Circular No. 49/VGNN-TC-TT guiding the implementation of the Chairman of the Council of Ministers' decision on processing prices, purchase prices for small-scale industrial and handicraft products.

 JOINT CIRCULAR

GUIDELINES FOR IMPLEMENTATION OF THE DECISION OF THE CHAIRMAN OF THE STATE ADMINISTRATIVE COUNCIL ON PROCESSING FEES AND PURCHASE PRICES

FOR SMALL INDUSTRIES AND HANDICRAFT PRODUCTS.

BASED ON Decision No. 263/Cong Ty dated October 16, 1986 of the Chairman of the State Administrative Council on processing fees and purchase prices for small industries and handicraft products; after consultation with the Ministry of Labor, the Vietnam Handicraft Union, and related sectors, the Joint Commission on Pricing and Finance hereby provides guidance as follows:

I. PRINCIPLES FOR DETERMINING PROCESSING FEES AND PURCHASE PRICES FOR SMALL AND HANDICRAFT INDUSTRIES.

The determination of processing fees and purchase prices for small and handicraft industries must meet two requirements:

- First, to adequately and accurately account for all cost factors according to necessary social norms regarding labor consumption and material usage, approved by competent authorities, ensuring that producers can cover reasonable actual costs and earn a satisfactory profit, contributing to state accumulation over time.

- Second, to protect consumer interests, encouraging production units (hereinafter referred to as cooperatives) to continuously improve technology, enhance product quality, strive to increase productivity and reduce costs to achieve reasonable selling prices recognized by consumers.

II. CONTENT AND METHODS FOR DETERMINING PROCESSING FEES AND PURCHASE PRICES FOR SMALL AND HANDICRAFT INDUSTRIES:

Processing fees and purchase prices for small and handicraft industries must accurately account for all relevant production costs associated with producing the goods. Unreasonable or invalid costs shall not be included in the processing fees or purchase prices.

Cost factors and components of processing fees and purchase prices are defined as follows:

A. Cost Factors (for calculating production costs)

1. Costs for raw materials, materials, fuel, etc., are determined based on norms and prices:

1. Supplementing Point 6a following Article 6 of Circular No. 02/2019/TT-BVHTTDL dated July 5, 2019 of the Minister of Culture, Sports and Tourism on the procedures for legal expertise regarding copyright and related rights as follows: Material Norms: These are calculated based on average advanced industry norms achieved during a relatively stable production period and must be reviewed by authorized bodies. For important materials managed uniformly by the state, regulations in Decree No. 201/CP dated May 26, 1981 of the Council of Ministers and Decision No. 038/UB-DM dated January 4, 1986 of the Chairman of the State Planning Commission apply. If cooperatives cannot implement these norms due to lower equipment levels or other conditions, they must clearly explain this in their pricing plan submitted for review by the competent authority.

For other materials, norms are set by Ministries, People's Committees of provinces, cities, and centrally-administered municipalities (hereinafter referred to as provinces), or authorized agencies.

Material norms for calculating processing fees and purchase prices are applied uniformly, without distinction between materials supplied by the state or self-balanced by cooperatives if the specifications and quality of the materials are equivalent.

b. Unit prices for materials to calculate production costs are differentiated based on the source of materials:

- Materials supplied by the state are calculated based on directed prices decided by authorized bodies. In cases where there are no directed prices, temporary prices may be used, valid for a maximum of 30 days; within this period, the supplier (the ordering party) must promptly submit a material price plan for review by the authorized body. Once the official material price is established, cooperatives and the ordering party must settle payments according to the authorized level's regulations.

- Materials sourced directly:

+ For agricultural, forestry, and marine products, cooperatives are allowed to purchase directly from producers at purchase prices within the local price range plus reasonable procurement costs. Cooperatives are responsible for strictly adhering to local pricing policies.

