Joint Circular No. 9-TC/NT guides the implementation of the reward system to encourage production and export delivery in Vietnamese currency.

CIRCULAR

JOINT MINISTRY OF FINANCE-MINISTRY OF FOREIGN TRADE DECREE NO. 9-TC/NT DATED FEBRUARY 4, 1987
GUIDELINES FOR IMPLEMENTING INCENTIVE SYSTEMS FOR PRODUCTION AND EXPORT DELIVERY BY MONETARY REWARD
ENCOURAGE THE PRODUCTION AND DELIVERY OF EXPORT GOODS IN VIETNAMESE DONG
BY VIETNAMESE DONG

The Council of Ministers issued Decision No. 117-HĐBT dated June 15, 1985 on policies and measures to promote exports and strengthen import-export management, including Article 14 which stipulates a monetary reward system for cooperatives, production units, and production groups that complete state plans for production and export delivery.

The Joint Ministry of Finance-Ministry of Foreign Trade provides guidelines for implementing Article 14 of Decision No. 117-HĐBT as follows:

I. OBJECTIVES OF THE INCENTIVE SYSTEM

Establishing a monetary reward system to encourage production and export delivery aims to motivate cooperatives, production units, and production groups (hereinafter referred to as collective production entities) to strive to fully and exceed their state plan targets for production and export delivery, increase workers' income, and create material conditions for collective production entities to expand production, increase export volume, and improve export quality.

II. ELIGIBILITY AND CONDITIONS FOR RECEIVING AWARDS

A. Eligible recipients are:

- Production units,

- Production groups,

- Production cooperatives, which have fully completed export delivery contracts signed with local Import-Export Joint Ventures, specialized local companies (bamboo and rattan companies, handicraft companies, etc.). Hereinafter referred to collectively as local Import-Export Joint Ventures, for goods exported by these joint ventures to the Central Import-Export Corporation at state-directed prices for foreign currency collection by the central government.

B. Conditions for receiving awards:

- Collective production entities must fully complete contracts with local Import-Export Joint Ventures regarding the portion of goods delivered to the central government for export. The quantity agreed upon in the contract must not be lower than the state plan target for export delivery to the central government assigned by the People's Committee of provinces and centrally-administered cities to the collective production entities (the export product plan targets assigned by the provincial and city committees to subordinate production entities must not be lower than the central government's plan targets for the provinces and cities).

Completing a contract means that the collective production entities must comply with all terms of the contract, primarily those concerning:

- Quantity and value of goods,

- Types, specifications, and quality of goods,

- Delivery deadlines.

Adjustments to reduce the quantity or value of goods recorded in the contract between the production entity and the local Import-Export Joint Venture only take effect after the state plan targets assigned to the provincial and city committees have been reduced. The deadline for contract adjustments between the parties is fifteen days from the date of the state plan adjustment. The final adjustment date is September 30 each year.

If, due to objective conditions, the state fails to provide sufficient raw materials (confirmed by a document from the State Planning Commission) for the production entities to produce goods for export to the central government, then the production entities may correspondingly reduce their obligation to deliver goods for export to the central government.

The price for delivering goods for export to the central government is the state-directed price, and rewards are not considered in cases where goods are delivered at negotiated prices.

III. AMOUNT OF REWARDS

Based on Decision No. 177-HĐBT, collective production entities that comprehensively complete state plan targets for production and export delivery will receive a monetary reward equal to 4%-5% of the contract value (excluding the value of state-provided raw materials).

Specific reward rates applicable to different categories of goods are as follows:

a) Agricultural, forestry, and livestock products 5%

b) Other goods 4%.

The value of state-provided raw materials excluded when calculating rewards refers to the cost of raw materials supplied by import-export organizations to collective production entities for producing goods to be exported to the central government.

The basis for determining the quantity and value of state-provided raw materials and materials includes:

- Economic and technical norms for raw material, fuel, and material consumption to produce goods for export to the central government, as prescribed by authorized bodies.

- The quantity of state-provided raw materials and materials.

- The price of raw materials and materials sold by import-export organizations to collective production entities.

IV. ORGANIZATION AND MANAGEMENT OF THE INCENTIVE FUND

1. Establishment and management of the incentive fund. To ensure a source of Vietnamese dong for rewarding collective production entities that complete export delivery contracts to the central government, each year when preparing financial plans, central import-export trading organizations are budgeted for the following levels of incentives:

- For agricultural, forestry, and livestock products: 3% of the purchase price from the production base.

