Circular No. 86/2021/TT-BTC guiding the implementation of certain provisions of the Government's Decree No. 147/2020/NĐ-CP dated December 18, 2020 on the organization and operation of local development investment funds

 CIRCULAR

Guidelines for implementing certain provisions of Decree No. 147/2020/NĐ-CP dated December 18, 2020 of the Government on the organization and operation of local investment and development funds

Pursuant to Decree No. 87/2017/NĐ-CP dated July 26, 2017 of the Government on the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decree No. 147/2020/NĐ-CP dated December 18, 2020 of the Government on the organization and operation of local investment and development funds;

At the proposal of the Director of the Department of Financial Affairs of Banks and Financial Institutions,

The Minister of Finance issues this Circular guiding the implementation of certain provisions of Decree No. 147/2020/NĐ-CP dated December 18, 2020 of the Government on the organization and operation of local investment and development funds.

PART I
GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular guides the implementation of certain provisions of Decree No. 147/2020/NĐ-CP dated December 18, 2020 of the Government on the organization and operation of local investment and development funds (hereinafter referred to as Decree No. 147/2020/NĐ-CP) regarding financial management mechanisms, supervision, evaluation of operational effectiveness, assessment and classification of managers, reporting systems, and information disclosure of local investment and development funds; the performance of the function of local investment and development fund by the State Capital Investment Corporation of Ho Chi Minh City.

Article 2. Applicability

1. Local investment and development funds established by provinces and centrally governed cities (hereinafter referred to as the Fund).

2. The State Capital Investment Corporation of Ho Chi Minh City (hereinafter referred to as HFIC).

3. People's Committees of provinces and centrally governed cities (hereinafter referred to as provincial-level People's Committee).

4. Relevant agencies, organizations, and individuals,

Chapter II
SPECIFIC PROVISIONS

Section 1

 SOME CONTENTS ON THE MANAGEMENT OF CAPITAL AND ASSETS OF

 LOCAL INVESTMENT AND DEVELOPMENT FUNDS

Article 3. Adjustment of Registered Capital

1. The authority to decide on changes in the registered capital of local investment and development funds shall be implemented according to the provisions of Clause 2, Article 35 of Decree No. 147/2020/NĐ-CP.

2. The method for determining the adjusted registered capital of local investment and development funds shall be carried out according to the regulations applicable to state-owned enterprises holding 100% of the registered capital. In which, the determination of the increased registered capital adjustment is carried out as follows:

a) For the increase in registered capital adjustment to implement investment projects forming assets serving the operations of the Fund and the increase in registered capital adjustment based on the value of assets received from other transfers, receiving money under state support policies, and the difference in asset valuation increases, the Fund shall implement the regulations applicable to state-owned enterprises holding 100% of the registered capital.

b) For the increase in registered capital adjustment based on the five-year strategy and plan of operations, based on the five-year strategy and plan of operations of the Fund approved by the provincial-level People's Committee, the maximum increase in registered capital adjustment shall be equal to the anticipated increase in the scale of loans and investments of the Fund.

3. If the local investment and development fund increases its registered capital to meet the requirements stipulated in Clause 1, Article 6 of Decree No. 147/2020/NĐ-CP, it does not apply the method for determining the adjusted registered capital as prescribed in Clause 2 of this Article. The Fund shall develop a supplementary registered capital plan to report to the provincial-level People's Committee for submission to the Provincial People's Council for approval to ensure compliance with the minimum registered capital requirement.

4. The local investment and development fund shall determine the adjusted registered capital, propose sources for additional registered capital investment to report to the provincial-level People's Committee or the Provincial People's Council for decision on the adjusted registered capital of the Fund within their respective authorities.

Article 4. Establishing management regulations for capital, assets, and activities

1. The local development investment fund shall be responsible for establishing and submitting to the Fund Management Board for issuance the operational management regulation on investment construction, procurement, and fixed asset management; the capital mobilization regulation; the lending regulation; the regulation on managing investments in establishing economic organizations, contributing capital, purchasing shares, and equity contributions from economic organizations; the regulation on managing investments under contract forms and implementing investment projects; the regulation on entrusted activities and accepting entrustment, and other regulations as required by the Fund Management Board.

2. The operational management regulation on investment construction, procurement, and fixed asset management of the Fund shall ensure the following principles:

a) The authority to decide on investment construction and procurement of fixed assets shall apply the provisions of the law for state-owned enterprises holding 100% of the charter capital and the Charter of the local development investment fund's organization and operation.

b) The procedures and processes for investment construction, procurement, management, use, depreciation accrual, leasing, mortgage, pledge, liquidation, sale, inventory of fixed assets of the Fund shall be implemented according to the provisions of the law on the management and use of state capital invested in production and business at enterprises.