+ For materials extracted by cooperative members, they are included in processing fees and purchase prices based on actual reasonable extraction costs and a fair profit margin based on the effectiveness of the extracted materials. Specific prices must be accepted by the ordering party.

+ For materials processed by cooperatives with other production units, in addition to raw material costs, processing fees according to officially determined rates are also included.

+ For materials balanced through various economic forms, they are included in processing fees and purchase prices based on prices or within the price range decided by authorized pricing management bodies. Determination of prices for these materials must be based on the nature of each type of material, supply sources, and economic cooperation methods, in accordance with the spirit of Decision No. 162/HDBT dated December 14, 1984 of the State Administrative Council on organizing economic cooperation activities.

+ For surplus, stagnant, or slow-turnover materials purchased from state enterprises or other agencies, they are included in processing fees and purchase prices according to the pricing principles in Circular No. 15/VGNN-TC-TT dated August 15, 1986 of the National Pricing Commission and the Ministry of Finance.

+ Scrap materials and waste products under unified state management, when cooperatives purchase directly from state enterprises or receive from supply agencies according to plans, are included in processing fees and purchase prices based on directed prices decided by authorized bodies. Other scrap materials and waste products obtained by cooperatives are included based on actual purchase prices within the local price range (if applicable).

c. Transportation and handling costs for materials are calculated based on state-directed freight rates (including central and local directives). If units transport and handle themselves or hire private means, costs are calculated based on local freight rates or guidelines.

2. Depreciation costs (basic and major repairs) of fixed assets included in processing fees and purchase prices include:

- Depreciation of buildings, equipment, etc., directly serving production.

- Depreciation of buildings and facilities serving management (including public welfare facilities at cooperatives).

在未进行固定资产全面清查和重新评估之前，小手工业领域的临时规定如下：

a. 对于1985年10月1日之前的固定资产，应按照联合部通函第22/LB-TT号文（1985年10月4日由国家物价委员会、国家计划委员会和财政部联合发布）的精神执行。具体而言：基本折旧增加五倍，大修理折旧增加七到九倍，与1985年10月1日前计算的折旧率相比。

特殊情况下，可以按固定资产价值比合作社账面上记录的价值增加十倍来计算基本折旧。但由于这种折旧计算对收购价格和加工费的影响，必须得到客户的同意。

b. 对于1985年10月1日之后购买的固定资产，按以下方法计算：

- 固定资产原值按国家规定的实际购买价格确定。如果是自制或自装资产，则按足以补偿实际合理成本并为合作社带来利润的价格确定。

- 折旧率按上述规定计算。如果由于折旧计算导致收购价格和加工费（包括原材料费用）超过国家指导价格（零售和批发供应价格），合作社应自行决定合适的折旧方式，以获得客户接受，确保正常生产和经营活动。

人民委员会根据上述规定，指导合理确定加工费和收购价格中的折旧率，并就处理超出国家指导价格的成本问题提供指示。

3. 小规模生产和具有工资性质的补贴计入收购价格，包括直接参与生产的社员工资；供应材料、仓库管理、保安等工作的社员工资；以及从事管理工作社员工资。

工资和具有工资性质的补贴确定原则如下：

1. Supplementing Point 6a following Article 6 of Circular No. 02/2019/TT-BVHTTDL dated July 5, 2019 of the Minister of Culture, Sports and Tourism on the procedures for legal expertise regarding copyright and related rights as follows: Labor norm：按照经有权机关审批的平均先进劳动定额（在相对稳定的生产期间达到的定额）计算（按国家规定的工日和工时计算；每月24.5个工日；每天8小时）。

