Circular No. 58-TC/TCÐN guides the procedures for disbursing and managing domestic capital and OPEC Fund loans for the National University of Hanoi Phase I project in Hanoi.

CIRCULAR

DIRECTIVE OF THE MINISTRY OF FINANCE NO. 58 TC/TCĐN ON SEPTEMBER 25, 1996 GUIDING PROCEDURES FOR SETTLEMENT AND MANAGEMENT OF FUNDS FOR THE FIRST PHASE OF THE VIETNAM NATIONAL UNIVERSITY IN HANOI

BASED ON THE LOAN AGREEMENT BETWEEN THE GOVERNMENT OF THE SOCIALIST REPUBLIC OF VIETNAM AND THE OPEC FUND FOR INTERNATIONAL DEVELOPMENT SIGNED ON OCTOBER 23, 1995;

BASED ON DECREE NO. 58/CP OF AUGUST 30, 1993 ISSUED BY THE GOVERNMENT ON THE REGULATIONS FOR MANAGING FOREIGN LOANS AND DEBTS AND THE GUIDELINES TO IMPLEMENT THE DECREE;

BASED ON DECREE NO. 42/CP OF JULY 16, 1996 ISSUED BY THE GOVERNMENT ON THE REGULATIONS FOR MANAGING INVESTMENTS AND CONSTRUCTION AND THE GUIDELINES TO IMPLEMENT THE DECREE;

BASED ON DECISION NO. 654 TC/QĐ-TCCB OF JUNE 23, 1995 ISSUED BY THE MINISTER OF FINANCE ON THE SPECIFIC RESPONSIBILITIES OF UNITS UNDER THE MINISTRY OF FINANCE IN MANAGING PROJECTS USING FOREIGN LOANS AND AID FUNDS FROM THE GOVERNMENT;

BASED ON DECISION NO. 362/TTg OF JUNE 20, 1995 ISSUED BY THE PRIME MINISTER ON INVESTING IN THE FIRST PHASE OF THE VIETNAM NATIONAL UNIVERSITY IN HANOI;

AFTER CONSULTATION WITH THE MINISTRY OF PLANNING AND INVESTMENT, THE STATE BANK OF VIETNAM, THE VIETNAM NATIONAL UNIVERSITY IN HANOI, AND THE VIETNAM COMMERCIAL JOINT STOCK BANK;

THE MINISTRY OF FINANCE GUIDES THE PROCEDURES FOR FUNDS DISBURSEMENT AND MANAGEMENT FOR THE VIETNAM NATIONAL UNIVERSITY IN HANOI IN THE FIRST PHASE AS FOLLOWS:

I- GENERAL PROVISIONS:

1- DEFINITIONS:

In this Circular, the following terms shall be understood as follows:

1.1- "AGREEMENT" refers to the loan agreement between the Government of Vietnam and the OPEC Fund for International Development signed on October 23, 1995.

1.2- "PROJECT" refers to the first phase investment project of the Vietnam National University in Hanoi using funds from the OPEC Fund.

1.3- "PROJECT OWNER" refers to the Vietnam National University in Hanoi.

1.4- The Project Management Board for the First Phase Investment Project of the Vietnam National University in Hanoi established according to Decision No. 34/TCCB of January 17, 1996 by the Director of the Vietnam National University in Hanoi is responsible for directly implementing the project, hereinafter referred to as the Project Management Board.

1.5- "LOAN" refers to the loan from the OPEC Fund for International Development to the Government of Vietnam.

1.6- "SERVICE BANK" for the project is the Vietnam Commercial Joint Stock Bank according to Decision No. 97/QĐ-NH8 of the Governor of the State Bank of Vietnam.

2- GENERAL PRINCIPLES:

2.1- The loan for implementing the first phase investment project of the Vietnam National University in Hanoi is part of the revenue of the Government of Vietnam, therefore, the Ministry of Finance is responsible for recording it in the state budget and managing its allocation to the Vietnam National University in Hanoi to implement the approved project. The Ministry of Finance oversees the management of the loan and balances the budget to repay the debt when due.

2.2- The capital allocation for the project includes domestic and foreign capital, implemented according to Decree No. 42/CP of July 16, 1996, Decree No. 58/CP of August 30, 1993 issued by the Government, and the guidelines as well as the provisions of the OPEC Fund for International Development.

2.3- The project owner is responsible for using the capital for the intended purpose and content of the approved project in accordance with domestic regulations as well as the conditions committed in the loan agreement with the OPEC Fund.