3. The capital mobilization regulation includes the following basic contents:

a) Purpose of capital mobilization;

b) Sources of capital and methods of mobilization;

c) Steps to develop capital mobilization plans from sources in accordance with the law;

d) Plan for managing and using mobilized capital;

đ) Plan for arranging funds to repay interest and principal when due;

e) Authority to mobilize capital in accordance with Decree No. 147/2020/NĐ-CP and the Charter of the organization and operation of the Fund.

4. The lending regulation includes the following basic contents:

a) Fields, objects, and conditions for lending for each lending form, including direct lending, entrusted lending, and joint lending;

b) Terms, interest rates, and limits for lending for each lending form as stipulated in Decree No. 147/2020/NĐ-CP and the management requirements of the Fund Management Board, rights and responsibilities of the parties;

c) Procedures for appraisal, authority to decide on lending, and guarantee of loans;

d) Forms of loan guarantees and mechanisms for managing collateral assets;

đ) Templates for direct lending contracts, entrusted lending contracts, and joint lending contracts;

e) Procedures for disbursing funds, managing loans, classifying debts, and setting aside provisions for credit risks;

g) Procedures and authority for handling debts;

h) Procedures and authority for handling collateral assets.

5. The regulation on managing investments in establishing economic organizations, contributing capital, purchasing shares, and equity contributions from economic organizations includes the following basic contents:

a) Fields, objects, conditions, forms, and limits for capital contribution;

b) Procedures for developing, appraising, and deciding on capital contribution plans. Among these, the authority to decide on capital contribution plans shall be carried out in accordance with Article 21 of Decree No. 147/2020/NĐ-CP;

c) Procedures for capital contribution, additional capital contribution, management, and partial or full transfer of contributed capital in accordance with the law on the management and use of state capital invested in production and business at enterprises;

d) Procedures for managing, supervising, and evaluating the effectiveness of capital contributions by the Fund.

6. The regulation on managing investments under contract forms and implementing investment projects includes the following basic contents:

a) Fields, objects, conditions, forms, and limits for investment;

b) Procedures for developing, appraising, and deciding on investment plans and projects. Among these, the authority to decide on investment shall comply with the provisions of Article 21 of Decree No. 147/2020/NĐ-CP;

c) Procedures for implementation, supervision, and evaluation of investment effectiveness;

d) Procedures for additional investment, partial or full transfer of investment capital;

đ) Procedures for setting aside risk provisions;

e) Procedures and authority for handling risks.

7. The regulation on managing entrusted activities and accepting entrustment includes the following basic contents:

a) Procedures for entrusting lending and investment activities;

b) Procedures for accepting entrustment to manage investment capital, lending, and debt recovery, allocating investment capital for projects from the state budget, policy banks, enterprises, and domestic and foreign organizations and individuals; procedures for accepting entrustment to manage financial resources and operations of local state financial funds;

c) Rights and responsibilities of participating parties;

d) Approval authority, principles for signing entrustment agreements, and main contents of entrustment documents.

Section 2

SOME MANAGEMENT CONTENTS OF REVENUE, EXPENSES,

 REVENUE AND EXPENSE DIFFERENCES OF THE LOCAL DEVELOPMENT INVESTMENT FUND

Article 5. Revenue and other income

1. Business revenue of the Local Investment Development Fund:

a) Revenue from investment activities;

b) Revenue from transferring investment assets;

c) Interest on loans, including interest on joint loans or entrusted loans;

d) Fees for entrusted services according to the decision of the Provincial People's Committee or the entrusted service contract signed between the Fund and the entrusting organization or individual;

đ) Fees for executing local government bond issuance operations under the authorization of the Provincial People's Committee in accordance with the provisions of the law;

e) Revenue from other business activities.

2. Financial revenue of the Local Investment Development Fund:

a) Interest from deposits;

b) Exchange rate differential (if any);

c) Revenue from other financial activities.

3. Other income:

a) Income from the liquidation and sale of assets;

b) Revenue from leasing assets;

c) Differential from the disposal of collateral assets, assets formed from loans already owned by the Fund when the project owner cannot repay the debt and transfers the assets to the Fund to offset the debt (if any);

d) Differential from insurance compensation payments after loss compensation has been made; recovered income from debts that have been written off;

đ) Penalties for breach of economic contracts;

e) Income from debts owed by unidentified or deceased debtors;

g) Other lawful income.

Article 6. Principles of Revenue Recognition

1. The revenues of the Local Investment Development Fund must be determined in accordance with Vietnamese accounting standards and relevant laws, with valid invoices or receipts, and must be fully recorded in revenue.