对于没有劳动定额或不完整工序定额的产品，合作社应自行调查并建立劳动定额，提交有权机关审查，按照国家分级管理的规定。如果有权机关尚未批准，则需详细说明定价方案。

b. 单位产品的工资单价 是基于劳动定额并采用国家职工工资制度制定的。工资单价的内容包括：

- 社员的基本工资相当于同行业国营企业工人的基本工资。

- 补贴性工资附加部分，如地区补贴、生活费用差价补贴、有害、困难和危险工作补贴、夜班补贴等（适用于有资格享受这些补贴的行业）。

- 从工资基金中提取的奖金和产品工资激励比例。

- 中餐和夜餐费用。

- 六种必需消费品的价格补贴。

c. 确定 中餐和夜餐费用及六种必需消费品价格补贴的原则如下：

+ 中餐和夜餐费用（对于需要夜间工作的合作社）应按照国务院总理第305号指示（1986年12月5日）的精神执行：中餐费用为每份...元，夜餐费用根据保证定量标准的原则确定（粮食150克/份，肉40克/份，蔬菜200克/份）。粮食、食品等价格按当地商业贸易价格计算。具体金额由省人民委员会根据劳动部的指导确定。

+ 六种必需消费品的价格补贴：根据保证手工艺工人能够按照与国营企业工人相同的定量标准购买必需品的原则确定（已在国务院第122号决定（1986年10月4日）中规定），按当地商业贸易价格计算。

必需消费品的六种定量价格补贴计入加工费和收购价格；收购价格是国务院第42a号决定（1986年4月15日）规定的稳定零售价与商业贸易价格之间的差额。

商业贸易价格由省人民委员会提出，国家物价总局和相关部委讨论，经常务国务院会议审议批准。

根据上述原则，目前暂时规定如下：

1. 对于粮食，总体精神是尽量按定量向手工艺工人销售（相当于经济合同中的产品份额），按国务院第42a号决定（1986年4月15日）规定的零售价销售，在加工费和收购价格中不包含粮食价格补贴。地方按商业贸易零售价向手工艺工人销售粮食的，必须按照上述原则，用商业贸易零售价与国务院第42a号决定规定的零售指导价之间的差额补贴给手工艺工人；绝对不能将这部分差额计入收购价格或加工费。

2. 对于其他商品（肉类、糖、调味品、燃料、肥皂）由于商品供应紧张，地方按商业贸易零售价向手工艺工人销售的，可将商业贸易价格与国务院第42a号决定规定的稳定零售价之间的差额，按与当地同行业国营企业工人相同的定量标准，计入加工费或收购价格。

省人民委员会根据上述指导，确定对手工艺工人的价格补贴计入工资，并通知国家物价总局、财政部和其他订货加工商。

4. Social insurance is calculated at 6% of the total wage (excluding price subsidies) equivalent to the social insurance system for state-owned enterprise workers.

5. Occupational safety expenses: For industries entitled to occupational safety benefits, these costs shall be calculated based on the principle of ensuring physical quantities according to local retail prices set by the Ministry of Commerce or the Provincial People's Committee.

6. Bank loan interest: For products produced under the raw material purchase and finished product sale model, if the cooperative has a plan to borrow from the bank and the bank agrees, then the bank loan interest will be considered a separate cost factor in the processing price and purchase price. The rate of bank loan interest is determined according to Decision No. 139/NH-QD dated October 14, 1986, of the State Bank of Vietnam. Interest on bank loans included in the processing price and purchase price must be based on reasonable working capital quotas and must deduct interest earned from deposits or advance payments from customers deposited in the bank. In cases where the bank cannot meet credit requirements (confirmed by the bank), if the cooperative borrows from members, this interest will also be included in the processing price and purchase price according to the above principle. The amount borrowed from members and the interest rate paid to members must be confirmed by the State Bank and registered.

7. Management costs include: travel expenses, office supplies, water consumption, shared medical expenses within the cooperative, hospitality expenses, bank loan interest (not yet calculated as per point 6 of this circular), etc., and are calculated according to the state regulations. To facilitate the calculation of processing prices and purchase prices, the People's Committee may specify these costs as a percentage of the main wages of direct production members in each industry reasonably. However, it should not exceed 15% of the main wages of direct production members included in the price.

