Circular No. 69/2007/TT-BTC guiding certain provisions of the Government Decree No. 151/2006/NĐ-CP dated December 20, 2006 on state investment credit and export credit

CIRCULAR

Guidelines for certain Articles of Decree No. 151/2006/NĐ-CP dated December 20, 2006 of the Government

concerning state investment credit and export credit

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Implementing Decree No. 151/2006/NĐ-CP dated December 20, 2006 of the Government on state investment credit and export credit, the Ministry of Finance issues the following guidelines:

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 enterprises, economic organizations, public service units with income that have projects eligible for loan investment, investment credit guarantee, post-investment support (hereinafter referred to as the project investor); domestic enterprises with export contracts or foreign organizations importing goods eligible for loans, export credit guarantees; Vietnam Development Bank (hereinafter referred to as the Development Bank) and other related organizations and individuals during the implementation of state investment credit and export credit.

2. State investment credit is implemented by the Development Bank through the forms of: investment loans, investment credit guarantees, post-investment support. State export credit is implemented by the Development Bank through the forms of: export loans, export credit guarantees, bid guarantees, and performance bond guarantees.

3. An investment project, export contract, import contract can only enjoy one form of support if it meets the conditions stipulated.

4. When borrowing funds or obtaining guarantees, investment projects, export contracts, import contracts must be appraised by the Development Bank regarding financial plans and debt repayment plans for borrowed capital.

5. The project investor, exporter, importer who borrow funds must use the borrowed funds for their intended purpose, repay the principal and interest to the Development Bank according to the signed credit agreement; strictly comply with the provisions in the investment credit guarantee contract.

II. PLAN FOR STATE INVESTMENT CREDIT AND EXPORT CREDIT

1. The Vietnam Development Bank shall prepare and report to the Ministry of Planning and Investment, the Ministry of Finance, and the State Bank of Vietnam annually on the plan for state investment credit and export credit according to point 1, Section VI of this Circular and long-term plans to be included in the overall socio-economic development plan.

2. Based on the demand for state investment credit and export credit and the budget balance capacity, the Ministry of Planning and Investment shall take the lead in compiling the annual plan for state investment credit and export credit within the total investment capital development plan of the economy to submit to the Prime Minister for decision. The annual plan for state investment credit and export credit of the Development Bank includes:

2.1. Total amount of state investment credit and export credit.

2.2. Sources of capital to implement state investment credit and export credit.

2.3. State budget subsidies for interest rate differences and post-investment support.

3. Within the scope of the announced plan for state investment credit and export credit, the Development Bank shall proactively allocate and adjust the plan for state investment credit and export credit for each project in various industries, fields, and regions based on the principle:

3.1. Prioritizing projects, export contracts, import contracts that have signed credit agreements with the Development Bank.

3.2. Projects, export contracts, import contracts under the urgent investment program of the Government.

4. In case there is a change in the demand for state investment credit and export credit in a year, the Development Bank shall report to the Ministry of Planning and Investment, the Ministry of Finance, and the State Bank of Vietnam to submit to the Prime Minister for consideration and adjustment of the plan accordingly.

III. STATE INVESTMENT CREDIT

A. INVESTMENT LOANS

1. Forms of investment loans, loan recipients, loan conditions, loan terms for projects under government agreements and overseas investment projects approved by the Prime Minister shall be implemented in accordance with Articles 5, 6, 7, 9, and 11 of Decree No. 151/2006/NĐ-CP dated December 20, 2006 of the Government on state investment credit and export credit.

2. Loan amount

2.1. The loan amount for each project shall be decided by the Development Bank, not exceeding 70% of the approved total investment capital (excluding working capital of the project).

2.2. The remaining investment capital of the project, the project investor must use other legitimate sources such as own capital, loans from organizations and individuals in accordance with the law to invest. Among them, the own capital must be at least 15% of the total fixed asset investment capital of the project. These sources of capital must be clearly defined and ensure the feasibility of each source of capital.

2.3. The Development Bank shall disburse funds according to the agreed capital structure in the credit agreement; the project investor must use own capital and self-raised capital to participate in the project investment in accordance with the commitment.

2.4. In special cases where a project must borrow more than 70% of the total investment capital of the project (excluding working capital) to meet the conditions for implementation, the Development Bank shall propose to the Ministry of Finance to report to the Prime Minister for consideration and decision.