2. For interest revenue from lending activities, the Local Investment Development Fund is responsible for assessing the ability to recover debts and classifying debts in accordance with the provisions of Decree No. 147/2020/ND-CP to serve as the basis for recording receivable interest and shall record as follows:

a) The Fund records receivable interest from lending activities arising during the period in loan interest revenue for debts classified as standard non-provisioned risks in accordance with Article 30 of Decree No. 147/2020/ND-CP.

b) For receivable interest of debts maintained at standard risk due to implementation of state policies and receivable interest arising during the period for remaining debts, such amounts shall not be recorded as income; the Fund shall monitor them off-balance sheet to urge collection; upon recovery, they shall be recorded as income.

3. For interest income from deposits: it is the receivable interest arising during the period.

4. For income from investment activities in establishing economic organizations, contributing capital, purchasing shares, equity contributions of economic organizations, investing through contracts, implementing investment projects: it is dividends and profits distributed based on the resolution of the Shareholders' Meeting or the decision of the parties contributing capital to establish the enterprise or the decision of the competent authority; in cases where the Fund directly manages the investment project, income from investment activities is recognized in the same period as the occurrence of investment revenue and expenses.

5. For exchange rate differentials resulting from revaluation of foreign currencies and gold, the Fund shall record in accordance with accounting standards and relevant legal provisions.

6. For receivables recorded in revenue but later assessed as uncollectible or not collected by the due date, the Fund shall reduce revenue if in the same accounting period or record as expenses if in a different accounting period and monitor off-balance sheet to urge collection. Upon recovery, it shall be recorded as income.

7. For revenue from other activities, it shall be carried out in accordance with tax laws and relevant laws.

Article 7. Types of expenses

The operating costs of the local development investment fund include all expenses incurred during the period related to the fund's activities, including:

1. Business operation costs:

a) Expenses related to lending activities (including forms such as direct lending, entrusted lending, and joint lending), establishing economic organizations, contributing capital, purchasing shares, the contribution portion of economic organizations, investing under contract form, implementing investment projects;

b) Expenses related to entrusted and received entrusted activities;

c) Expenses for raising funds for the local budget according to the authorization of the provincial People's Committee (if applicable);

d) Expense for setting up reserve funds;

đ) Expenses for purchasing business risk insurance and other types of business insurance as prescribed by law;

e) Expenses for compensating property losses as prescribed;

h) Other business activity expenses.

2. Financial expenses:

a) Interest and fee payments arising from raised capital;

b) Exchange rate differences (if any);

c) Other financial expenses.

3. Management Costs:

a) Expenses on assets including: depreciation of fixed assets as prescribed by law; rental expenses for office premises and fixed assets; maintenance and repair expenses; purchase and supply expenses for tools and equipment; asset insurance expenses;

b) Employee expenses: salary and wages; social insurance, health insurance, unemployment insurance, personal accident insurance, trade union fees, meal expenses, labor protection expenses, transaction attire expenses, female employee expenses, annual leave pay and other employee expenses as prescribed by law for state-owned enterprises with 100% state capital;

c) Management and public service expenses: electricity, water, telephone, materials, printing paper, office supplies expenses; consulting and auditing expenses; domestic and foreign expert rental expenses; scientific research and technological innovation research expenses; training and professional instruction expenses; incentive awards for productivity improvement and cost savings; environmental protection and agency security expenses; publicity, advertising, marketing expenses; conference, reception, ceremonial, transaction, diplomatic expenses as prescribed by law;

d) Allowance expenses for members concurrently serving on the Fund Management Council and other concurrent positions (if any);

đ) Other management expenses as prescribed by law.

4. Other expenses:

a) Expenses for selling off and liquidating assets (if any) including the remaining value of fixed assets sold off; expenses for handling property losses after compensation from other sources as prescribed;

b) Penalties for breach of economic contracts;

c) Court fees and enforcement fees;

d) Social work expenses as prescribed by law;

đ) Membership fee expenses for industry associations both domestically and internationally as prescribed by law;

e) Other expenses as prescribed by law.

Article 8. Principles of Recording and Managing Expenses

1. The expenses of the local development investment fund are actual expenses incurred during the period related to the fund's activities.

2. Expenses recorded as operating expenses of the local development investment fund must comply with the principle of matching revenue and expenses and have valid invoices and receipts as prescribed by law.

3. Principles of managing expenses:

a) The Fund shall establish and submit to the Fund Management Council for approval and issuance of internal expenditure regulations and appropriate expense standards for each phase, complying with current legal provisions.

b) For expenses not in accordance with regulations, not settled, and exceeding the limits set out in the internal expenditure regulations issued by the Fund Management Council as stipulated in point a, Clause 3, Article 8 of this Circular, the Fund must clearly identify the responsibility of relevant organizations and individuals to present to competent authorities for determination of compensation measures.