In addition to production costs and costs related to producing the product mentioned above, the processing price and purchase price also include:

B. Fixed profit: determined according to the principle of ensuring that small-scale industrial production bases establish funds (accumulation, social welfare, rewards, etc.) with distinctions aimed at encouraging the production of essential goods, children's goods, high-quality goods, export goods, or goods substituting imports.

Initially, the standard profit margin is temporarily set at 20% to 45% of the main wages and is specified by the provincial People's Committee for each product or group of products.

For essential goods, children's goods, high-quality goods, export goods, or goods substituting imports, the additional profit margin ranges from 10% to 20% compared to the profit margin of ordinary products. However, the highest profit margin should not exceed 55% of the main wages.

The provincial People's Committee shall base on the above guidelines to determine the profit margin for each product or group of products reasonably.

4. Liquid bull semen Industry fees are calculated at 1.5% of the main wages (including management wages) in the processing price and purchase price.

D. Tax is calculated according to the state regulations.Corporate tax is calculated at 3%, 4%, or 5% of the processing price and purchase price depending on the specific items defined in the state tax tables.

III. BIDDING PRICE FORMULATION

Applying bidding procedures to prioritize orders and provide raw materials to production units producing quality goods at low prices is a new step in economic management mechanisms. The Inter-Ministerial Department recommends that the Light Industry Ministry, the Foreign Trade Ministry, and relevant sectors work together with the People's Committees of Ho Chi Minh City, Hanoi, Hai Phong, etc., to develop pilot projects implementing bidding price formulation for items within their pricing authority based on the Chairman of the Council of Ministers' directives, thereby gaining experience for implementation in other sectors.

IV. PRICING MANAGEMENT LEVELS:

1. For products listed in the state pricing directory (central and provincial levels), cooperatives and designated consumption units shall prepare pricing plans based on the guidance of this joint circular and submit them to the competent authorities for review.

For important products (textile fabrics, carpet weaving, garment manufacturing, fine arts, bamboo and rattan weaving for export, etc.), which fall under central pricing authority, the Ministries shall decide on purchase prices and processing prices (standard prices or price ranges) as a basis for subordinate business units to negotiate specific purchase and production sales prices with local cooperatives or production units. Before deciding on standard prices or price ranges, the Ministries need to consult with provinces and cities with significant production volumes for the central government.

Other products are priced by the provincial People's Committee (or authorized level). If the products are produced for central delivery, the province needs to consult with centrally designated purchasing organizations before setting the price.

2. For products produced outside economic contracts, using raw materials sourced independently by the cooperative and the remaining products after fulfilling tax obligations and delivering required quantities to state economic units and other economic units according to signed economic contracts, if the cooperative is permitted to organize its own sales, it must adhere strictly to the local government's price range. Cooperatives must comply with national tax policies, pricing policies, market management, etc. If state economic units need to purchase, they should buy according to negotiated prices guided by local authorities.

The list of cooperative products allowed to organize their own sales is specified by the provincial People's Committee.

3. Based on prices decided by competent authorities, the provincial Price Control Committee, the Department of Finance, the Cooperative Marketing Association, and related sectors in the province shall regularly inspect the implementation of pricing policies, pricing methods, and state directive prices for cooperatives and ordering units (including both central and local customers).

Any unit or individual violating state price discipline will be dealt with strictly in accordance with the spirit of Decree No. 191-HĐBT dated August 4, 1986, of the Council of Ministers.

This Joint Circular takes effect from the date of signature. All provisions previously stipulated by the State Price Commission and the Ministry of Finance that are contrary to this regulation shall be void.

Joint Ministries request the People's Committees of provinces, cities, and centrally governed municipalities to guide subordinate units to implement according to the provisions of this Joint Circular. In the course of implementation, if there are difficulties, economic grassroots units, sectors, and localities are requested to promptly reflect them so that the Joint Ministries can supplement and amend.