Circular No. 88/2003/TT-BTC guides the implementation of Decision No. 182/2003/QD-TTg dated September 5, 2003, of the Prime Minister on the issuance of government bonds for investment in important transportation and water conservancy projects of the country.

CIRCULAR

Guidelines for implementing Decision No. 182/2003/QĐ-TTg dated September 5, 2003 of the Prime Minister on the issuance of government bonds to invest in important transportation and water conservancy projects of the country

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Implementing Decision No. 182/2003/QĐ-TTg dated September 5, 2003 of the Prime Minister on the issuance of government bonds to invest in important transportation and water conservancy projects of the country, after reaching consensus with the State Bank, the Ministry of Finance provides guidelines for implementation as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. From 2003, the Ministry of Finance will issue government bonds denominated in Vietnamese dong and foreign currencies to raise funds for investment in important transportation and water conservancy projects of the country, contributing to economic and social development, and restructuring the economy.

2. The annual plan for issuing government bonds shall be decided by the Minister of Finance based on the progress of construction projects and the need for repayment of maturing government bonds.

3. All proceeds from the issuance of government bonds must be centralized at the National Treasury to be used for projects included in the list approved by the Prime Minister; they must not be used for other purposes.

4. Government bonds may be transferred, gifted, left as inheritance, or used as collateral in credit relationships; government bonds denominated in Vietnamese dong can be listed and traded on the centralized securities market.

Depending on actual conditions, the State may repurchase government bonds before their maturity date.

5. Organizations and individuals purchasing government bonds shall do so voluntarily. The State encourages organizations and individuals to actively participate in buying government bonds to invest in important transportation and water conservancy projects of the country.

II. SPECIFIC PROVISIONS

1. Currency for Issuance and Payment of Bonds

Government bonds shall be issued and paid in Vietnamese dong and freely convertible foreign currencies.

Bonds issued in which currency shall be redeemed in that same currency. In cases where the payment amount includes fractional foreign currency units (less than one unit of currency), it shall be converted into Vietnamese dong according to the selling rate published by the Commercial Bank at the nearest time point for payment to customers.

2. Form and Denomination of Bonds

2.1. For Vietnamese dong:

a) Unregistered certificates, printed with the name before the denomination. The denominations of government bonds include: VND 100,000, VND 200,000, VND 500,000, VND 1,000,000, VND 2,000,000, VND 5,000,000, VND 10,000,000, VND 20,000,000, VND 50,000,000, VND 100,000,000.

b) Registered form.

2.2. For foreign currencies:

The form, type of foreign currency, and denomination of bonds shall be determined by the Minister of Finance for each issuance period.

2.3. Bond certificates shall be standardized by the Ministry of Finance and organized for printing, management, and use throughout the system by the Central Treasury.

3. Term of Bonds

Government bonds have terms of 5 years and 10 years. If necessary, the Minister of Finance may decide to issue short-term or longer-term bonds to meet the capital investment needs of projects and align with the actual situation of the market.

4. Interest Rate on Bonds

The interest rate on government bonds shall be determined according to market principles, ensuring sufficient attractiveness without disrupting the interest rate level in the market. The Minister of Finance shall determine the interest rate on bonds based on discussions with the State Bank. The interest rate for each issuance period shall be set appropriately for each issuance method, specifically as follows:

4.1. Issuance through retail and agency methods: The Minister of Finance shall decide the interest rate for each issuance period.

4.2. Issuance through guarantee and bidding methods: The Minister of Finance shall decide the maximum interest rate for each period. The General Director of the Treasury shall manage the interest rate for each issuance period, ensuring it does not exceed the permitted ceiling.

Depending on actual conditions, the Minister of Finance may decide to conduct bidding based on interest rates or volumes as appropriate.

5. Purchasers of Bonds

5.1. Entities participating in purchasing government bonds include:

a) Vietnamese citizens within and outside the country;

b) Overseas Vietnamese;

c) Foreigners working and residing in Vietnam;

d) Administrative and public service agencies;

e) Political organizations; political-social organizations; political-social-professional organizations; social organizations; social-professional organizations;

f) Organizations of all economic sectors;

g) Foreign organizations operating in Vietnam.