Article 9. Settlement of Revenue and Expenditure Items

1. Annually, the Local Investment Development Fund shall be responsible for reporting to the Fund Management Board for approval and submitting to the Provincial People's Committee for approval the Report on the Settlement of Surplus/Deficit after the annual financial report of the Fund has been audited independently in accordance with Clause 2, Article 34 of Decree No. 147/2020/NĐ-CP.

2. Expenditure items exceeding the prescribed limits under the Internal Expense Regulations issued by the Fund Management Board in accordance with Clause 3, Article 8 of this Circular and not approved by the Provincial People's Committee must be excluded from the Fund's accounting books, and at the same time, the responsibility of organizations and individuals involved in approving such expenditures must be clearly identified to submit to competent authorities for decision on compensation plans for excesses over the prescribed limits.

Article 10. Distribution of Surplus/Deficit

1. The Local Investment Development Fund shall distribute surplus/deficit in accordance with Clause 4, Article 34 of Decree No. 147/2020/NĐ-CP.

2. The level of contribution to the reward fund and welfare fund shall be based on the classification of the effectiveness of the operation of the Investment Development Fund as stipulated in Article 16 of this Circular, specifically as follows:

a) For Class A Funds, up to a maximum of three months' actual salary of employees can be contributed to both the reward fund and welfare fund;

b) For Class B Funds, up to a maximum of one and a half months' actual salary of employees can be contributed to both the reward fund and welfare fund;

c) For Class C Funds, up to a maximum of one month's actual salary of employees can be contributed to both the reward fund and welfare fund;

d) The ratio of distribution to each reward fund and welfare fund shall be approved by the Management Board.

3. The level of contribution to the management reward fund shall be based on the classification of the effectiveness of the operation of the Local Investment Development Fund as stipulated in Article 16 of this Circular, specifically:

a) For Class A Funds, up to a maximum of one and a half months' actual salary of managers can be contributed;

b) For Class B Funds, up to a maximum of one month's actual salary of managers can be contributed;

c) For Class C Funds, no contribution to the management reward fund can be made;

4. The Local Investment Development Fund shall apply the method of determining actual salary months according to regulations applicable to state-owned enterprises holding 100% of the charter capital.

5. The Provincial People's Committee shall decide on the level of contribution to the investment development fund, financial reserve fund, management reward fund, reward fund, and welfare fund of the Fund in accordance with Clause 4, Article 34 of Decree No. 147/2020/NĐ-CP and Clauses 1, 2, and 3 of this Article.

Article 11. Management and Utilization of Funds

1. Purpose of Using Funds

a) The financial reserve fund shall be used to cover the remaining losses and damages to assets occurring during operations after being compensated by the organizations and individuals causing the loss, insurance organizations, and using reserves established in expenses; it may also be used for other purposes as prescribed by law.

b) The investment development fund shall be used to implement investment development projects of the Fund and to supplement the registered capital.

c) The reward fund shall be used for:

- Year-end bonuses, regular bonuses, special bonuses, and bonuses as prescribed by laws on commendation and rewards for Fund employees. The reward fund of the Fund shall not be used to pay bonuses to management personnel of the Fund.

- Bonuses for individuals and units outside the Fund who have contributed to the Fund's activities.

- The amount of bonus shall be decided by the General Director or Director of the Fund in accordance with the Regulations on Commendation and Reward and the Regulations on Management and Use of Reward and Welfare Funds stipulated in Clause 2 of this Article.

d) The welfare fund shall be used for:

- Investing in building or repairing welfare facilities of the Fund.

- Spending on welfare activities for Fund employees and management personnel.

- Providing emergency assistance to employees and management personnel, including those who have retired, lost their health, fallen into difficult circumstances, have no place to rely on, or engage in charitable social work.

- The amount of expenditure using the fund shall be decided by the General Director or Director of the Fund in accordance with the Regulations on Management and Use of Reward and Welfare Funds stipulated in Clause 2 of this Article.

e) The management reward fund shall be used for:

- Annual bonuses; bonuses at the end of term for the Chairman, Vice Chairmen, members of the Management Board, Head of the Supervisory Board, General Director/Director, Deputy General Director/Deputy Director, Chief Accountant of the Fund.

- The amount of annual bonus and end-of-term bonus shall be decided by the Chairman of the Provincial People's Committee based on criteria for evaluating Fund management personnel and the effectiveness of the Fund's operations, upon the recommendation of the Management Board.

- In cases where Fund management personnel are commended according to laws on commendation and rewards, the Fund shall use the management reward fund to pay bonuses to the aforementioned individuals at the levels specified by laws on commendation and rewards for each form of commendation and reward.

