Circular No. 87 TC/TCĐN guiding the examination of exchange rate decisions and payment for exported goods and services for foreign debt repayment.

CIRCULAR

Guidelines for examining Decisions on exchange rates and payments

for export goods and services to repay foreign debts

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Pursuant to 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 deems not yet meeting conditions for tendering under 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 ON PAYMENT EXCHANGE RATES

1- Scope of application:

The principles and procedures for examining and deciding on exchange rates stipulated in Section I below shall apply to export goods and service categories for repaying foreign debts which have not met the conditions for applying the tender mechanism under the Tender Regulations, but still implement the allocation of debt repayment quotas for enterprises according to 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 with goods and services of the Government, the Minister of Finance will issue a notification letter specifying the goods that have not met the conditions for applying the tender mechanism mentioned above.

2- GENERAL PRINCIPLES:

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

For goods and services for debt repayment where there are insufficient grounds to determine the fixed exchange rate level in advance (never exported for debt repayment before or no fixed exchange rate level 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 fixed exchange rate level will be specified for each export good or group of goods for debt repayment to each country and will apply to the entire export quota for debt repayment of that good within the annual plan, without reviewing the exchange rate for each shipment or individual foreign contract.

- The fixed exchange rate levels for each specific good, group of goods, or service must not exceed the maximum exchange rate level 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 level will be announced for debt repayment in rubles and 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 fixed exchange rate levels on the previous year's settlement exchange rate, the Ministry of Finance will examine and announce these fixed exchange rate levels immediately 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 debt repayment quota, designated enterprises need to prepare exchange rate calculation plans and submit them to the Ministry of Finance for examination and announcement of the settlement exchange rate for the export goods, group of goods, or service for debt repayment.

- Within no more than ten days from the date of receipt of complete calculation plans and related explanatory documents, the Ministry of Finance will organize the examination and announcement of the fixed exchange rate levels. 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 the relevant enterprise headquarters to coordinate.

- The exchange rate calculation plan should be based on reasonable and valid production and business costs of the enterprise and savings for the State Budget. External prices (export and service) should be based on past implementation prices, taking into account international market price fluctuations at the time of the 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 fixed exchange rate levels for goods and services for debt repayment, if the main exporting enterprises or service providers accept the announced exchange rate levels, they will go to the Ministry of Finance (Department of Foreign Financial Affairs) to sign orders (according to the attached form in this Circular).

3.4: During the implementation period, if changes in domestic and international prices lead to the settlement exchange rate already announced becoming unsuitable and requiring adjustment, based on the proposal of enterprises and relevant ministries (superior management agencies, Ministry of Trade, Government Price Board), the Ministry of Finance will examine and decide on amending the announced exchange rate levels.

II/ PROVISIONS ON PAYMENTS FOR EXPORT GOODS AND SERVICES TO REPAY DEBTS

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

1. Payment Documents:

After main enterprises have exported goods and provided services abroad to repay state debts according to signed orders with the Ministry of Finance, when coming to the Ministry of Finance to handle payment procedures, they must present the following payment documents to the Ministry of Finance (Department of Foreign Financial Affairs) as specified:

1.1: For enterprises exporting goods to repay debts: The payment document package includes:

- Export invoice (original)

- Bill of lading (copy)

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

- Export declaration form confirmed by customs (copy)

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

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

a) In the case of debt repayment in freely convertible foreign currencies (USD, SFr, DM...):

- The exchange rate table between VND 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 withdraw export tax paid according to current regulations for repaying 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)

- Confirmation of tax payment to the State Budget (original or certified copy) bearing the stamp and signature of confirmation from the National Treasury accountant at the place of payment.

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

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

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

- Service supply invoice (original)

- Original confirmation of agreement to pay debt repayment (from the Embassy or the representative office of the creditor country, 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 export goods for debt repayment mentioned above)

2. Settlement:

After reviewing and confirming that the enterprise's debt settlement dossier is complete and valid, the Ministry of Finance will pay VND to the main enterprises according to the announced exchange rate, specifically as follows:

- Pay 100% of the value if the State Commercial Bank confirms "the foreign party has settled the debt" or has been "confirmed to settle the debt".

- Advance payment of 90% of the value if the State Commercial Bank confirms "has completed procedures to send documents for debt repayment processing". The remaining 10% value, the Ministry of Finance will pay further when receiving confirmation of debt settlement 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 of the State Commercial Bank announced on the debt repayment date. If the Ministry of Finance delays payment by 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 to take 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 provisions regarding delivery and quality of goods as stipulated in the commercial contracts signed with foreign countries, or as stated in the orders signed with the Ministry of Finance (if there are separate provisions), leading to the foreign party refusing to settle debts 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 penalized according to the percentage of unfulfilled orders, as specified in the bidding regulations issued by the Ministry of Finance.

III/ REPORT ON IMPLEMENTATION

1. Send copies of Contracts and accessories signed with foreign countries regarding the export of goods and services for debt repayment to the State to the Ministry of Finance (Department of Foreign Financial Affairs).

2. Regularly submit reports on the implementation status and figures of debt repayment orders to the Ministry of Finance (Department of Foreign Financial Affairs) every 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 the delivery value according to the final delivery deadline 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 agreement of the Ministry of Finance.

IV/ IMPLEMENTATION PROVISIONS

This Circular takes effect from the date of issuance 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, if ministries, sectors, and related enterprises encounter any difficulties, please report to the Ministry of Finance for timely resolution./.