Circular No. 69/2012/TT-BTC guiding the management and use of funds from non-repayable aid from the Government of Japan for the project ensuring food security for disadvantaged farmers (Project 2KR).

CIRCULAR

Guidelines for managing and using funds from non-repayable aid grants from

the Government of Japan for the Food Security Project for disadvantaged farmers (Project 2KR)

Based on the Exchanged Note signed on October 29, 2009 between the Government of Vietnam and the Government of Japan, and the Aid Agreement signed on October 29, 2009 between the Government of Vietnam and the Japan International Cooperation Agency (JICA) regarding the non-repayable aid grant from the Government of Japan for the Food Security Project for disadvantaged farmers (Project 2KR);

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Implementing Circular No. 7844/VPCP-QHQT dated November 14, 2008 of the Government Office on the mechanism for receiving the Japanese Government's aid grant under the 2KR Program and Decision No. 1642/TTg-QHQT dated September 15, 2009 of the Prime Minister on the Exchanged Note and Aid Agreement of the Japanese Government for disadvantaged farmers;

The Ministry of Finance guides the management and use of funds from the non-repayable aid grant from the Government of Japan for the Food Security Project for disadvantaged farmers (Project 2KR) as follows

This Circular stipulates the management and use of funds from the sale of aid goods under the non-repayable aid grant from the Government of Japan for the 2KR Project.

Part I

GENERAL PROVISIONS

Article 1. Scope of Regulation

Article 2. Aid Fund Account and Serving Bank

Proceeds from the sale of aid goods from the aid grant shall be transferred into a separate account (Aid Fund Account) at a bank (Serving Bank) and shall be used according to the Agreement between the Government of Vietnam and the Government of Japan for investment development projects.

Article 3. Selection of Projects and Works

Based on project registration by localities (Project Proponents) and the agreed purpose of the aid grant between the two Governments, the Ministry of Planning and Investment shall coordinate with the Ministry of Finance, the Ministry of Agriculture and Rural Development, and relevant agencies to select specific works and projects to use the proceeds from these aid grants, officially notify Japan to cooperate in implementation.

The Ministry of Finance shall implement the transfer of funds for projects using aid funds through the State Treasury system. Local State Treasuries with projects using aid funds under the 2KR Project shall make payments for basic construction investment capital for projects using aid funds according to current regulations on payment of basic construction investment capital from state budget funds.

Article 4. Payment

Article 5. Responsibilities of the Project Proponent

Project proponents are responsible for preparing, submitting for approval, managing, using, reporting, and finalizing the investment capital of the project in accordance with current regulations on basic construction investment; using the capital for its intended purpose as specified in the approved project.

Article 6. Preparation of the Project List

Part II

SPECIFIC PROVISIONS

Based on the agreements recorded in the Exchanged Note between the two Governments and related Agreements, the Ministry of Planning and Investment shall coordinate with the Ministry of Agriculture and Rural Development, the Ministry of Finance, and representatives of the Japanese Government to select projects to use proceeds from the sale of aid goods (hereinafter referred to as the List of Projects Using Aid Funds). The total amount allocated to the projects must not exceed the total amount of the aid grant.

Pursuant to the agreements recorded in the diplomatic notes exchanged between the two Governments and related agreements, the Ministry of Planning and Investment shall coordinate with the Ministry of Agriculture and Rural Development, the Ministry of Finance, and representatives of the Government of Japan to select projects to be funded from proceeds of sale of aid (hereinafter referred to as the List of Projects using Aid Funds). The total amount allocated for the projects shall not exceed the total amount of the aid grant.

Article 7. Approval of Projects

1. Projects listed in the Project Catalogue using aid funds shall be approved in accordance with current regulations on investment management for basic construction projects issued by the Government. In cases where the total investment cost of a project exceeds the allocated aid funds, the shortfall shall be covered from the local budget or other sources raised by the locality, and this information shall be reported to the State Treasury by the People's Committee of the province for payment of the project costs.

2. After the project is approved, the Project Owner shall submit the following documents to the Ministry of Finance (Debt Management and External Financial Department):

 - A notification letter detailing the approved project content, including the total investment cost of the project, specifying the value of aid funds used for the project, domestic counterpart funds, implementation schedule, and completion time.