2. The Local Investment Development Fund shall develop, seek opinions from employees, the Fund's Trade Union, and submit to the Fund Management Board for approval the Regulations on Commendation and Reward and the Regulations on Management and Use of Reward and Welfare Funds.

Section 3

SOME CONTENTS ON ACCOUNTING SYSTEM, AUDIT REPORT

 FINANCIAL STATEMENTS AND INFORMATION DISCLOSURE

Article 12. Financial Reports and Other Reports

1. At the end of each accounting period (quarter, year), the Local Investment Development Fund must prepare, present, and submit reports in accordance with Clause 2 of this Article. The data cut-off date is the end of the reporting period (quarter, year). The General Director/Director (Director) of the Fund is responsible for the accuracy and truthfulness of these reports.

2. Types of reports of the Local Investment Development Fund:

a) Quarterly report:

- The financial report of the Fund includes: financial statements; statement of operations results; cash flow statement; notes to the financial statements. The preparation and presentation of the Fund's financial statements shall be carried out in accordance with accounting laws;

- Statistical report, including: Report on direct investment situation; loan situation report; report on equity investment in establishing enterprises; report on debt classification and risk reserve provision according to Appendices 1, 2, 3, 4 attached to this Circular.

b) Annual report:

- All reports specified in point a of this clause;

- Final account surplus/deficit report in accordance with Clause 5 of Article 34 of Decree No. 147/2020/NĐ-CP;

- Efficiency assessment report of the Fund in accordance with Article 16 of this Circular;

- Other reports: Financial income and expenditure report; report on the implementation of state budget obligations; surplus/deficit distribution and fund utilization report according to Appendices 5, 6, 7 attached to this Circular.

3. Deadline for submitting reports:

a) Quarterly reports must be submitted no later than 45 days from the end of the quarter;

b) Annual reports must be submitted no later than 90 days from the end of the fiscal year, except for the efficiency assessment report of the Fund which must be submitted no later than May 31 each year;

c) The audit report on the Fund's financial statements conducted by an independent auditing organization must be submitted no later than 90 days from the end of the fiscal year.

4. Recipients of reports:

a) Reports specified in point a of Clause 2 of this Article must be sent to the Provincial People's Committee, Provincial Department of Finance, and State Bank branch in the province/city.

b) Reports specified in point b of Clause 2 of this Article must be sent to the Provincial People's Committee, copied to the Ministry of Finance, Provincial Department of Finance, and State Bank branch in the province/city.

5. Methods of submitting reports shall be carried out through one of the following methods:

- Submit directly in paper form;

- Sending via postal service in paper form;

- Sending via email system or specialized information software system (if available);

- Other methods as prescribed by law.

6. The Local Investment Development Fund is responsible for providing ad hoc reports upon request of the Provincial People's Committee, Ministry of Finance, Provincial Department of Finance, and State Bank branch in the province/city when necessary.

Article 13. Audit of Financial Statements

1. The annual financial statements of the Local Investment Development Fund must be audited by an independent auditing organization.

2. Annually, the Supervisory Board of the Local Investment Development Fund shall propose to the Management Board to select an independent auditing organization established and operating in Vietnam to audit the Fund's financial statements.

3. The Supervisory Board of the Local Investment Development Fund organizes inspections and supervision according to plans on compliance with financial accounting systems at the Fund and reports the inspection results to the Fund's Management Board and the Provincial People's Committee.

Article 14. Information Disclosure System

1. The local investment and development fund shall disclose information periodically and extraordinary information in accordance with the regulations applicable to state-owned enterprises holding 100% of the charter capital, except for the annual report on the implementation of enterprise restructuring and modernization, the current management status and organizational structure report of the enterprise, and the mid-year financial report and summary thereof.

2. The local investment and development fund shall disclose information on its website or on the website of the provincial People's Committee or other mass media as prescribed by the provincial People's Committee in the Fund's Charter.

3. The Management Board of the local investment and development fund shall be responsible for approving the contents of information disclosure of the Fund as stipulated in Clause 1 of this Article; ensuring the transparency, clarity, and timeliness of disclosed information.

Section 4

SOME CONTENTS OF SUPERVISION AND ASSESSMENT OF THE EFFECTIVENESS OF OPERATIONS, ASSESSMENT AND RANKING OF MANAGEMENT PERSONNEL OF THE FUND

Article 15. Methods of Supervising the Operations of the Local Investment and Development Fund

1. The provincial People's Committee shall supervise the finance of the local investment and development fund. The Department of Finance shall take the lead and coordinate with relevant units in the locality to assist the provincial People's Committee in supervising the finance of the Fund.

