Circular No. 63/2004/TT-BTC guiding certain provisions of Government Decree No. 106/2004/NĐ-CP dated April 1, 2004 on state investment credit for development

CIRCULAR

Guidelines for certain Articles of Decree No. 106/2004/NĐ-CP

dated April 1, 2004 of the Government on state investment credit development

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Implementing Decree No. 106/2004/NĐ-CP dated April 1, 2004 of the Government on state investment credit development, the Ministry of Finance provides guidance on the implementation of state investment credit development 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. This Circular applies to the Development Support Fund, project sponsors of projects benefiting from state investment credit development policies, and financial institutions lending to projects guaranteed by the Development Support Fund.

2. Forms of state investment credit development include:

2.1. Investment loans for projects under government agreements;

2.2. Post-investment interest rate support;

2.3. Investment loan guarantees. The Ministry of Finance will provide separate guidance on loans for projects under government agreements.

3. A project may simultaneously benefit from the following forms of support:

3.1. Partial investment loans and post-investment interest rate support;

3.2. Partial investment loans and investment loan guarantees. The total level of support for a project under these forms shall not exceed 85% of the approved fixed asset investment capital of the project.

4. Projects borrowing investment capital must be reviewed by the Development Support Fund for financial plans and repayment plans before investment decisions are made; for projects with investment loan guarantees, the Development Support Fund must review financial plans and repayment plans before guarantee decisions are made.

5. Project sponsors must use borrowed funds for their intended purposes, repay principal and interest to the Development Support Fund according to the terms of the credit agreement, guarantee agreement, and post-investment interest rate support agreement signed with the Development Support Fund.

II. NATIONAL INVESTMENT DEVELOPMENT CREDIT PLAN

1. The national investment development credit plan is part of the national investment development plan aimed at achieving strategic economic and social development goals during each period. The national investment development credit plan is announced annually and includes the following main indicators:

a) Total national investment development credit including: investment loan amounts, project loans under government agreements, post-investment interest rate support, and investment loan guarantees.

b) Sources of capital to implement the total national investment development credit.

c) Total amount of interest rate subsidy provided by the state budget.

2. Based on the capital needs for disbursing funds to investment projects that have signed credit contracts; planned investment projects to sign credit contracts within the planning year; capital needs for post-investment interest rate support for projects that have signed contracts, planned to sign contracts within the planning year; capital needs for investment loan guarantees within the planning year; and collection plans for loans, repayment of borrowed capital, the Development Support Fund is responsible for preparing and reporting to the Ministry of Planning and Investment and the Ministry of Finance the following draft plans no later than July 20 of the year preceding the planning year:

a) Plan for total investment loan capital for the year;

b) Plan for post-investment interest rate support capital;

c) Investment loan guarantee plan;

d) Plan for repayment of maturing borrowings;

e) Loan collection plan;

f) Plan for total interest rate subsidy from the state budget.

3. Based on the demand for national investment development credit and the state budget's balancing capacity, the Ministry of Planning and Investment, in coordination with the Ministry of Finance, will prepare and submit

4. Based on the assigned plan, the Development Support Fund allocates total investment loan capital, post-investment interest rate support, and investment loan guarantees to sectors and fields divided by region for branch offices of the Development Support Fund to base their credit disbursement on, in accordance with the specific requirements of each type of entity.

5. Within the approved total national investment development credit limit, the Development Support Fund proactively arranges and adjusts plans for individual projects in sectors, fields, and regions to ensure the investment needs of supported entities are met.

6. In cases where the demand for national investment development credit in a year exceeds the announced plan or the announced interest rate subsidy plan, the Development Support Fund reports to the Ministry of Planning and Investment and the Ministry of Finance to request

III. INVESTMENT LOANS

1. Borrowers for investment loans

1.1. Borrowers for investment loans are projects capable of directly recovering capital included in the list of projects and programs decided by the Government for each period.

1.2. Detailed lists of projects and programs for investment loans; preferential periods are implemented according to the Decision of the Minister of Finance regarding specific borrowers for state investment development credit.

2. Conditions for investment loans The conditions for investment loans are implemented according to Article 9 of Decree No. 106/2004/NĐ-CP dated April 1, 2004 of the Government on state investment development credit.

3. Amount of investment loan capital

3.1. The amount of investment loan capital for each project is determined by the Development Support Fund, up to a maximum of 70% of the approved fixed asset investment capital of the project.

3.2. The remaining investment capital of the project must be sourced from other legitimate sources such as equity capital, loans from organizations and individuals in accordance with the law, and must be clearly defined and ensure the feasibility of each source.