Entities specified in points d, e, and f are not allowed to use state budget funds to purchase bonds.

5.2. Bidding for government bonds in foreign currencies shall only apply to credit institutions operating under the Law on Credit Institutions in Vietnam; those permitted to engage in foreign exchange transactions and having foreign currency accounts at the State Bank.

5.3. The Minister of Finance shall specify the eligible purchasers for each bond issuance period.

6. Methods of Issuance

6.1. Retail through the Treasury System

a) Government bonds issued through the retail method via the Treasury System shall be denominated in Vietnamese dong and freely convertible foreign currencies.

b) The issuance of government bonds in foreign currencies through the retail method may be conducted in some major provinces and cities, in line with the capacity and actual fundraising needs.

c) Bonds sold through the Treasury System shall be sold at par value.

6.2. Auction through the State Bank

a) Government bonds in foreign currencies shall be issued through the auction method via the State Bank. The State Bank acts as an agent for the Ministry of Finance in issuing and paying government bonds in foreign currencies.

b) Bonds shall be issued at par value, in registered form, managed and recorded by the State Bank.

c) The auction of government bonds shall be conducted in two forms: competitive and non-competitive bidding.

For each issuance, the Ministry of Finance may prescribe the form of competitive bidding or a combination of competitive and non-competitive interest rate bidding. In cases where both competitive and non-competitive interest rate bidding forms are applied, the quantity of bonds subject to non-competitive interest rate bidding shall not exceed 30% of the total quantity of bonds expected to be issued in that bidding round. If the quantity of bids for non-competitive interest rate bidding is less than or equal to 30%, it will be determined based on the quantity of bids.

d) Organizing the bidding:

- Announcing the bidding: At least two working days before organizing the bidding, based on the Government bond issuance proposal from the Ministry of Finance, the State Bank of Vietnam sends out the bidding announcement to market participants and publishes it through mass media.

- Participants in the bidding are not limited by the minimum quantity they can bid and are not required to deposit a bid bond when participating in the bidding.

- Before 13:00 on the day of opening the bids, participants in the bidding must submit their bid forms to the State Bank of Vietnam.

- The time for opening the bids is set at 13:30 on the bidding day.

- Determining the quantity and interest rate of winning government bonds:

The basis for determining the quantity and interest rate of winning bonds includes: the quantity and interest rate of bids from participating organizations; the quantity of bonds expected to be issued through competitive and non-competitive interest rate bidding forms; the ceiling interest rate.

Principles for determining the quantity and interest rate of winning bids:

+ For entities participating in competitive bidding: The quantity of winning bonds is selected according to the interest rate of bids from low to high within the ceiling interest rate range; At the highest winning interest rate level where the quantity of bids exceeds the quantity of bonds expected to be issued through competitive bidding, the quantity of winning bonds is allocated to each bid form in proportion to the quantity of bids at that interest rate level.

2. In the case of a combined competitive and non-competitive interest rate auction in one session:

+ For entities participating in non-competitive interest rate bidding: The quantity of bonds issued to these entities is allocated in proportion to the quantity of bonds purchased by each entity. The purchase interest rate for bonds is the winning interest rate determined through competitive bidding.

e) Transferring money for winning government bonds:

- Within the next two working days following the bidding day, successful bidders must transfer the full amount of money for purchasing bonds at the selling price confirmed in the winning bid notification into the foreign currency account opened by the Treasury of Vietnam at the State Bank of Vietnam.

- The issuance date of the bonds is set for the second working day after the bidding day. On the issuance day, the State Bank of Vietnam credits the Treasury of Vietnam with the proceeds from selling government bonds to successful bidders, while crediting the accounts of successful bidders with the government bonds.

- In cases where successful bidders delay the settlement procedures beyond the specified date, the State Bank of Vietnam will deduct the account balance of the transferring unit to pay the Treasury of Vietnam. If the balance in the deposit accounts of successful bidders is insufficient to settle the payment, the unfulfilled portion of the winning bid results will be canceled, and the unit will be fined 5% of the canceled amount to be transferred to the state budget.

f) The Bond Bidding Committee has the responsibility to assist the Ministry of Finance and the State Bank of Vietnam in organizing and supervising the operation of the foreign currency government bond bidding market.

g) The State Bank of Vietnam provides detailed guidance on the bidding process and procedures for foreign currency government bonds.

