Circular No. 82/TC-TCNH guiding the financial management regulations for the National Investment Support Fund

 

CIRCULAR

Guidelines for Financial Management of the National Investment Support Fund

Pursuant to Decision No. 808/TTg dated December 9, 1995 of the Prime Minister on the establishment of the National Investment Support Fund.

Pursuant to Decision No. 462/TTg dated July 9, 1996 of the Prime Minister approving the Charter of the National Investment Support Fund.

Pursuant to Decree No. 178/CP dated October 28, 1994 of the Government stipulating the tasks, powers, and organizational structure of the Ministry of Finance.
The Ministry of Finance hereby issues guidelines for financial management of the National Investment Support Fund as follows:

I. GENERAL PROVISIONS

1. The National Investment Support Fund is a state financial organization operating throughout the country. The Fund has the function of mobilizing capital from organizations and individuals both within and outside the country; receiving state investment funds to lend to projects developing industries and sectors under preferential treatment for all economic components and difficult regions as prescribed by the Government. The Fund's activities are not profit-oriented.

2. The National Investment Support Fund has legal personality, with a charter capital of 1,100 billion VND (one thousand one hundred billion dong) at its establishment, operates independently in finance, and is responsible for its activities before the law. It is exempted from taxes and contributions for the use of state budget funds to reduce lending interest rates but must ensure repayment of principal and cover costs.

3. Implement revenue, expenditure, accounting, and settlement of revenues and expenditures according to the Accounting and Statistics Ordinance and the state financial regulations. The fiscal year of the Fund runs from January 1 to December 31 annually.

4. The National Investment Support Fund is subject to financial management by the Ministry of Finance.

II. CONTENTS OF FINANCIAL MANAGEMENT

1. Regarding sources of capital for the operation of the National Investment Support Fund

a. The charter capital at establishment and increase of the National Investment Support Fund is formed from the following sources:

- State budget capital: 50% of the total charter capital.

- Capital contribution from insurance organizations, state-owned credit institutions, and state-owned enterprises (hereinafter referred to collectively as state-owned enterprises) with a list and contribution levels determined by the Minister of Finance upon approval by the Prime Minister. The capital contribution from state-owned enterprises is derived from post-tax profits of the previous year, with a minimum level of 3%. - Voluntary capital contributions from individuals and organizations both within and outside the country.

Annually, based on actual investment needs, the capacity of the state budget and state-owned enterprises, and proposals from the Fund’s Management Board, the Minister of Finance will submit to the Prime Minister for decision on the additional contribution levels to the charter capital of the National Investment Support Fund. b. Mobilized capital: The Fund may mobilize and receive capital from the following sources:

- Medium and long-term loans from organizations and individuals both within and outside the country.

- Receiving state investment funds, including government loans and official development assistance (ODA) funds to lend to projects specified by the Government.

- Mobilizing medium and long-term capital from organizations and individuals both within and outside the country through the issuance of various types of bonds.

- Accepting entrusted investment development capital from organizations and individuals both within and outside the country.

- Receiving voluntary deposits from economic and social organizations and individuals to invest in development.

2. Use of capital and preservation of capital:

- The operational capital of the Fund is mainly used to provide loans for medium and long-term investment projects in industries and sectors under preferential treatment or in ethnic minority areas, mountainous regions, islands, and other difficult regions as prescribed by the Government. For new production and business establishments as stipulated in Articles 9 and 11 of the Law on Encouraging Domestic Investment, the Fund can provide loans at interest rates determined by the Management Board in accordance with the principle of ensuring repayment and covering management costs.

- The Fund is responsible for managing and using the capital for its intended purposes, targeting the right beneficiaries, and effectively recovering both principal and interest promptly to ensure repayment, cover management costs, and timely and fully repay to organizations and individuals who have lent to the Fund.

- Operational risks due to objective reasons will be covered by the Business Risk Reserve Fund. For unavoidable risks such as natural disasters, typhoons, floods, or implementing state directives..., after utilizing the Business Risk Reserve Fund to cover losses and still falling short, the Fund must report the causes and extent of the damage to the Ministry of Finance for review and submission to the Government for resolution.

3. Financial income and expenditure of the Fund:

a. Income of the Fund includes the following items:

- Interest income from loans

- Interest income from deposits with the State Treasury and Banks

- Service fees include:

+ Service fees for projects entrusted to the Fund for re-lending. Revenue is the service fee for re-lending received from the entrusting party according to the contract.

+ Service fees for transferring funds domestically and internationally for financial institutions and units transacting with the Fund (if applicable).

+ Other service fees.

- Other income generated during the course of operations outside the above categories.

b. Operating expenses of the Fund:

- Business expenses include:

+ Payment of interest on issued bonds.

+ Payment of interest on medium and long-term loans from organizations and individuals both within and outside the country.

+ Payment of interest on entrusted capital received from organizations and individuals both within and outside the country (if applicable).

+ Expenses related to bond issuance and capital mobilization.

+ Other expenses arising from loan appraisal, inspection, and debt recovery for investment projects financed by the Fund.

+ Other business expenses (if applicable).

- Administrative expenses:

+ Salary and allowances.

+ Contributions to social insurance, health insurance, and other deductions according to state regulations.

+ Allowances for members of the Management Board and other positions according to current regulations.

+ Depreciation of fixed assets according to state regulations.

+ Purchase of labor tools and working equipment.