2.4- The Ministry of Finance and the State Bank authorize the Vietnam Commercial Joint Stock Bank to act as the commercial bank serving the project, to carry out procedures for withdrawing funds from the loan (including direct payment methods, repayment, and letter of commitment) for the project upon the approval of the Ministry of Finance for each withdrawal.

2.5- During the process of withdrawing loan funds, the Vietnam Commercial Joint Stock Bank will charge service fees based on the services provided (including L/C opening fees, document submission fees, telegrams, FAX...) according to the fee schedule of the Vietnam Commercial Joint Stock Bank in compliance with Decision No. 162 QĐ/NH2 of August 19, 1993 issued by the Governor of the State Bank of Vietnam regarding the collection of service fees for bank transactions. These service fees will be included in the total investment cost of the project.

2.6- Tax issues related to imported equipment for the project shall be carried out in accordance with Article 4.03 of the Agreement and current regulations.

II- SPECIFIC PROVISIONS

1- PREPARATION AND APPROVAL OF THE PROJECT'S FINANCIAL PLAN:

Annually, in accordance with the system for preparing and reviewing the state budget plan, the project owner prepares the financial plan of the project to submit to the competent authority for consolidation and submission for approval to the Ministry of Planning and Investment, the Ministry of Finance, and then to the Government and the National Assembly. Once the plan is approved, the Ministry of Finance will notify the project owner of the plan for allocating investment funds for the project. The project owner is responsible for notifying the Project Management Board of the approved plan.

The financial plan must fully reflect the volume of work to be carried out, the loan funds, the progress of withdrawing funds from the OPEC Fund and domestic funds, detailed by month, quarter, year, and by each category of work for construction, equipment, etc.

2- TOTAL EXPENSES AND CAPITAL USE STRUCTURE:

Specified in detail in Decision No. 362/TTg of June 20, 1995 issued by the Prime Minister on approving the first phase investment for the Vietnam National University in Hanoi and the loan agreement with the OPEC Fund.

3- OPENING ACCOUNTS:

The Project Management Board opens an account at the Hanoi Investment and Development Bureau to receive domestic funds.

The project owner opens an account at the Vietnam Commercial Joint Stock Bank to receive loan funds from the OPEC Fund for payment to domestic contractors.

4- ALLOCATION AND USE OF DOMESTIC GOVERNMENT FUNDS:

Counterpart funds: The Ministry of Finance (General Department of Investment and Development) manages and allocates according to the current system. Quarterly, based on the annual plan divided by quarter, the General Department of Investment and Development will transfer counterpart funds to the Hanoi Investment and Development Bureau, which will be paid directly (according to the payment ratio) to suppliers and contractors based on the payment request of the Project Management Board. The Investment Bureau is responsible for checking necessary documents to confirm the value of work eligible for funding.

See Appendix 1 for the flow of funds.

5- WITHDRAWAL OF FUNDS ALLOCATED AND MANAGEMENT OF OPEC FUND LOANS:

The Ministry of Finance (General Department of Investment and Development) is responsible for allocating investment funds to the project owner from the OPEC Fund loan according to the state regulations and in compliance with the provisions of the loan agreement. Withdrawal of funds from the loan account for the project is done through three forms: direct payment, letter of commitment procedure, and repayment.

a) Direct payment form and letter of commitment procedure for deep investment equipment and construction works:

Based on the payment request from the supplier of goods, the project owner prepares the application for capital withdrawal from the loan and necessary documents to submit two sets of files to the Ministry of Finance (Investment Development General Department, Foreign Financial Affairs Department) and one set to the serving bank. The payment file includes:

. Application for capital withdrawal according to the model.

. Letter requesting capital withdrawal.

. Copy of the procurement contract for goods, equipment, construction, and hiring of experts.

. Copy of other related economic contracts (if any).

. Documents confirming the validity of the contract (such as the opinion of the OPEC Fund, tender results for construction and procurement contracts over $150,000 and hiring of experts with a value over $100,000 for companies and over $50,000 for individuals).

. Copy of the bill of lading (in case of direct payment of the value of goods).

. Copy of the draft letter of credit issued by the Commercial Bank (in case of commitment procedure).

Within three working days from the date of receiving all the capital withdrawal files, the Investment Development General Department studies and sends its comments to the Foreign Financial Affairs Department. Within five working days, if the Investment Development General Department does not have any different opinions, the Foreign Financial Affairs Department will examine and approve the capital withdrawal. The project owner and the serving commercial bank jointly sign the application for capital withdrawal to pay the beneficiary (contractor, supplier).