3. Currency and interest rates for loans

3.1. Currency and interest rates for loans shall be implemented in accordance with Article 10 of Decree No. 151/2006/NĐ-CP dated December 20, 2006 of the Government on state investment credit and export credit.

3.2. In case a project borrows both Vietnamese dong and convertible foreign currency, the interest rate for loans in Vietnamese dong and the corresponding interest rate for loans in foreign currency shall apply to the respective portions of the borrowed capital.

3.3. In case a project borrows under an Agreement and a decision of the Prime Minister but in non-convertible foreign currency without specific provisions on interest rates, the Development Bank shall report to the Ministry of Finance to decide the interest rate for each specific case.

B. POST-INVESTMENT SUPPORT

1. Recipients of post-investment support

1.1. Recipients of post-investment support shall be implemented in accordance with Article 12 of Decree No. 151/2006/NĐ-CP dated December 20, 2006 of the Government on state investment credit and export credit.

1.2. Projects that have been supported by investment funds or state budgets at various levels shall not be eligible for post-investment support.

2. Conditions for receiving post-investment support

2.1. The project falls under the post-investment support objects specified in Point 1, Section B, Part III of this Circular but does not borrow from the Development Bank but instead borrows commercial credit from financial institutions legally operating in Vietnam.

2.2. Has been appraised by the Development Bank and signed a post-investment support contract.

2.3. The project has been completed and put into use, with a completion certificate, a final settlement approval document for the project investment capital, and has repaid the loan debt.

3. Principles for determining and granting post-investment support

3.1. The level of post-investment support is calculated for each project and granted to the investor after repaying the investment loan principal (principal debt) to the lending financial institution. Depending on the scale of the project, the Development Bank grants post-investment support to the investor at most once per quarter during the year.

3.2. The level of post-investment support is calculated based on the total actual principal repaid according to the signed credit contract with the financial institution but shall not exceed 70% of the approved fixed asset investment capital of the project.

3.3. For loans prepaid, the level of post-investment support is calculated based on the actual borrowing period of that loan according to the signed credit contract.

3.4. For projects with suspended debts, the suspension period shall not be counted towards the actual borrowing period for calculating post-investment support, and the maximum support period equals the loan term recorded in the initial signed credit contract.

3.5. Investors shall not be granted post-investment support for overdue debts or debts paid during extended repayment periods.

4. Level of post-investment support

4.1. Formula for determining the level of post-investment support

.2. Method for determining factors in calculating the level of post-investment support

a) The actual principal repaid for calculating post-investment support is determined based on the actual principal repaid to the financial institution for each repayment but must ensure that the total actual principal repaid for calculating post-investment support for all repayments does not exceed 70% of the approved fixed asset investment capital of the project according to the final settlement.

b) The interest rate differential for calculating post-investment support (HTSĐT) published annually by the Ministry of Finance is calculated based on: the average lending interest rate for investment of several large commercial banks minus (-) 90% of the state's investment credit interest rate.

During implementation, if the lending interest rate of financial institutions increases or decreases by more than 10%, the Ministry of Finance will recalculate the interest rate differential for calculating post-investment support and notify the Vietnam Development Bank to implement accordingly.

c) The actual borrowing period for calculating post-investment support is the time period (converted into years) from the date of receiving the loan to the date when the principal within the limit is repaid to the financial institution according to the initial signed credit contract.

Principle of determination: the determination of the actual borrowing period for post-investment support is based on the date of receiving the loan recorded on the promissory note and the date of repaying the principal recorded on the repayment document (months converted into years) between the investor and the financial institution. Compare the first repayment date of the principal within the limit with the disbursement date of the initial loan amount to determine the actual borrowing months of the first principal repayment and base on that to calculate backward to determine the actual borrowing months of subsequent principal repayments.

The post-investment support period is determined for cases where the disbursed capital is repaid once; the disbursed capital is repaid in multiple installments; the disbursed capital in multiple installments is repaid once; the disbursed capital in multiple installments is repaid in multiple installments. (Specific calculation method attached as an appendix).

e) Determining the level of post-investment support for projects borrowing foreign currency is carried out in the original currency. Based on that, refer to the average USD/VND exchange rate on the inter-bank foreign exchange market or the cross-exchange rate for other foreign currencies/VND announced by the State Bank of Vietnam at the time of providing the support money to determine the level of post-investment support in Vietnamese Dong for the project.

5. Accounting entries

5.1. For the Development Bank, accounting and tracking post-investment support for projects of the Development Bank is carried out in accordance with the Accounting Regulations of the Development Bank approved by the Ministry of Finance.