+ Rent for office space and other fixed assets.

+ Maintenance and repair expenses.

+ Travel expenses

+ Communication and publicity fees.

+ Expenditure on office supplies and seals.

+ Expenditure on vocational training and instruction.

+ Expenditure on labor protection equipment and uniforms as prescribed by the State.

+ Other necessary and reasonable expenditures such as electricity, water, office cleaning, hospitality expenses for meetings, etc., in accordance with State regulations.

c. Financial revenue and expenditure management:

- The National Investment Support Fund shall be responsible for collecting revenues accurately, fully, and promptly from sources generated during its operations to record them as income of the Fund, without leaving any revenues outside the books or failing to record them as income.

- The National Investment Support Fund may allocate expenditures according to its activities as follows:

* Operational expenditure items: These are allocated based on the actual amount incurred from the expenditure items specified in sub-item b.

* Regarding management costs:

+ Salary and allowance for dedicated staff working for the Fund shall be implemented in accordance with Decree No. 25/CP dated May 23, 1993 of the Government. For part-time staff and members of the Management Board, the level of allowance shall be determined by the General Director based on the nature and volume of work, to be reported to the Management Board for consideration and decision.

+ Depreciation of fixed assets: The National Investment Support Fund is entitled to allocate depreciation of fixed assets based on the value of fixed assets actually used by the Investment Department. The annual depreciation amount is considered as basic construction investment capital provided by the State and can be used to purchase fixed assets and other necessary assets for the Fund's operations. The Fund is responsible for managing and utilizing this capital in accordance with the Investment and Construction Management Regulations issued together with Decree No. 42/CP dated July 16, 1996 of the Government.

+ For remaining management costs such as purchasing labor tools, repairing and maintaining assets, communication fees, office supplies, seals, electricity, water, office cleaning, travel expenses, reception expenses, etc., since the Fund does not have its own organizational structure but uses the Investment Development Department's structure to operate, these management cost items will be allocated based on the ratio of the Fund's business turnover compared to the Investment Development Department's business turnover to be recorded as the Fund's costs.

The National Investment Support Fund shall record the following expenditures:

- Losses and damages to assets caused by individuals or groups within the Fund.

- Expenditures on construction and acquisition of fixed assets from basic construction investment capital.

- Risks covered by the Risk Reserve Fund.

If any of the above expenditures occur, they must be funded from the designated source or deducted from the welfare and incentive funds of the Fund to cover the costs.

4. Distribution of surplus revenue over expenditure

a. If revenue exceeds expenditure, the National Investment Support Fund shall:

- Allocate 25% of total profit to establish the "Operational Risk Reserve Fund." This fund will be established until it equals 100% of the actual registered charter capital at the time of establishment. The Operational Risk Reserve Fund can only be used to offset operational risks and capital losses due to objective reasons and approved by the Management Board. In cases caused by subjective reasons, individual responsibility will be pursued or deducted from the welfare and incentive funds of the unit.

- Allocate 15% of total profit to establish the "Supplementary Capital Reserve Fund."

- Allocate 15% of total profit to establish the "Technical Development Fund."

- Distribute profits to capital contributors and investors at 30%-35% of total profit. The specific ratio and distribution level are decided annually by the Management Board.

- The remainder will be allocated to the welfare and incentive funds. The maximum allocation rate for each fund is controlled according to the regulations for state-owned enterprises. The specific annual allocation amount will be reviewed and determined by the Ministry of Finance based on the Management Board's proposal. The incentive and welfare funds are used to cover welfare and incentive expenses for the Fund's staff and organizations or individuals who have contributed to the Fund's operations. Any remaining amount (if any) after allocating the welfare and incentive funds (at the specific rate approved annually by the Ministry of Finance) will be added to the technical development fund.

b. In cases where revenue is less than expenditure, based on the actual situation, after using existing funds to cover the shortfall and still being insufficient, the Fund shall report to the Ministry of Finance for review and handling.

5. Accounting and bookkeeping system:

- The National Investment Support Fund must implement accounting books, record vouchers, and perform financial accounting and reporting in accordance with the Accounting and Statistics Ordinance and the regulations of the Ministry of Finance.

- The National Investment Support Fund is responsible for finalizing financial accounts and submitting quarterly and annual reports to the Ministry of Finance (Department of Banking and Financial Organization Finance):

+ Balance sheet.

+ Income and expense settlement report.

+ Source and use of capital report.

Deadline for submission of reports:

- Quarterly reports must be submitted no later than 10 days after the end of the quarter.

- Annual settlement reports must be submitted no later than 30 days after the end of the year.

6. Financial planning:

- The National Investment Support Fund is responsible for developing the annual financial plan at the budget planning stage and submitting it to the Ministry of Finance, including:

+ Plan for sources and use of capital.

+ Financial income and expenditure plan.

The Management Board of the Fund is responsible for reviewing the above plans of the Fund. The approved financial targets by the Ministry of Finance will serve as the basis for the Fund's implementation throughout the year.

III. IMPLEMENTATION PROVISIONS

The National Investment Support Fund is legally responsible for the use and guarantee of the return of State and social capital for investment development purposes and is subject to financial inspection by the State's financial authorities in accordance with the Accounting and Statistics Ordinance and the financial regulations stipulated in this Circular.

This Circular takes effect from the date of signature.

During the implementation process, if there are any difficulties, please reflect them to the Ministry of Finance for timely supplementation and amendment.