3.3. The Development Support Fund disburses funds according to the agreed structure of the credit contract; project sponsors must use their own capital and self-raised capital to participate in the project in accordance with their commitments.

4. Loan term

4.1. The loan term for projects borrowing state investment development credit is based on the ability to recover capital, taking into account the production and business characteristics of each project and the sponsor's repayment capacity, but not exceeding 12 years.

4.2. Certain special projects with long-term capital recovery and large investment amounts may be considered for a maximum loan term of 15 years, including:

a) Concentrated forest planting projects for paper, pulp, and artificial board raw materials linked to processing enterprises.

b) Investment projects for producing machine tools and high-quality steel belonging to Group A as prescribed.

c) Investment projects for producing nitrogen fertilizers and DAP belonging to Group A as prescribed.

5. Interest rate on loans

5. 1. The interest rate on investment loans shall be implemented in accordance with the Decision of the Minister of Finance regarding the interest rate on state credit development loans.

5. 2. The interest rate on a loan for a project shall be determined at the time of signing the first credit agreement and shall remain unchanged throughout the loan period of the project.

5. 3. The overdue interest rate shall be 150% of the interest rate stipulated in the credit agreement for loans within the term, calculated on the amount of debt (principal and interest) due but not paid according to the credit agreement.

6. Loan guarantee

6. 1. When borrowing investment capital, investors may use assets formed from borrowed funds to secure the loan.

6. 2. During the period when the debt has not been fully repaid, the investor may not transfer, sell, or mortgage or pledge such assets to borrow elsewhere. If the investor or borrowing entity cannot repay the debt, or if they are dissolved or declared bankrupt, the Development Support Fund shall handle the assets formed by borrowed funds as collateral in accordance with the law applicable to financial institutions to recover the debt.

6. 3. The procedures and formalities for securing loans, handling collateral assets in cases where the investor cannot repay the principal and interest shall be carried out in accordance with the law on loan guarantees, secured transactions, registration of secured transactions, and the guidelines of the Ministry of Finance on handling state development credit debts.

7. Repayment of loans

7. 1. Investors are responsible for repaying the loan principal and interest to the Development Support Fund in accordance with the signed credit agreement using revenues from the project and their own legitimate sources of funding.

7. 2. During the grace period, the investor does not need to repay the principal but must pay the interest.

7. 3. After ten working days from the due date for repayment, if the investor fails to repay the loan for that period and no extension is granted, the unpaid principal and interest for that period will be transferred to overdue status, and the investor must bear the overdue interest rate as stipulated in Point 5.3, Section II of this Circular. The overdue date is counted from the eleventh working day after the due date specified in the credit agreement or promissory note.

7. 4. After six months from the date of transferring the debt to overdue status, after applying collection measures and the investor still cannot repay the debt, the Development Support Fund has the right to auction the collateral assets in accordance with the law to recover the debt. In cases where the investor is declared bankrupt or dissolved, or a state-owned enterprise undergoing ownership conversion or financial difficulties while still owing the Development Support Fund, it shall be handled in accordance with the Government's regulations for commercial banks and the guidelines of the Ministry of Finance on handling state development credit debts.

8. Adjustment of grace periods, repayment terms, and installment amounts (hereinafter referred to as loan extension)

8. 1. In cases where, due to unforeseen reasons, the investor cannot repay the debt as agreed in the credit agreement, they must submit a written request to the Development Support Fund along with the investment decision authority explaining the reasons for non-payment and proposing specific measures to overcome difficulties to ensure repayment.

8. 2. The investment decision authority is responsible for reviewing the investor's request and providing a written opinion to the Development Support Fund regarding the investor's loan extension request.

8. 3. The Development Support Fund is responsible for reviewing and deciding on loan extensions within its authority. The total extension period for a project shall not exceed one-third of the repayment period recorded in the initial credit agreement, including any previously extended periods (if any). The total loan period and extension period shall not exceed twelve years for each project and fifteen years for special projects. If the loan period has already reached the maximum of twelve years (fifteen years) as prescribed, the Development Support Fund must report to the Ministry of Finance.

9. Risk and risk management

9. 1. State development credit investment projects facing risks due to force majeure events such as natural disasters, unexpected fires or accidents causing asset damage, or changes in government policies shall be considered for loan extensions, write-offs, or interest reductions or exemptions.

9. 2. Cases involving ownership transfers or financial difficulties for state-owned enterprises using state development credit investments shall be handled in accordance with the Government's regulations for commercial bank debts.

