Joint Circular No. 56/1998/TTLT/BTC-GTVT guiding the financial management regime for state-owned enterprises operating public services ensuring maritime safety in Vietnam.

JOINT CIRCULAR

Guidelines on financial management for

State-owned enterprises operating for public interest to ensure maritime safety in Vietnam

Pursuant to Decree No. 56/CP dated October 2, 1996 of the Government on state-owned enterprises operating for public interest, Circular No. 06 TC/TCDN dated February 24, 1997 of the Ministry of Finance guiding financial management regulations for state-owned enterprises operating for public interest, Decision No. 4461/QĐ-TCCB-LĐ dated November 21, 1997 of the Ministry of Transport. The Ministry of Finance and the Ministry of Transport guide financial management regulations for state-owned enterprises operating for public interest to ensure maritime safety in Vietnam as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. The subject of this Circular is state-owned enterprises operating for public interest to ensure maritime safety in Vietnam (hereinafter referred to as BĐATHHVN).

2. BĐATHHVN is responsible for using capital and resources allocated by the State to carry out maritime safety work in accordance with the provisions of the State.

3. In addition to the assigned public service tasks, BĐATHHVN may utilize labor, land, capital, and state assets after completing the assigned public service tasks and raising additional capital to organize business activities in line with the enterprise's capacity and market demand provided that:

Approval is obtained in writing from the agency deciding to establish the enterprise.

It does not affect the performance of the maritime safety tasks assigned by the State.

Supplementary registration of business operations according to current regulations.

Separate accounting for additional business activities.

Fulfill tax obligations for additional business activities in accordance with the law.

4. BĐATHHVN is subject to financial inspection and supervision by the financial authority as the representative of the State owner regarding capital and state assets at the enterprise under the authorization of the Government.

II. MANAGEMENT AND USE OF CAPITAL AND ASSETS

1. Capital Investment:

1.1. BĐATHHVN shall be granted initial registered capital by the State, not less than the statutory capital prescribed by the State, to construct, purchase, and acquire fixed and circulating assets in line with the scale and assigned tasks.

1.2. If BĐATHHVN operates with insufficient capital compared to the tasks assigned by the State (after mobilizing existing capital within the enterprise), the State will supplement capital as follows:

In cases where BĐATHHVN generates profit, the portion of corporate income tax payable may be refunded to supplement the enterprise's capital in accordance with the law.

In cases where there is no profit or after refunding the portion of corporate income tax payable, if there is still a capital shortage, the State will consider supplementing capital.

1.3. Procedures for basic construction investment and circulating capital for BĐATHHVN shall be carried out in accordance with the regulations of the State.

2. Capital Mobilization:

2.1. BĐATHHVN has the right to raise capital in all forms to develop business activities in accordance with the law, but it must not change the form of ownership.

BĐATHHVN must prepare specific plans to submit to the Ministry of Transport and the Ministry of Finance. After reaching agreement with the Ministry of Finance, the Ministry of Transport decides to implement.

2.2. In cases where BĐATHHVN organizes business activities outside the assigned public service tasks, it can borrow funds from credit organizations (commercial banks, finance companies...), other enterprises, individuals (including employees of the enterprise) to serve business activities, but must comply with the law and must not change the form of ownership.

2.3. Interest rates for raising capital recorded in production and service costs of BĐATHHVN must not exceed the maximum lending rate announced by the State Bank of Vietnam during the period of raising capital according to each industry.

2.4. When raising capital, BĐATHHVN must carefully consider economic efficiency, ensuring the proper and effective use of raised capital, not using short-term loans for long-term investments, separating raised capital for public service or other production and business activities to allocate interest rates for each activity and must repay principal and interest according to the agreed terms when raising capital.

The General Director of BĐATHHVN is responsible to the State for establishing capital-raising plans and using capital for purposes other than those intended, leading to losses.

3. Investment outside the enterprise:

3.1. When there is a need to invest capital, assets, land value, or land rental fees outside the enterprise, BĐATHHVN must prepare a capital contribution plan or explain joint venture projects to submit to the Ministry of Transport and the Ministry of Finance. After reaching agreement with the Ministry of Finance, the Ministry of Transport decides to implement.

3.2. Investment outside the enterprise must not affect the assigned public service tasks, must comply with the law, ensuring efficiency, preservation, and development of capital, increasing income. When using land value to invest outside the enterprise, it must follow the provisions of the Land Law.

3.3. BĐATHHVN is not allowed to use state-invested capital for monetary transactions such as purchasing bonds, bills, savings deposits...

3.4. BĐATHHVN is not permitted to invest in businesses not owned by the State where the managers or main owners are the spouse, parent, child, or sibling of the General Director of BĐATHHVN.

4. BĐATHHVN is responsible for maintaining accounting books accurately reflecting all current assets and capital according to the current accounting and statistical regulations, truthfully and promptly reflecting the situation of asset and capital usage and changes during the operation process.

5. Transfer, liquidation, leasing, mortgaging, pledging of assets:

5.1. BĐATHHVN may sell or liquidate obsolete assets not needed to recover capital for efficient business purposes.

When selling or liquidating, a technical evaluation committee must be established to assess the value of the assets and organize auctions according to the law. The difference between the proceeds from selling or liquidating the assets and their remaining book value and the costs of selling or liquidating shall be accounted for in the business results.

5.2. For assets that do not require depreciation when sold or liquidated, the proceeds from the sale or liquidation (after deducting selling or liquidation costs) shall be fully remitted to the state budget and accounted for as a reduction in business capital (or an increase in business capital if the State reinvests).

5.3. Machinery and equipment, key assets that determine the operation of the Vietnam Maritime Safety Assurance Corporation when sold or liquidated must be approved by the Ministry of Transport after obtaining a written agreement from the Ministry of Finance.

5.4. For assets leased to enhance efficiency and increase revenue, the Vietnam Maritime Safety Assurance Corporation must still depreciate them according to the prescribed regulations, monitor and recover the assets upon expiration of the lease term.

5.5. Assets pledged, mortgaged, or used as collateral for loans at financial institutions must be carried out strictly in accordance with the procedures stipulated by law.

The Vietnam Maritime Safety Assurance Corporation shall not pledge, mortgage, or lease borrowed, rented, entrusted, pledged, or mortgaged assets from other enterprises without the consent of the owners of such assets.

6. Handling of asset losses:

Asset loss handling shall follow the following principles:

If caused by subjective reasons, the person responsible must bear the liability for compensation.

If caused by objective reasons, for insured assets, compensation will be provided by the insurance organization.

Remaining losses (after deducting compensation from the person responsible and insurance compensation) the Vietnam Maritime Safety Assurance Corporation may use the financial reserve fund (if available) to offset, if insufficient, it will be recorded as business expenses.

In cases of asset losses due to force majeure (natural disasters, fires...), the General Director of the Vietnam Maritime Safety Assurance Corporation shall develop a plan and report to the Ministry of Transport, the Ministry of Finance, and the Vietnam Maritime Administration for decision on handling or report to the Prime Minister for decision. After handling the losses, the Vietnam Maritime Safety Assurance Corporation must adjust its accounting records according to the handling decision.

7. Capital transfer, responsibility for capital preservation, asset evaluation, management of receivables and payables shall be implemented as prescribed for state-owned enterprises engaged in business operations.

8. Depreciation and utilization of fixed assets of the Vietnam Maritime Safety Assurance Corporation shall be carried out according to the regulations set forth in Decision No. 1062/TC/QĐ/CSTC dated November 14, 1996 of the Ministry of Finance regarding the management, use, and depreciation of fixed assets.

All depreciation of fixed assets shall be retained for reinvestment to replace and modernize fixed assets and used for the operational needs of the Vietnam Maritime Safety Assurance Corporation, and their use must comply with the regulations of the Ministry of Finance and Circular No. 24/1998/TT-BTC dated February 26, 1998 of the Ministry of Finance guiding the management and use of reinvestment capital in state-owned enterprises.

For assets that do not require depreciation, the enterprise must still maintain books to record and reflect the value of wear and tear according to the prescribed regulations.

III. PRODUCTION - TECHNICAL - FINANCIAL PLANNING AND HANDLING OF FINANCIAL RESULTS

OF THE PUBLIC SERVICE ENTERPRISE FOR MARITIME SAFETY ASSURANCE IN VIETNAM

A. PRODUCTION - TECHNICAL - FINANCIAL PLAN

Annually, based on the guidance of the State and the tasks assigned by the Ministry of Transport, the Vietnam Maritime Safety Assurance Corporation shall prepare production-technical plans and financial income-expenditure plans through the Vietnam Maritime Administration to submit to the Ministry of Transport and the Ministry of Finance. After receiving a written consensus from the Ministry of Finance, the Ministry of Transport, and the Vietnam Maritime Administration, they shall notify the financial plan and guide the Vietnam Maritime Safety Assurance Corporation to implement the assigned plan.

B. FINANCIAL RESULTS

1. Revenue from public service activities of the Vietnam Maritime Safety Assurance Corporation includes port fees collected from domestic and foreign vessels entering and leaving Vietnamese ports, the amount of which is determined according to the tariff rates established by the Government's price management agency.

1.1. The Ministry of Transport entrusts port authorities to collect maritime safety assurance fees on behalf of the Vietnam Maritime Safety Assurance Corporation. Port authorities are entitled to a commission fee equal to a percentage of the total maritime safety assurance fees collected, the rate of which is decided by the Minister of Transport after consultation with the Ministry of Finance.

1.2. Acting on the entrustment of the Vietnam Maritime Safety Assurance Corporation, port authorities shall collect maritime safety assurance fees, retain the specified percentage, and transfer the remainder to the account of the Vietnam Maritime Safety Assurance Corporation opened at a bank. Port authorities are responsible for collecting the full amount promptly and transferring it to the Vietnam Maritime Safety Assurance Corporation.

1.3. Port authorities shall settle accounts periodically with the Vietnam Maritime Safety Assurance Corporation regarding the collected fees and retained amounts. The Vietnam Maritime Safety Assurance Corporation is responsible for reconciling and monitoring all sources of income generated by port authorities, in accordance with the invoices issued as prescribed by the Ministry of Finance. Special receipts and invoices must be registered with the Ministry of Finance (General Taxation Department).

2. Operating costs of the Vietnam Maritime Safety Assurance Corporation include public service costs, business operation costs, and other activities.

The contents of public service expenditure of the Vietnam Maritime Safety Assurance Corporation include:

2.1. Material, fuel, and energy costs used during operations.

2.2. Wages, salaries, and allowances with wage characteristics according to the prescribed regulations of the State.

2.3. Contributions to social insurance, health insurance, and trade union funds according to the prescribed regulations of the State.

2.4. Depreciation costs of fixed assets: The objects and rates of depreciation are implemented according to the provisions of Decision No. 1062/TC/QĐ/CSTC dated November 14, 1996 of the Ministry of Finance.

2.5. Costs for maintaining and repairing navigational aids, regular and periodic repairs, and improvements to navigational aid facilities (including visual, acoustic, and radio aids), and equipment, working premises, and production facilities in the operation of the Vietnam Maritime Safety Assurance Corporation.

2.6. Costs for ensuring lighting, channel surveys, issuing maritime notices, adjusting buoys, and supplying lighthouses on islands.

2.7. Costs for channel surveys, removal of obstacles in channels, maintenance and repair of channel improvement works, dredging and maintenance of channels leading to ports.

2.8. Costs for participating in marine search and rescue operations, maritime safety inspections, and related costs for environmental protection and national defense as assigned by the Ministry of Transport (or the Vietnam Maritime Administration under delegation).

2.9. Costs for membership fees of international associations of which the Vietnam Maritime Safety Assurance Corporation is a member, and participation in international conferences on maritime safety assurance.