 - An original copy of the Decision of the competent authority approving the project.

Article 8. Selection of Contractors and Suppliers and Contract Signing

The selection of contractors and suppliers and the signing of contracts for implementing projects shall be carried out in accordance with current regulations of the Government of Vietnam on basic construction investment and bidding.

Article 9. Control of Fund Disbursement

1. Opening an account to receive aid funds and transferring proceeds from aid sales into the Aid Fund Receiving Account.

a. Based on the Project Catalogue using aid funds announced by the Ministry of Planning and Investment, the Ministry of Finance (Debt Management and External Financial Department) shall notify this catalogue to the State Treasury and relevant provincial finance departments. The Project Owner shall open an Aid Fund Receiving Account at the local State Treasury where the project is located.

b. After the Aid Fund Receiving Account has been opened, the Project Owner shall issue a document requesting the initial fund transfer to the Ministry of Finance (Debt Management and External Financial Department). On the basis of the Project Owner's request, the Ministry of Finance shall issue a document requesting the Bank to transfer funds from the Aid Fund Account to the newly opened Aid Fund Receiving Account at the local State Treasury, with the initial transfer amount being 50% of the allocated aid funds for the project.

c. When utilizing between 80% and 90% of the initial transferred funds in accordance with regulations on disbursement of construction investment funds, the Project Owner shall submit another request to the Ministry of Finance (Debt Management and External Financial Department) for the second fund transfer equal to 50% of the allocated aid funds for the project, along with an original copy of the local State Treasury's expenditure control confirmation for the initial transferred funds. Based on the Project Owner's request for fund transfer, the Ministry of Finance shall issue a document requesting the Bank to transfer funds from the Aid Fund Account to the Aid Fund Receiving Account opened at the local State Treasury where the project is located.

d. Requests for fund transfers shall be prepared according to the Model attached as an Appendix.

2. Control of Fund Disbursement from the Aid Fund Receiving Account

Advance payments, recovery of advance payments, and settlement of completed work volumes for projects using aid funds shall be carried out in accordance with the provisions related to the Circular No. 86/2011/TT-BTC dated June 17, 2011 of the Ministry of Finance on the management and settlement of investment funds and public service funds with investment characteristics from the state budget.

Article 10. Recording of Disbursements and Receipts of Aid Funds

When the second transferred capital has been fully utilized, the State Treasury of the provinces with projects shall close the account for receiving aid funds and submit a written report to the Ministry of Finance (Department of Debt Management and External Financial Affairs).

Based on the notification from the State Treasury of the provinces regarding the full disbursement of the account for receiving aid funds, and based on the bank's transfer order from the Aid Fund Account to the Account for Receiving Aid Funds opened at the State Treasury of the provinces where the projects are located, the Ministry of Finance (Department of Debt Management and External Financial Affairs) shall issue a Revenue Recording Order (accompanied by a Payment Order) to be sent to the State Treasury for supplementary expenditure accounting for the locality.

Article 11. Settlement

Annually, the Project Owner and the superior agency of the Project Owner shall prepare settlement reports according to the fiscal year as stipulated in Circular No. 210/2010/TT-BTC dated October 20, 2010 of the Ministry of Finance on the settlement of construction investment capital under state budget sources according to the annual fiscal year. Upon completion of the project, the final settlement of investment capital shall be carried out in accordance with Circular No. 19/2011/TT-BTC dated February 14, 2011 of the Ministry of Finance on the settlement of completed projects under state sources.

Article 12. Reporting and Inspection System

After the completion of the project, the Investor shall be responsible for submitting a project completion report to the Ministry of Planning and Investment and the Ministry of Finance for consolidation and reporting to the Government of Vietnam and the Government of Japan.

In cases deemed necessary, the Ministry of Planning and Investment may coordinate with the Ministry of Finance to inspect the implementation and effectiveness of projects utilizing aid funds from the Japanese Government.

Part III

ORGANIZATION AND IMPLEMENTATION

This Circular takes effect from June 15, 2012.

During the implementation process, in case of any difficulties, agencies and units are requested to promptly reflect them to the Ministry of Finance for research and amendment./.