2. The basis for implementing financial supervision, the content of financial supervision, the method of supervision, the implementation of supervision, and financial supervision of subsidiaries and associated companies of the local investment and development fund, and other related provisions concerning the financial supervision of the Fund shall be carried out in accordance with the regulations applicable to state-owned enterprises holding 100% of the charter capital, Decree No. 147/2020/ND-CP, and this Circular.

3. In addition to signs of financial instability implemented according to the regulations applicable to state-owned enterprises holding 100% of the charter capital, the Fund shall be deemed to have lost financial stability if it falls into one of the following cases:

a) The ratio of bad debt to total outstanding loans exceeds 50%;

b) The ratio of difficult-to-collect receivables to total investment capital exceeds 80%.

Article 16. Classification of Operational Effectiveness

1. The local investment and development fund shall assess and classify operational effectiveness as stipulated in Clause 2 of Article 42 of Decree No. 147/2020/ND-CP based on the principle of comparing actual results with the targets set forth in the financial plan assigned by the provincial People's Committee. These indicators are assigned to the Fund in writing before April 30 of the planning year and cannot be adjusted throughout the implementation period (except for major force majeure cases). Among them:

a) For the revenue and other income indicator (Indicator 1) and the difference between revenue and expenditure and the rate of difference between revenue and expenditure over equity capital (Indicator 2): the difference between revenue and expenditure is used to determine the indicator as the difference between revenue and expenditure after deducting corporate income tax expenses (if any); equity capital is used to determine the indicator as the average equity capital during the year.

b) For the compliance with laws on investment, management, and use of capital, obligations towards the state budget, and regulations on financial reporting systems and reports for financial supervision (Indicator 4): compliance with systems, policies, and laws means adhering to the regulations without any acts of non-compliance, omission, incomplete, untimely, or non-execution. Violations include actions by the Fund, individuals under the name of the Fund, or managers of the Fund causing such violations.

2. The method of evaluating the indicators stipulated in Clause 2 of Article 42 of Decree No. 147/2020/ND-CP is as follows:

a) The method of evaluating the revenue and other income indicator (Indicator 1) and the difference between revenue and expenditure and the rate of difference between revenue and expenditure over equity capital (Indicator 2) is as follows:

- Class A when the indicator achieved equals or exceeds the assigned target;

- Class B when the indicator achieved is lower but at least 90% of the assigned target;

- Class C when the indicator achieved is below 90% of the assigned target.

b) The method of evaluating the ratio of bad debt to total outstanding loans (including direct lending and joint lending) and the ratio of difficult-to-collect receivables to total investment capital (Indicator 3) is as follows:

- Class A when the indicator achieved is lower than the assigned target;

- Class B when the indicator achieved equals the assigned target;

- Class C when the indicator achieved is higher than the assigned target.

c) The method of evaluating the compliance with laws on investment, management, and use of capital, obligations towards the state budget, and regulations on financial reporting systems and reports for financial supervision (Indicator 4) is as follows:

- The Fund is classified as Class A if it meets the following conditions:

+ During the year of assessment and classification, the Fund is not penalized administratively by competent authorities in the field of taxation for any act of false declaration leading to underpayment of taxes due or increase in tax exemptions, reductions, refunds, or non-collection, or tax evasion.

+ Not being or being reminded in writing once by the provincial People's Committee or financial authority about submitting financial supervision reports, efficiency ranking reports, and financial reports that are not in accordance with regulations or deadlines.

- The Fund is classified as Class B if it falls into one of the following situations:

+ During the year of assessment and classification, the Fund is penalized administratively by competent authorities in the field of taxation for one violation act belonging to the group of false declarations leading to underpayment of taxes due or increase in tax exemptions, reductions, refunds, or non-collection.

+ Being reminded in writing twice by the provincial People's Committee or financial authority about submitting financial supervision reports, efficiency ranking reports, and financial reports that are not in accordance with regulations or deadlines.

- The Fund is classified as Class C if it falls into one of the following situations:

+ During the year of evaluation and classification, the Fund is penalized by the competent authority for administrative violations in the tax field due to having two or more different acts of misreporting leading to underpayment of taxes owed or overpayment of tax exemptions, reductions, refunds, or non-collection; or the Fund engages in tax evasion as defined by the Government's regulations on administrative penalties for tax violations and invoices.

+ Receiving three or more written warnings from the Provincial People's Committee or financial authorities regarding the submission of reports for financial oversight, performance effectiveness reports, and financial statements that are not in compliance with regulations or deadlines.

+ The Fund Manager violates the law during the execution of the Fund's duties concerning compliance with laws on investment, management, and use of capital, obligations to the state budget, and financial reporting systems as concluded by the competent authority. The evaluation and classification of the Fund will only be counted once for the same violation case involving the Fund Manager.