9. 3. Authority to manage risks shall be carried out in accordance with Article 21 of Decree No. 106/2004/NĐ-CP dated April 1, 2004, and the guidelines of the Ministry of Finance on managing state development credit debts.

IV. INTEREST RATE SUPPORT AFTER INVESTMENT

1. Eligibility and scope of interest rate support after investment

1. 1. Entities eligible for interest rate support after investment include:

a) Projects that fall under the category of borrowing investment capital as prescribed but have only partially borrowed or have not yet borrowed state development credit funds, with the remaining portion or the entire project having borrowed commercial credit funds, may be considered for post-investment interest rate support.

b) Projects in industries and regions eligible for investment incentives under current Government guidelines implementing the Law on Encouraging Domestic Investment (amended), which do not fall under the borrowing investment category and are not guaranteed by the Development Support Fund.

1. 2. Conditions for eligibility for interest rate support after investment

a) The project (or independent component) has been completed and put into operation and has repaid part of the loan.

b) The investor can only receive interest rate support for the portion of the loan from legally operating financial institutions in Vietnam used to invest in fixed assets within the approved total investment amount for fixed assets of the project.

c) A project may simultaneously receive partial investment loans and post-investment interest rate support, with the total support not exceeding 85% of the approved fixed asset investment amount of the project.

d) Projects that have received interest rate support from investment funds or state budgets at various levels shall not be eligible for post-investment interest rate support from the Development Support Fund.

2. Principles for determining and granting post-investment interest rate support

2.1. Post-investment interest rate support is calculated for each project and granted to the project owner after they have repaid the loan principal to a legally operating credit institution in Vietnam. Depending on the scale of the project, the Development Support Fund will grant post-investment interest rate support to the project owner once or twice a year.

2.2. For loans that are prepaid, the amount of post-investment interest rate support is calculated based on the actual borrowing period of that capital.

2.3. For projects with debt moratoriums, the moratorium period shall not be included in the actual borrowing period for calculating post-investment interest rate support, and the maximum support period equals the loan term specified in the credit agreement.

2.4. For overdue debts, the period for calculating post-investment interest rate support is equal to the loan term of that overdue debt as stated in the credit agreement. The consideration of post-investment interest rate support for overdue debts ceases when the post-investment interest rate support agreement between the project owner and the Development Support Fund expires.

3. Method for determining the level of post-investment interest rate support

3.1. For projects borrowing in Vietnamese dong:

3.2. For projects borrowing in foreign currency:

3.3. Method for determining factors for calculating post-investment interest rate support

a) The State's development credit interest rate used to calculate the level of post-investment interest rate support is the interest rate at the time of withdrawing the principal amount supported by post-investment interest rate support.

b) For foreign currency loans: the interest rate for considering post-investment interest rate support is the actual interest rate of credit institutions according to the credit agreement. In cases where floating interest rates are applied, the interest rate for considering post-investment interest rate support throughout the support period is the actual interest rate of the first loan of credit institutions according to the credit agreement.

c) Determining the level of post-investment interest rate support for projects borrowing in foreign currency is carried out in the original currency. Based on this, reference is made to the average exchange rate USD/VND on the inter-bank foreign exchange market or the cross-exchange rate for other foreign currencies/VND published by the State Bank of Vietnam at the time of providing the support fund to determine the level of post-investment interest rate support in Vietnamese dong for the project.

d) The actual borrowing period for calculating post-investment interest rate support is the duration (converted to years) from the date of receiving the loan to the date when the principal is paid within the due period to the credit institution.

- Principle for determination: Based on the date of receiving the debt recorded on the promissory note and the date of paying off the principal recorded on the payment voucher (converted to years) of the project owner to the credit institution, starting from the disbursement date of the first loan amount, the actual borrowing period of the first principal repayment amount is calculated, and based on this, it is retroactively determined to calculate the actual borrowing period of subsequent principal repayments.

- Method for determination: Calculating the post-investment interest rate support period for cases where the disbursed capital is repaid once; the disbursed capital is repaid in multiple installments; multiple disbursed capitals are repaid once; multiple disbursed capitals are repaid in multiple installments.

Specific calculation method is detailed in the attached annex.

4. Accounting treatment

4.1. For the Development Support Fund:

The accounting and tracking of post-investment interest rate support grants for projects by the Development Support Fund shall be conducted in accordance with the regulations on the Accounting System for the Development Support Fund.

4.2. For the project owner:

Upon receipt of the post-investment interest rate support grant, the project owner shall account for reducing production and business costs for the period.