6.3. Bidding Through the Securities Trading Center

Government bonds denominated in Vietnamese dong are issued through bidding via the Securities Trading Center in accordance with the provisions of Circular No. 55/2000/TT-BTC dated June 9, 2000, issued by the Ministry of Finance, guiding the bidding of government bonds through the centralized securities trading market.

b) Organizations and individuals who are not members of the bidding center at the securities trading center may participate in bidding through member bidders.

c) Organizations and individuals participating in bidding are not required to deposit a bid bond when participating in the bidding.

6.4. Guarantee and Issuing Agent

Government bonds denominated in Vietnamese dong are issued through guarantee or issuing agent methods in accordance with the provisions of Circular No. 68/2000/TT-BTC dated July 13, 2000, issued by the Ministry of Finance, detailing certain aspects of guarantee and issuing agent for government bonds, and Circular No. 13/2002/TT-BTC dated February 5, 2002, issued by the Ministry of Finance, amending and supplementing certain points of Circular No. 68/2000/TT-BTC dated July 13, 2000.

7. Payment of Bonds

7.1. Repayment of principal and interest on matured bonds

a) The principal of the bonds is paid once upon maturity.

b) The interest on the bonds is paid annually.

c) For retail bonds sold through the Treasury of Vietnam system or listed at the Securities Trading Center but not centrally registered, if the bondholder has not come to make the principal or interest payment upon maturity, the principal or interest amount will be reserved for repayment when the bondholder requests payment; no compound interest will be calculated and no interest will be charged during the overdue period.

7.2. Early Redemption of Bonds

In necessary cases, the Minister of Finance decides on early redemption of bonds in line with the State Budget's capacity and the objectives of national financial policy.

7.3. Methods of Bond Payment

a) For bonds denominated in Vietnamese dong

- Unregistered bonds or those centrally registered at the Securities Trading Center: The principal and interest payments of the bonds are carried out by bond depository organizations. One day before the due date for principal and interest payment, the Ministry of Finance processes the capital transfer to the Securities Trading Center to transfer directly to the bondholders through the depository organizations.

- For bearer bonds not registered and not centrally deposited at the Securities Exchange Center: The bondholder may freely choose the place to receive principal and interest payments from State Treasury units or government bond payment agents. The State Treasury and payment agents will advance funds to pay the bondholders. Periodically, the State Treasury and payment agents will consolidate the amounts paid to request the Ministry of Finance to promptly refund the temporarily advanced amounts.

- For registered bonds: Principal and interest payments on the bonds shall be made at the place of issuance. The State Treasury will advance funds from its reserve to pay the bondholders. Monthly, the State Treasury will consolidate the amounts paid to request the Ministry of Finance to promptly refund the temporarily advanced amounts.

b) For foreign currency-denominated bonds:

- Issued through auction via the State Bank: Payment of principal and interest on due bonds will be made through the State Bank. One day before the due date for principal and interest payment, the Ministry of Finance will process the transfer of foreign currency from existing foreign currency sources or convert Vietnamese dong to foreign currency from the State Bank to pay the principal and interest to the bondholders.

- Issued through retail sales via the State Treasury system: Payment of principal and interest on due bonds will be made at the State Treasury where the bonds were issued.

The source of foreign currency for payments at State Treasury units will be transferred back by the Central State Treasury. In cases where the Ministry of Finance purchases foreign currency from the State Bank to pay the due principal and interest on bonds, it will be done according to the inter-bank foreign exchange rate prevailing at the time of purchase.

8. Handling cases of lost or damaged bonds

8.1. In cases where bearer bonds are lost or altered, erased, repaired, torn, or damaged to the point of losing their original shape and content, they will not be paid.

8.2. In case a registered bond is lost or damaged, the bondholder must report in writing to the State Treasury where the bond was issued. The head of the State Treasury unit is responsible for checking, and if the bond has not been misused to withdraw money, they will confirm that payment will be made when due. If the bond has been misused, the head of the State Treasury unit is responsible for timely inspection, determining the cause, and taking appropriate measures in accordance with the law.