- Violations of tax procedures are not considered for the purpose of evaluating and classifying the Fund.

3. Classification of operational effectiveness

a) The Fund is classified as A if it does not have any criteria classified as C, where criteria 1 and criterion 2 specified in point a and point b, Clause 2, Article 42 of Decree No. 147/2020/ND-CP are classified as A.

b) The Fund is classified as C if criterion 1 is classified as C or any other criteria specified in Clause 2, Article 42 of Decree No. 147/2020/ND-CP are classified as C.

c) The Fund is classified as B if it is not classified as A or C.

4. The report on the classification of operational effectiveness must be approved by the Management Board and submitted to the Provincial People's Committee for approval.

Article 17. Evaluation and Classification of Local Development Investment Fund Managers

1. The local development investment fund managers are evaluated and classified annually based on the criteria stipulated in Clause 4, Article 42 of Decree No. 147/2020/ND-CP. The evaluation results of the fund manager are categorized into four levels: outstandingly completing tasks, satisfactorily completing tasks, completing tasks, and failing to complete tasks.

2. The authority to evaluate local development investment fund managers is carried out according to the Charter of the Fund's organization and operation and the local cadre management delegation.

3. The procedures, criteria for evaluating local development investment fund managers are implemented according to the regulations for state-owned enterprise managers holding 100% of the charter capital and local cadre evaluation regulations.

Chapter III
RESPONSIBILITIES OF RELATED ORGANIZATIONS

Article 18. Responsibilities of the Ministry of Finance

Summarizing and evaluating the implementation and compliance with policies to improve the financial management mechanism, supervision, and assessment of the operational effectiveness of local development investment funds as prescribed in this Circular.

Article 19. Responsibilities of Provincial People's Committees

1. Directing and supervising the Management Board and local development investment funds to implement the financial mechanisms, supervision, and assessment of operational effectiveness as prescribed in this Circular.

2. Approving the additional registered capital of local development investment funds as stipulated in Article 3 of this Circular.

3. Approving the report on the classification of operational effectiveness of local development investment funds; settling surplus or deficit of the fund; the level of reserve for investment development, financial contingency, bonus for managers, awards, and welfare of the fund.

4. Organizing inspection and audit work on the activities and finances of local development investment funds.

Article 20. Responsibilities of the Management Board of the Local Investment Development Fund

1. Receive, manage, and use effectively the state budget capital and other resources assigned by the State to the Local Investment Development Fund; submit to the Provincial People's Committee the plan for adjusting the registered capital of the Fund.

2. Issue regulations on managing investment construction activities, procurement, and fixed assets; regulations on raising capital; lending regulations; regulations on managing investments under contract form and implementing investment projects; regulations on managing investments for establishing economic organizations, contributing capital, purchasing shares, and equity contributions from economic organizations; regulations on managing entrusted activities and accepting entrustment and other regulations as stipulated in this Circular.

3. Submit to the Provincial People's Committee for approval the report on classifying the effectiveness of the Local Investment Development Fund's operations; the settlement of surplus or deficit of the Fund; the level of setting up the development fund, financial reserve fund, management personnel reward fund, incentive and welfare fund of the Fund.

4. Approve the contents of information disclosure of the Local Investment Development Fund according to Article 14 of this Circular.

Article 21. Rights and responsibilities of the Local Investment Development Fund

1. Adhere to financial management systems, supervision, and evaluation of operational effectiveness as prescribed in this Circular and related legal documents.

2. Prepare the annual settlement report and conduct an annual assessment and classification of the Local Investment Development Fund according to the legal provisions.

3. Issue operational procedures of the Local Investment Development Fund based on current state regulations and activity regulations issued by the Management Board of the Fund.

Chapter IV
IMPLEMENTATION

Article 22. Effectiveness

1. This Circular takes effect from November 20, 2021, and applies to the fiscal year 2021.

2. This Circular replaces Circular No. 28/2014/TT-BTC dated February 25, 2014, guiding the financial management mechanism of the Local Investment Development Fund, Circular No. 42/2014/TT-BTC dated April 8, 2014, promulgating the model charter applicable to Local Investment Development Funds, and Clause 12 of Circular No. 84/2020/TT-BTC dated October 1, 2020, amending and supplementing the reporting system within the authority of the Minister of Finance in the field of banking finance.

Article 23. Implementation Organization

1. The Local Investment Development Fund is responsible for drafting and submitting to the Management Board for issuance of regulations as prescribed in Article 4 of this Circular within six months from the date this Circular takes effect.