5.2. For investors, upon receipt of post-investment support funds, investors account for reducing production and business costs for the period.

C. GUARANTEE OF INVESTMENT CREDIT

1. Objectives eligible for guarantee; conditions for guarantee; guarantee period; guarantee fees are implemented according to the provisions of Articles 15, 16, 17, and 18 of Decree No. 151/2006/NĐ-CP dated December 20, 2006 of the Government on state investment credit and export credit.

2. Guarantee Currency: The guarantee currency is the Vietnamese Dong.

3. Appraisal and signing of guarantee contracts.

3.1. Based on the written request of the lending financial institution and the guarantee application of the investor along with relevant documents related to the project, the Development Bank appraises the guarantee conditions to decide on signing the guarantee contract and processing the issuance of the guarantee letter. If refusing to provide the guarantee, the Development Bank sends a written notice to the lending financial institution and the investor, both to be sent to the competent authority deciding on investment.

3.2. The guarantee contract clearly stipulates the guaranteed amount, guarantee period, forms of security for the guarantee; rights, obligations of the parties, and other commitments agreed upon in compliance with the law.

3.3. The guarantee contract terminates when:

a) The guaranteed investor has fully repaid the debt to the financial institution or to the Development Bank (in case the Development Bank has to repay on behalf);

b) According to the decision of the competent state authority.

4. Financial responsibility when the investor cannot repay the debt is implemented according to Article 19 of Decree No. 151/2006/NĐ-CP dated December 20, 2006 of the Government on state investment credit and export credit.

IV. STATE EXPORT CREDIT

A. EXPORT LOANS

1. The borrowing subjects are export enterprises with export contracts and import enterprises with import contracts for goods produced in Vietnam listed in the Export Credit Loanable Goods Catalogue prescribed by the Prime Minister at each period.

2. Forms of export credit loans

2.1. Export credit loans include: lending to export enterprises before or after delivery, or lending to import enterprises before or after delivery.

2.2. Each export or import contract can only be lent under one of the above forms.

3. Borrowing conditions and loan terms shall be implemented in accordance with Articles 22 and 24 of Decree No. 151/2006/NĐ-CP dated December 20, 2006 of the Government on State Investment Credit and Export Credit.

4. Currency and interest rate for loans

4.1. Currency and interest rate for loans shall be implemented in accordance with Article 25 of Decree No. 151/2006/NĐ-CP dated December 20, 2006 of the Government on State Investment Credit and Export Credit.

4.2. In cases where an export contract or import contract borrows both Vietnamese dong and freely convertible foreign currency, the interest rate applicable to the portion borrowed in Vietnamese dong shall be the interest rate for loans in Vietnamese dong, and the interest rate applicable to the portion borrowed in freely convertible foreign currency shall be the interest rate for loans in freely convertible foreign currency.

5. Loan amount

5.1. The loan amount for each contract shall be determined by the Development Bank, not exceeding 85% of the value of the signed export or import contract or the effective Letter of Credit value for pre-delivery loans, or the value of valid drafts for post-delivery loans.

5.2. The remaining portion of the contract must be funded by other legitimate sources such as equity capital, loans from organizations and individuals in accordance with the law. These sources must be clearly defined and ensure the feasibility of each source.

6. Disbursement and debt collection in cases of lending to import enterprises:

6.1. Disbursement methods

a) The Development Bank directly pays the supplier based on the export credit loan agreement between the Development Bank and the import enterprise.

b) The Development Bank entrusts financial and credit institutions operating legally both domestically and internationally to disburse the export credit loan to the import enterprise.

6.2. Debt collection methods

a) The Development Bank directly collects debts (principal and interest) from the import enterprise.

b) The Development Bank entrusts financial and credit institutions operating legally both domestically and internationally to collect debts (principal and interest) from the import enterprise.

6.3. Entrusted disbursement and debt collection shall be carried out based on the agency agreement between the Development Bank and the entrusted financial and credit institutions, specifying the obligations and rights of the parties regarding disbursement and debt collection.

B. GUARANTEES FOR EXPORT CREDIT

1. The guarantee subjects are export enterprises with export contracts for goods produced in Vietnam listed in the Export Credit Loanable Goods Catalogue but do not borrow state export credit.

2. Guarantee conditions, guarantee period, guarantee amount, guarantee fee, and financial responsibility when the export enterprise fails to repay the debt shall be implemented in accordance with Articles 28, 29, 30, and 31 of Decree No. 151/2006/NĐ-CP dated December 20, 2006 of the Government on State Investment Credit and Export Credit.