9. Rights and responsibilities of bondholders

9.1. The Ministry of Finance guarantees full and timely payment of principal and interest on bonds in the currency in which the bonds were purchased.

9.2. Bondholders have the right to sell, give, donate, leave as inheritance, or pledge their bonds.

9.3. Bondholders in Vietnamese dong can buy and trade bonds through the Securities Exchange Center.

9.4. Bondholders who are credit institutions may trade bonds in the money market, discounting, and rediscounting in accordance with regulations of the State Bank.

9.5. Income from bond interest and gains from bond trading for individuals are exempt from income tax.

9.6. Bondholders may deposit their bonds at the State Treasury for safekeeping. Individuals are exempt from storage fees at the State Treasury.

9.7. Bonds may not be used to replace circulating currency, pay taxes, or fulfill financial obligations to the state.

10. Management of revenue from bond issuance and sources for repayment of principal and interest on bonds

10.1. All proceeds from the issuance of government bonds are centralized at the State Treasury for investment in projects approved by the Prime Minister or to repay maturing government bonds issued for important projects. They may not be used for other purposes.

For revenue from the issuance of foreign currency-denominated bonds, after deducting direct expenses in foreign currency, the Ministry of Finance will sell them to the State Bank to increase the state's foreign exchange reserves at the inter-bank foreign exchange rate prevailing at the time of sale; the Vietnamese dong received from the State Bank will be transferred to the Ministry of Finance.

10.2. The source of funds for annual interest payments on government bonds is guaranteed by the central budget and is balanced within the annual state budget estimate.

The source of funds for principal repayment on bonds is allocated from subsequent issuances of government bonds or partially balanced into the annual state budget estimate according to the Prime Minister's Decision.

10.3. The State Treasury organizes management and accounting of revenues from bond issuance and principal repayment separately. Direct principal repayment from the state budget is carried out through this account.

11. Costs of issuing and paying bonds

11.1. Costs of issuing and paying government bonds are guaranteed by the central budget and are paid to organizations performing the tasks of issuing and paying bonds, specifically as follows:

a) Fees for retail bond issuance and payment through the State Treasury system amount to 0.5% of the value of retail bonds.

Specifically, for the issuance and payment of bonds to Social Insurance, the Treasury will charge a fee of 0.2% of the bond issuance value.

b) Fees for organizing bond auctions through the Securities Exchange Center amount to 0.15% of the total value of auctioned bonds. The Securities Exchange Center agrees with members who accept bidding orders from organizations and individuals regarding the fee to be received, with a maximum of 0.05% of the value of auctioned bonds for organizations and individuals who are not members of the auction.

c) Fees for organizations acting as agents for bond issuance are capped at 0.1% of the amount of bonds sold to investors.

d) Fees for organizations acting as agents for bond payment are 0.1% of the actual principal and interest paid.

e) Fees for organizations providing bond issuance guarantees are capped at 0.2% of the amount of bonds under guarantee.

f) Fees for issuing and paying foreign currency-denominated government bonds through the State Bank auction are 0.1% of the value of issued bonds.

In cases of foreign currency issuance, issuance and payment costs are converted into Vietnamese dong based on the accounting exchange rate set by the Ministry of Finance.

11.2. Bond printing costs are guaranteed by the central budget and directly paid to the organization printing the bonds.

11.3. Transfer fees for bond principal and interest into the account as requested by the bondholder are borne by the bondholder at the bank transaction fee rate.

III. IMPLEMENTATION

1. This Circular takes effect 15 days after publication in the Official Gazette.

2. The State Treasury shall be responsible for calculating and drafting plans to print bonds with a reasonable face value structure, providing them fully to State Treasury units; directly organizing the issuance of bonds; organizing accounting entries for bond revenues; monitoring and reporting to the Ministry of Finance on the results of bond issuance nationwide.

3. The Ministers of Ministries, Heads of ministerial-level agencies and agencies under the Government, Chairpersons of People's Committees of provinces and centrally governed cities, General Directors of the State Treasury, Heads of units under and directly under the Ministry of Finance, Directors of State Treasuries of provinces and centrally governed cities shall be responsible for implementing this Circular./.