V. GUARANTEE OF INVESTMENT CREDIT

1. Eligible recipients for guarantee

1.1. Projects that fall under the category of investment loans as prescribed but have only partially borrowed or have not borrowed State development credit.

1.2. Projects listed in the industry categories eligible for investment incentives according to current Government guidelines on implementing the Law on Encouraging Domestic Investment (amended), but which do not qualify for investment loans or post-investment interest rate support from the Development Support Fund.

2. Scope of Guarantee

2.1. The Development Support Fund only guarantees investment credit for the above-mentioned projects to borrow from credit institutions to invest in fixed assets approved by competent authorities.

2.2. A project may simultaneously receive partial investment loans and investment credit guarantees, with the total support not exceeding 85% of the approved fixed asset investment capital of the project.

3. Conditions and Guarantee Fee

Conditions and guarantee fee are implemented in accordance with Article 27 and Article 30 of Decree No. 106/2004/NĐ-CP dated April 1, 2004 of the Government on State Development Credit.

4. Guarantee Amount

4.1. The guarantee amount for a project by the Development Support Fund shall be decided, with a maximum of 70% of the approved fixed asset investment capital of the project.

4.2. The total guarantee amount for projects under guarantee contracts signed between the Development Support Fund and project owners in a year shall not exceed the total amount of investment loans disbursed by the Fund in that year.

5. Guarantee Period

The guarantee period is determined to be consistent with the loan term agreed upon in the credit agreement signed between the project owner and the lending credit institution for the implementation of the project.

6. Review and Signing of Guarantee Contracts

6.2. The guarantee contract shall clearly specify the amount guaranteed, the term of guarantee, the forms of security for the guarantee; the rights, obligations of the parties, and other commitments agreed upon by the parties in accordance with the provisions of the law.

6.3. The guarantee contract terminates when:

a) The guaranteed project sponsor has fully repaid the debt to the credit institution or to the Development Support Fund (in case the Development Support Fund must repay the debt on behalf of the sponsor);

b) Pursuant to the decision of the competent state agency.

7. Financial liability when the project sponsor cannot repay the debt

7.1. Upon the due date for repayment, if the project sponsor cannot repay part or all of the loan amount (principal, interest) without being granted a deferment or extension by the credit institution, then the Development Support Fund will repay the debt on behalf of the sponsor; simultaneously, the project sponsor must sign a compulsory loan acknowledgment agreement with the Development Support Fund for the amount repaid at an interest rate penalty equal to 150% of the current loan interest rate of the credit institution.

7.2. When there is a source to repay the debt, the project sponsor must repay the compulsory loan amount (including interest) to the Development Support Fund.

8. Risk management and authority to manage risks in guarantees

8.1. In cases where the guaranteed project sponsors cannot repay the compulsory debt of the Development Support Fund, they will be handled according to the provisions of Article 19 and Article 22 of Decree No. 106/2004/NĐ-CP dated April 1, 2004 of the Government on state investment credit development and the guidance of the Ministry of Finance on handling state investment credit debts.

8.2. After six months from the date of receiving the compulsory debt, after applying collection measures but the project sponsor still fails to repay the debt, the Development Support Fund has the right to auction the collateral assets for the loan as with credit institutions to recover the debt or initiate legal proceedings in accordance with the law.

VI. IMPLEMENTATION

1. This Circular takes effect fifteen days after its publication in the Official Gazette and applies to projects signing their first credit contracts (including projects borrowing investment capital, post-investment interest support, and investment credit guarantee) from the date of the effectiveness of Decree No. 106/2004/NĐ-CP dated April 1, 2004 of the Government on state investment credit development.

2. For projects (including projects borrowing investment capital, post-investment interest support, and investment credit guarantee) that have signed credit contracts (including project credit contracts and annual credit plan loan contracts) with the Development Support Fund before the effectiveness of Decree No. 106/2004/NĐ-CP (April 27, 2004), they continue to be implemented according to the signed credit contracts and relevant state regulations on state investment credit development.

Specifically, the following contents are applied according to this Circular:

2.1. Regarding loan repayment: Loan repayment amounts from April 27, 2004 onwards shall be carried out in accordance with the provisions of Point 7, Section III of this Circular.

2.2. Regarding asset management: Implemented in accordance with the provisions of Point 6, Section III of this Circular.

2.3. Regarding the timing of transferring overdue loans when repaying loans to credit institutions to calculate the level of post-investment interest support shall be carried out in accordance with the provisions of Point 7, Section III of this Circular.

3. The Chairman of the Management Board, General Director of the Development Support Fund, and sponsors of projects using state investment credit development funds are responsible for implementing this Circular./.