3. Guarantee currency: The guarantee currency is Vietnamese dong.

4. Evaluation and signing of guarantee contracts

Evaluation and signing of guarantee contracts shall be carried out as stipulated in Point 3, Section C, Part III of this Circular.

C. BID GUARANTEE AND CONTRACT PERFORMANCE GUARANTEE

1. The guarantee subjects are export enterprises participating in bidding or performing export contracts for goods produced in Vietnam listed in the Export Credit Loanable Goods Catalogue.

2. Guarantee conditions shall be implemented in accordance with Article 33 of Decree No. 151/2006/NĐ-CP dated December 20, 2006 of the Government on State Investment Credit and Export Credit.

3. The guarantee period for bid guarantee and contract performance guarantee shall be based on the performance period of the export enterprise's obligations recorded in the tender invitation or export contract.

4. Guarantee currency: The guarantee currency is Vietnamese dong or freely convertible foreign currency.

5. Guarantee amount and guarantee fee

5.1. For bid guarantee, the maximum guarantee amount is 3% of the bid price. If the bid price cannot be determined at the time of signing the guarantee contract, the guarantee amount shall be based on the bidder's obligations specified in the tender invitation.

5.2. For contract performance guarantee, the maximum guarantee amount is 15% of the contract value.

5.3. The export enterprise receiving the guarantee must pay a guarantee fee of 0.5% per year on the guarantee amount, but not exceeding 100 million Vietnamese dong per guarantee contract.

6. Fulfillment of guarantee obligations: If the guaranteed subject fails to comply with bidding regulations or contractual obligations, the Development Bank shall fulfill its guarantee obligations according to the commitments in the guarantee letter.

7. Mandatory debt collection:

7.1. When the Development Bank fulfills its guarantee obligations, the export enterprise must accept mandatory debt collection from the Development Bank.

7.2. The interest rate for mandatory debt collection is 150% of the export credit loan interest rate applied to the amount collected.

V. SECURING LOANS, REPAYING LOANS, AND MANAGING RISKS

A. SECURING LOANS

1. The project owner, when borrowing investment funds or receiving investment credit guarantees, may use assets formed from the borrowed funds to secure the loan.

If the assets formed from the borrowed funds do not meet the conditions for securing the loan or guarantee, the project owner must use their own other legal assets or third-party assets to secure the loan with a minimum value equal to 15% of the total loan amount and guarantee. Securing the loan with assets must be carried out in accordance with the provisions of the law on secured transactions.

2. Exporters when borrowing funds or obtaining export credit guarantees may use their own lawful assets or third-party assets to secure the loan; they are exempt from collateral when providing bid guarantees or performance bond guarantees. The securing of loans with assets must be carried out in accordance with the provisions of the law on secured transactions.

3. Foreign importers when borrowing export credit funds must be guaranteed by the Government or the Central Bank of the importing country in accordance with the provisions of Clause 5, Article 22 of Decree No. 151/2006/NĐ-CP dated December 20, 2006 of the Government on state investment credit and export credit.

4. During the period before all debts are repaid, the project sponsor and exporter may not transfer, sell, lease, lend, or pledge or mortgage the secured assets. When the project sponsor or exporter cannot repay the debt, or dissolve or go bankrupt, the Development Bank shall handle the secured assets in accordance with the laws governing financial institutions to recover the debt.

5. The procedures and formalities for securing loans, handling secured assets in cases where the project sponsor or exporter cannot repay the principal or interest, and other matters related to securing loans shall be implemented in accordance with the provisions of the law on loan security, secured transactions, and registration of secured transactions.

B. DEBT REPAYMENT

1. The currency for repaying loans shall be carried out according to the following principles:

1.1. Loans in Vietnamese dong shall be repaid in Vietnamese dong; loans in freely convertible foreign currencies shall be repaid in freely convertible foreign currencies.

1.2. In cases where the project borrows under an Agreement or a decision of the Prime Minister but the borrowed currency is not a freely convertible foreign currency and there is no specific provision regarding the repayment currency, the repayment currency may be the borrowed currency or a freely convertible foreign currency; the exchange rate for conversion shall be the cross-rate published by the State Bank of Vietnam at the time of repayment.

2. The project sponsor, exporter, and importer are responsible for repaying the loan principal and interest to the Development Bank in accordance with the signed credit agreement using revenues from the project, export contracts, and their own lawful sources of capital.