After receiving the notification from the OPEC Fund about the payment to the supplier of goods and services and contractors, the project owner is responsible for reporting two copies to the Ministry of Finance (Foreign Financial Affairs Department, Investment Development General Department) to process the budget revenue and expenditure records.

Implementation steps are detailed in Appendix 2 and 3.

b) Capital withdrawal according to the repayment procedure:

The principle of repayment is the actual expenditure principle, meaning that the project can only withdraw capital to offset actual payments made. Based on the payment requests for design costs, supervision, hiring of experts, and project implementation according to the repayment procedure, the project owner prepares the necessary capital withdrawal documents to send to the Ministry of Finance (Foreign Financial Affairs Department), including:

. Application for capital withdrawal according to the OPEC Fund's model;

. Letter requesting capital withdrawal;

. Detailed statement of expenditures by the Project Management Board;

. Price list, confirmation of acceptance of completed work volume accompanied by the audit result of the Hanoi Investment and Development Bureau.

- Proof of payment.

Within five working days from the date of receiving all the above capital withdrawal files, the Ministry of Finance (Foreign Financial Affairs Department) examines, checks, and issues an approval for capital withdrawal. If approved, the project owner and the serving commercial bank jointly sign the capital withdrawal application and send it to the OPEC Fund. Upon receiving the disbursement notification from the OPEC Fund to an account confirmed by the Ministry of Finance, the project owner is responsible for sending two copies of the notification to the Ministry of Finance (Foreign Financial Affairs Department, Investment Development General Department) to process the budget revenue and expenditure records.

Implementation steps are detailed in Appendix 4.

III- REPORTING, INSPECTION, AND SETTLEMENT WORK:

1- Quarterly and annually, the project owner is responsible for reporting to the Ministry of Finance (Investment Development General Department, Foreign Financial Affairs Department), the State Bank, and the Ministry of Planning and Investment on the project implementation status, including clearly showing the capital withdrawal situation and loan usage.

2- The Vietnam Commercial Bank is responsible for monthly account statements to the project owner, the Ministry of Finance (Foreign Financial Affairs Department, Investment Development General Department).

3- The project owner must settle accounts with the Ministry of Finance (Investment Development General Department) annually and upon completion of the works or projects.

4- Regularly and urgently, the Ministry of Finance, the Ministry of Planning and Investment, the State Bank, and the National University of Hanoi will inspect the project implementation status and the project's fund usage (domestic and foreign). If the project owner uses funds improperly or without effectiveness, the Ministry of Finance will suspend fund transfer to address violations.

IV - EFFECTIVE PROVISIONS

This Circular takes effect from the date of signing. During implementation, if there are difficulties, the project owner, the Project Management Board, and the Vietnam Commercial Bank need to promptly reflect them to the Ministry of Finance for study and amendment.

ANNEX 1

PAYMENT WITH COUNTERPART FUNDS

(1) Quarterly Transfer of Funds: Transfer of Money:

(2) Signing Economic Contracts: Other Relationships:

(5) Acceptance, quality inspection of goods

(4) Payment Request:

(5) Confirmation of Completed Work:

(6) Payment Transfer:

(7) Report to the Investment Development General Department:

ANNEX 2

DIRECT PAYMENT

(1) Contract:

(2) Implementing contracts

(3) Payment Request:

(4) Acceptance and Quality Inspection of Goods and Services:

(5) Withdrawal Request for Payment:

(6) Approval of Withdrawal for Payment:

(7) Submit Withdrawal Application:

(8) Payment Transfer:

ANNEX 3

PAYMENT THROUGH LETTER OF GUARANTEE PROCEDURE

(3) Execution of contract

(4) Payment request

(5) Acceptance, quality inspection of goods

(6) Request for fund withdrawal for payment

(7) Approval of fund withdrawal for payment

(8) Request for fund withdrawal for payment in the form of a commitment letter

(9) Send a commitment letter to the seller's bank

(10) Seller's bank pays the supplier, contractor

(11) Send refund request

(12) ADB/WB pays the seller's bank

(12) Send refund request

(12) OPEC Pays the Selling Bank:

ANNEX 4

PAYMENT PROCEDURE FOR CAPITAL REIMBURSEMENT

(1) Prepare withdrawal request form and proposal

(2) Approval of Withdrawal Application:

(3) Sign Withdrawal Application and Send to OPEC:

(4) Transfer Money to the Project Account at the Serving Bank:

or an account confirmed by the Ministry of Finance:

(5) Report Account to the Project Owner and the Ministry of Finance: