Circular No. 87 TC/TCÐN guides the determination of exchange rates and payment for exported goods and services to repay foreign debts.

CIRCULAR

GUIDELINES FOR THE DETERMINATION OF EXCHANGE RATES AND PAYMENT FOR EXPORT GOODS AND SERVICES TO REPAY FOREIGN DEBTS

BASED ON Decree No. 40/CP dated July 3, 1995 of the Government and Directive No. 4125/KTTH dated July 31, 1995 of the Prime Minister, assigning the Minister of Finance to examine and decide on exchange rates for payment of export goods and services to repay foreign debts that the Ministry of Finance considers not yet meeting the conditions to organize bidding according to Decree No. 40/CP, the Ministry of Finance hereby provides specific guidelines for implementing the above-mentioned documents as follows:

I. PRINCIPLES AND PROCEDURES FOR EXAMINING AND DECIDING EXCHANGE RATES FOR PAYMENT

1- Scope of application:

The principles and procedures for examining and deciding exchange rates stipulated in Section I below shall apply to export goods, groups of goods, and services to repay foreign debts that have not met the conditions to apply the bidding mechanism under the Bidding Regulations, but still implement the allocation of repayment quotas for enterprises in accordance with the guidance provided in Article 8 of Decree No. 40/CP dated July 3, 1995 of the Government.

Annually, based on the plan for repaying foreign debts through goods and services of the Government, the Minister of Finance will issue a letter notifying specifically the goods that have not met the conditions to apply the bidding mechanism mentioned above.

2- GENERAL PRINCIPLES:

- Annually, the Ministry of Finance will announce the specific exchange rate quota for goods for debt repayment that have not participated in bidding, aiming to help production units and exporters of debt repayment goods proactively strive to reduce costs, lower the cost of exported goods, and serve as a basis for negotiating prices with customers in accordance with the general directive of the Government.

For goods and services for debt repayment that are considered not to have sufficient grounds to determine the exchange rate quota in advance (never exported for debt repayment before or no exchange rate quota has been set for other markets with similar export conditions and prices...), after receiving the export quota for debt repayment, the Ministry of Finance will organize the examination and decision-making process for exchange rates according to the specific procedure outlined in Point 3.2 below.

- The exchange rate quota specified for each type or group of goods or service for debt repayment to each country will be applied throughout the annual export quota for debt repayment of that good, without reviewing the exchange rate for each shipment or individual foreign contract.

- The exchange rate quotas for each type or group of goods or specific services mentioned above must not exceed the maximum exchange rate ceiling announced annually by the Ministry of Finance, based on the overall balance on the basis of the foreign debt repayment plan from the State Budget approved by the Government.

The maximum exchange rate ceiling will be announced for debt repayment in rubles and debt repayment in freely convertible foreign currencies converted to USD.

3. Procedure for Examining and Announcing Exchange Rates

3.1: For types of goods, groups of goods, and services that can base their exchange rate on the previous year's payment rate, the Ministry of Finance will examine and immediately announce the exchange rate quota after signing the Debt Repayment Protocol or Agreement with foreign creditors.

3.2: For cases not covered by Point 3.1 above, based on the assigned repayment quota, designated enterprises need to prepare exchange rate calculation plans to submit to the Ministry of Finance for examination and announcement of the exchange rate for the export goods, groups of goods, or debt repayment services.

- Within ten days from the date of receipt of complete plans and detailed explanatory documents, the Ministry of Finance will organize the examination and announcement of the exchange rate quota. In special cases requiring additional opinions from relevant ministries or departments, or requiring re-evaluation of the calculation basis and enterprise headquarter exchange rate proposals, the Ministry of Finance will notify the specific examination and announcement plan for related enterprise headquarters to coordinate.

- The exchange rate calculation plan is based on reasonable and valid production and business costs of the enterprise and savings for the State Budget. The external price (export and service) is based on past implementation prices, taking into account international market price fluctuations at the time of exchange rate review, or based on signed foreign contracts and accepted by the Ministry of Trade according to specific cases.

3.3: After the Ministry of Finance announces the specific exchange rate quota for goods and services for debt repayment, if the main exporting enterprises or service providers accept the announced exchange rate, they will go to the Ministry of Finance (Department of Foreign Finance) to sign the order form (according to the attached model in this Circular).

3.4: During the implementation period, if there are sudden changes in domestic and international prices leading to the payment according to the announced exchange rate being no longer appropriate and requiring adjustment, based on the proposal of the enterprise and relevant ministries (superior management agencies, Ministry of Trade, Government Price Board), the Ministry of Finance will examine and decide on modifying the announced exchange rate.

II. PROVISIONS ON PAYMENT FOR EXPORT GOODS AND DEBT REPAYMENT SERVICES

The provisions on payment stated in this Circular apply uniformly in both cases of implementing the bidding method and allocating repayment quotas according to Decree No. 40/CP of the Government.