3. During the grace period, the project sponsor, exporter, and importer do not have to repay the principal but must pay interest in accordance with the signed credit agreement.

4. After ten working days from the due date for repayment, if the project sponsor, exporter, or importer cannot repay the loan for that period and the repayment term cannot be adjusted or extended, the unpaid principal and interest for that period will be transferred to overdue debt, and the project sponsor, exporter, or importer must bear the overdue interest rate as stipulated in this Circular. Overdue debt is calculated from the day after the repayment due date specified in the signed credit agreement or loan agreement.

5. After six months from the date of transferring the debt to overdue status, after applying debt collection measures and the project sponsor, exporter, or importer still cannot repay the debt, the Development Bank has the right to auction the collateral in accordance with the law to recover the debt.

C. RISK MANAGEMENT

In cases where the project sponsor, exporter, or importer encounter force majeure risks and cannot repay the debt; state enterprises face financial difficulties and must be handled when implementing ownership conversion, risk management shall be considered in accordance with the Government's regulations and the Ministry of Finance's guidelines on managing state investment credit and export credit debt.

VI. REPORTING REGIME

1. Annually, no later than July 20 of the year preceding the planning year, the Development Bank is responsible for preparing and reporting to the Ministry of Planning and Investment and the Ministry of Finance the following plans:

1.1. Investment credit plan, including:

a) Plan on the total amount of investment lending capital for the year;

b) Post-investment support capital plan;

c) Investment credit guarantee plan.

1.2. Export credit plan, including:

a) Plan on the total amount of export lending capital for the year;

b) Export credit guarantee plan;

c) Bid and contract performance guarantee plan.

1.3. Additional charter capital provided by the State Budget for the planning year;

1.4. Annual additional State Budget capital for the investment credit and export credit programs, post-investment support;

1.5. Plan for raising and repaying maturing borrowings;

1.6. Plan for subsidizing interest rate differences and post-investment support from the State Budget.

2. Periodically (monthly, quarterly, annually), the Development Bank is responsible for preparing and submitting the following financial reports to the Ministry of Finance:

2.1. Monthly, by the 25th, the Development Bank prepares and submits to the Ministry of Finance a quick report on the overall system operation situation according to Model No. 01/BC-VDB attached to this Circular.

2.2. Quarterly and annually (submitted no later than the 25th of the first month of the next quarter for quarterly reports and January 30 of the following year for annual reports), the Development Bank prepares and submits to the Ministry of Finance the following reports:

- Report on capital sources and capital usage (Model No. 02/BC-VDB);

- Report on state investment credit lending (Model No. 03/BC-VDB);

- Report on state export credit lending (Model No. 04/BC-VDB);

- Report on investment credit guarantee (Model No. 05/BC-VDB);

- Report on export credit guarantee (Model No. 06/BC-VDB);

- Report on bid and contract performance guarantee (Model No. 07/BC-VDB);

- Report on post-investment support (Model No. 08/BC-VDB);

- Report on investment lending with entrusted capital (Model No. 09/BC-VDB).

3. Special topic or program ad hoc reports.

VII. IMPLEMENTATION ORGANIZATION

1. This Circular takes effect fifteen days after its publication in the Official Gazette and applies to projects signing credit contracts for the first time (including investment financing projects, post-investment support, investment credit guarantee, export contracts, import contracts, bid guarantee, and contract performance guarantee) from the date Decree No. 151/2006/NĐ-CP dated December 20, 2006 of the Government on state investment credit and export credit takes effect.

2. For projects, credit investment loan contracts, export credit contracts, investment credit guarantees, export credit guarantees, bid guarantees, and contract performance guarantees that have signed contracts with the Development Bank before the effective date of Decree No. 151/2006/NĐ-CP and have partially or fully disbursed the loan amount before the effective date of this Circular shall be implemented according to the provisions stipulated in the signed credit contracts.

For post-investment interest rate support contracts signed with the Development Bank before the effective date of Decree No. 151/2006/NĐ-CP, they shall be implemented according to the provisions stipulated in the signed credit contracts, with the state's investment credit interest rate for calculating post-investment interest rate support being 7.8% per year as prescribed in Decision No. 41/2005/QĐ-BTC dated July 7, 2005 of the Minister of Finance.

The Chairman of the Management Board, the General Director of the Development Bank, and the project sponsors, exporters, importers who have projects or contracts using state investment credit and export credit funds shall be responsible for implementing this Circular./.