Other expenses include: travel expenses, rental fees for fixed assets, land rental fees, working location rental fees, protective clothing, scientific research, innovations, improvements, vocational training to enhance skills for workers and managers, bank loan interest payments, reception and ceremonial expenses, conference expenses, transaction expenses, foreign relations expenses...

Expenses such as raw materials, purchased services, reception, ceremonial, conference expenses must have valid invoices according to the regulations of the Ministry of Finance. Reception, ceremonial, conference, transaction, and foreign relations expenses shall not exceed the limits set by the State.

The cost contents of business activities and other activities shall be implemented as with state-owned enterprises engaged in business operations.

3. BĐATHHVN may use revenue to cover expenses, including:

Revenue from public service activities is used to cover public service activity costs, taxes, and other revenues payable to the State as prescribed by law (excluding income tax).

Revenue from business activities and other activities is used to cover business activity costs, other activity costs, taxes, and other revenues payable to the State as prescribed by law (excluding income tax).

BĐATHHVN's business operations must ensure profitability and shall not use profits from public service activities to offset losses in business and other activities.

C. DISPOSITION OF FINANCIAL RESULTS

1. The results of BĐATHHVN's business operations include:

a. For public service activities: The difference between revenue and costs of public service activities shall be handled as follows:

Establishing reserves at the following rates and maximum levels:

Development Investment Reserve: 25% of the difference.

Financial Provision Reserve: 5% of the difference, the balance of this reserve shall not exceed 25% of the registered capital.

Establishing two reward and welfare reserves equal to three months' actual salary if the reported annual budget payment is higher than the previous year, and two months' actual salary if the reported annual budget payment is the same or lower than the previous year.

The remaining difference shall be paid into the State budget.

b. For business activities:

Business activity profits and other activity profits shall be distributed as follows:

Pay taxes as prescribed by law.

The remaining profit after tax shall be distributed as with state-owned enterprises engaged in business operations, but the total amount allocated to each reserve from all sources (including from public service activities) shall not exceed the maximum limit for state-owned enterprises engaged in business operations.

2. Procedures, timing for establishing reserves, and purposes of their use by BĐATHHVN shall be carried out as with state-owned enterprises engaged in business operations.

IV. ACCOUNTING AUDITS, FINANCIAL REPORTS, AND FINANCIAL TRANSPARENCY

1. Preparation of financial statements:

Quarterly and annually, BĐATHHVN is responsible for reporting financial statements in accordance with current regulations. The General Director of BĐATHHVN is responsible before the State and the law for the accuracy and truthfulness of the financial statements.

Financial quarterly and annual reports must be submitted to the following agencies:

The Ministry of Transport, the Ministry of Finance (State Capital and Asset Management Agency at Enterprises), the Vietnam Maritime Administration, the Tax Authority, the Statistical Authority.

2. Accounting audits and financial reports

Quarterly and annually, BĐATHHVN is responsible for self-auditing accounting and financial reports.

The Ministry of Transport, in collaboration with the Ministry of Finance, shall organize the review and approval of BĐATHHVN's annual financial reports.

Financial authorities are responsible for checking compliance with financial systems, accounting, revenue collection discipline, and the accuracy and truthfulness of financial reports.

Violations of accounting systems, financial revenue and expenditure systems, budget revenue collection systems, and reserve establishment and usage systems of BĐATHHVN will be subject to administrative and economic penalties as prescribed by law.

3. Public disclosure of annual financial reports

Based on the annual financial report approved by the competent authority, BĐATHHVN shall publicly disclose certain financial indicators before the enterprise's employee congress.

Contents of the financial indicators to be publicly disclosed are stipulated in the annex attached to this Circular.

V. IMPLEMENTATION PROVISIONS

1. In addition to the provisions mentioned above, BĐATHHVN shall also implement other legal provisions applicable to state-owned enterprises.

2. This Circular takes effect from 1998. All previous regulations concerning BĐATHHVN that conflict with this Circular are hereby abolished.

3. During implementation, any difficulties should be promptly reflected to the Ministry of Finance and the Ministry of Transport for study and appropriate amendments and supplements./.