1. Payment Documents:

After completing the export of goods and provision of services abroad to repay state debts according to orders signed with the Ministry of Finance, designated enterprises must present the following payment documents to the Ministry of Finance (Department of Foreign Finance) when processing payment:

1.1: For enterprises exporting goods for debt repayment, the payment documents include:

- Export invoice (original)

- Bill of lading (copy)

- Export permit if required by the Ministry of Trade (copy)

- Export declaration confirmed by the customs office (copy)

- Confirmation from the Central Bank of Foreign Trade that it has processed the submission of documents for debt repayment or that debt has been deducted abroad, according to current regulations.

In the following specific cases, enterprises must also submit additional documents:

a) For debt repayment in freely convertible foreign currencies (USD, SFr, DM...):

- The exchange rate table between the Vietnamese dong and freely convertible foreign currencies published by the State Commercial Bank on the debt repayment date (or the date of sending documents for debt repayment) as confirmed by the State Commercial Bank.

b) In cases where enterprises request to refund export tax paid according to current regulations for goods exported to repay debts:

- Export tax receipt attached with a payment authorization form for bank transfer (or cash deposit slip) issued according to the model promulgated by the Ministry of Finance (original or certified copy).

- A certificate confirming tax payment to the State Budget (original or certified true copy) bearing the stamp and signature of confirmation by the Treasury Accountant where the payment was made.

c) In cases where the foreign partner requests us to re-export to a third country:

- A formal letter requesting from the enterprise which is the foreign debtor (or reflected in the supplementary contract or contract accessory already signed between both parties). For export items subject to quota and price management under current state regulations, enterprises must have the official approval of the Ministry of Trade.

1.2. For enterprises providing services for debt repayment: The dossier includes:

- Original service supply invoice

- Original confirmation of agreement to settle debt repayment (from the Embassy or the representative office of the creditor country's trade agency, in accordance with specific provisions in the Protocol or Agreement between the two governments)

- Confirmation from the State Commercial Bank (similar to the case of goods exported for debt repayment mentioned above)

2. Settlement:

After reviewing and confirming that the enterprises' debt settlement dossiers are complete and valid, the Ministry of Finance will pay the Vietnamese dong to the main enterprises at the announced exchange rate, specifically as follows:

- Pay 100% of the value if the State Commercial Bank confirms "the foreign party has deducted the debt" or "confirmed receipt of debt deduction".

- Advance payment of 90% of the value if the State Commercial Bank confirms "has completed procedures to send documents for debt deduction". The remaining 10% value will be paid by the Ministry of Finance when receiving confirmation of debt deduction from the foreign bank.

- In cases of repayment in freely convertible foreign currency, the payment exchange rate is determined based on a percentage of the buying rate published by the State Commercial Bank on the debt repayment date. If the Ministry of Finance delays payment for one month or more from the date of receiving the complete debt settlement dossier according to current regulations, it must pay interest on the unpaid amount to the enterprise at the loan interest rate of the bank calculated based on the actual number of days delayed. In cases where this delay is due to objective reasons, the Ministry of Finance will report to the Prime Minister for appropriate measures to resolve the issue.

3. Deduction:

3.1: Enterprises that have signed orders with the Ministry of Finance, if they fail to comply with the delivery and quality requirements stipulated in the commercial contracts signed with foreign countries or in the orders signed with the Ministry of Finance (if there are separate provisions), leading to the foreign party refusing to deduct debt for the state, shall bear full material responsibility for the resulting losses (including late payment penalties payable to the foreign party if applicable).

3.2: In cases where orders are executed through bidding procedures, in addition to bearing responsibility for the aforementioned material losses, if enterprises fail to deliver goods for debt repayment, they will also be subject to penalties corresponding to the percentage of unfulfilled orders, as specified in the bidding regulations issued by the Ministry of Finance.

III. REPORT ON IMPLEMENTATION

Enterprises that have signed orders with the Ministry of Finance are responsible for:

1. Sending copies of Contracts and accessories signed with foreign countries regarding the export of goods and services to repay state debts to the Ministry of Finance (Department of Foreign Financial Affairs).

2. Submitting periodic reports on the implementation status and figures of debt repayment orders to the Ministry of Finance (Department of Foreign Financial Affairs) at the end of each quarter, so that the Ministry of Finance can compile and report to the Government as stipulated in Article 12 of Decree No. 40/CP of the Government.

3. Each order only has validity for delivery according to the final delivery date recorded in the order. Beyond this deadline, enterprises may continue to deliver and settle orders with the Ministry of Finance only with the official extension approval of the Ministry of Finance.

IV/ IMPLEMENTATION PROVISIONS

This Circular takes effect from the date of signature and replaces Circular No. 82 TC/TCĐN dated October 1, 1993 of the Ministry of Finance. All previous regulations contrary to this Circular are hereby abolished.

During the implementation of this Circular, relevant ministries, sectors, and enterprises should promptly report any difficulties to the Ministry of Finance for timely resolution./.