2. For HFIC:

a) Determination of the amount of increase in the registered capital of HFIC to perform the function of the Local Investment Development Fund shall be carried out in accordance with Clause 2, Article 3 of this Circular. Other matters related to additional capital contribution to HFIC shall be implemented in accordance with the regulations applicable to state-owned enterprises holding 100% of the registered capital.

b) HFIC is responsible for drafting and submitting to the Board of Members for issuance of regulations on raising capital; lending regulations; regulations on managing investments for establishing economic organizations, contributing capital, purchasing shares, and equity contributions from economic organizations; regulations on managing investments under contract form and implementing investment projects; regulations on managing entrusted activities and accepting entrustment as prescribed in Clauses 3, 4, 5, 6, and 7 of Article 4 of this Circular.

c) HFIC records revenue, other income, and expenses arising during the period related to lending, investment, entrusted, and accepting entrustment activities as prescribed in Articles 5, 6, 7, and 8 of this Circular.

d) HFIC is responsible for preparing and submitting reports as prescribed in Article 12 of this Circular (excluding the Settlement Report on Surplus or Deficit). For the annual financial report, it must be accompanied by an explanation evaluating the results and effectiveness of performing tasks related to the function of the Local Investment Development Fund as prescribed in Article 65 of the State Budget Law and any amendments, supplements, or replacements thereof (if any).

đ) HFIC implements management, use of capital and assets, management of revenue, expenses, and profit distribution, accounting, auditing, reporting, supervision, and evaluation of operational effectiveness according to the laws applicable to state-owned enterprises holding 100% of the registered capital and the provisions at points a, b, c, and d of this clause.

3. The Director of the Ministry of Finance’s Office, the Director of the Department of Banking and Financial Institutions, the Heads of relevant units under the Ministry of Finance, the Chairmen of Provincial People's Committees, Local Investment Development Funds, HFIC, and related organizations and individuals are responsible for implementing this Circular./.

 

 

ANNEX I

REPORT ON INVESTMENT SITUATION UNDER CONTRACT FORM AND IMPLEMENTATION OF INVESTMENT PROJECTS
(Issued together with Circular No. 86/2021/TT-BTC dated October 6, 2021 of the Minister of Finance)

 

REPORT

On the situation of investment under contract form and implementation of investment projects

Quarter … Year …

Unit: dong

 

 

ANNEX II

REPORT ON LENDING SITUATION
(Issued together with Circular No. 86/2021/TT-BTC dated October 6, 2021 of the Minister of Finance)

 

REPORT

On the situation of lending

Quarter … Year …

Unit: dong, except column 3 reported in percentage %

 

 

ANNEX III

REPORT ON INVESTMENT SITUATION FOR ESTABLISHING ECONOMIC ORGANIZATIONS, CONTRIBUTING CAPITAL, PURCHASING SHARES, AND EQUITY CONTRIBUTIONS FROM ECONOMIC ORGANIZATIONS
(Issued together with Circular No. 86/2021/TT-BTC dated October 6, 2021 of the Minister of Finance)

 

REPORT

On the situation of investment for establishing economic organizations, contributing capital, purchasing shares, and equity contributions from economic organizations

Quarter … Year …

Unit: dong, except columns 4, 5, 8, and 9 reported in percentage %

 

 

ANNEX IV

REPORT ON DEBT CLASSIFICATION AND PROVISION FOR RISK
(Issued together with Circular No. 86/2021/TT-BTC dated October 6, 2021 of the Minister of Finance)

 

REPORT

On the situation of debt classification and provision for risk

Quarter … Year …

Unit: dong

1. Insufficient specific provisions (***): = Specific provisions to be set aside - Actual specific provisions set aside

2. Insufficient general provisions: = (0.75% - actual general provision ratio set aside in the quarter) x Total outstanding debt

 

 

ANNEX V

REPORT ON FINANCIAL INCOME AND EXPENSES SITUATION
(Issued together with Circular No. 86/2021/TT-BTC dated October 6, 2021 of the Minister of Finance)

 

REPORT

Regarding the situation of financial income and expenses

Year ………

Unit: dong

 

 

ANNEX VI

REPORT ON THE IMPLEMENTATION OF OBLIGATIONS TO THE STATE BUDGET
(Issued together with Circular No. 86/2021/TT-BTC dated October 6, 2021 of the Minister of Finance)

 

REPORT

Regarding the implementation of obligations to the state budget

Year ………

Unit: dong

 

 

ANNEX VII

SITUATION OF DISTRIBUTION OF INCOME EXPENSE DIFFERENCES AND SETTING UP FUNDS
(Issued together with Circular No. 86/2021/TT-BTC dated October 6, 2021 of the Minister of Finance)

 

REPORT

Regarding the situation of distribution of income expense differences and setting up funds

Year ………

Unit: dong