- For other goods: 2% of the purchase price from the production base.

Central import-export trading organizations base themselves on the above ratios to declare foreign trade profit and loss adjustments when goods are exported and set up an incentive fund for promoting exports in Vietnamese dong.

When implementing exchange rate contracting for import-export trading units, the Central Import-Export Corporations can allocate, according to the above ratios, to establish an incentive fund for promoting exports in Vietnamese dong from the Vietnamese dong provided by the Bank for the Central Import-Export Corporations based on the exchange rate group approved by the Exchange Rate Council.

The amount of the incentive fund for promoting exports in Vietnamese dong of the Central Import-Export Corporations is recorded in one account at the Foreign Trade Bank and used as specified in point 2 below.

2. Method of awarding and procedures for granting awards.

- Awards should be granted immediately after the collective production entity completes the contract and no later than June 30 of the following year.

- After the collective production entities complete the export delivery contracts to the central government, the local Import-Export Joint Ventures are responsible for preparing files to review and grant awards to eligible collective production entities.

- Collective production bases have the right to lodge complaints with the Ministry of Foreign Trade when they believe they meet the conditions for receiving export incentive bonuses in Vietnamese currency but are not awarded such bonuses.

Upon receipt of a complaint, the Ministry of Foreign Trade will conduct an investigation. If it is determined that the reason why the collective production base was not awarded the bonus is due to the local import-export joint venture company not processing the application for award consideration, then the Joint Ministries will require the local import-export joint venture company to allocate funds from its own reward fund to pay the collective production base the amount of bonus they should have received according to this Circular.

The files for award consideration for collective production bases include:

- A valuation form of state-supplied materials (Form No. 1),

- An award calculation form (Form No. 2),

- A copy of the contract between the collective production base and the local import-export joint venture company,

- A summary of the allocation of export targets to collective production bases (Form No. 3).

After completing the award consideration file, the local import-export joint venture company transfers the file to the relevant central trading organization.

Upon receiving the award consideration file, the central trading organizations are responsible for rechecking the documents, then transferring the entire file to the supervising ministry, which reviews and issues a decision on the award for collective production bases according to Form No. 4 (three copies). After reviewing and approving, the supervising ministry returns the entire file to the central trading organization (including the file sent by the local import-export joint venture company and the award decision).

Based on the review results of the supervising ministry, the central trading organizations inform the local import-export joint venture companies about the award decision issued by the ministry and send the award decision and the allocated bonus directly to the collective production bases entitled to receive them.

3. Reporting and settling the export incentive bonus fund.

Central trading organizations must maintain records to track the establishment and use of the export incentive bonus fund and report this situation in their quarterly and annual settlements.

At year-end, if due to objective reasons, bonuses have not been distributed to collective production bases in time, the central trading organizations must estimate the bonus expenditure. Any surplus in the export incentive bonus fund after distribution and deduction of estimated bonus expenditure must be remitted to the State Budget no later than December 31 each year. Thereafter, the central trading organizations must settle the use of estimated expenditures with the Ministry of Finance and reflect this in their quarterly and annual reports.

4. Using the bonus. Collective production bases distribute the bonus into the following funds:

- 30% to the accumulation fund,

- 70% to the public welfare fund (of which 80% is allocated for individual awards).

5. Implementation Organization.

To enhance the stimulating effect of the award system on the production of export goods in the collective sector, the Joint Ministries request all sectors at all levels to perform the following tasks:

- Central ministries, bureaus, provincial People's Committees, city People's Committees must disseminate this circular to collective production bases directly engaged in producing export goods, ensuring these bases understand the purpose and content of the system, recognize their obligations and benefits in producing and delivering export goods.

- Local import-export joint ventures and central trading organizations need to thoroughly understand and strictly comply with the guidelines set out in this circular.

- Annually, when reviewing the completion of plans by central trading organizations, higher-level management agencies need to check the management and use of the export incentive bonus fund in Vietnamese currency.

Awards given outside the regulations must be settled and deducted from the bonus amount of the following year.

- The Ministry of Finance is responsible for periodically or randomly checking the implementation of this award system. During inspections, the Ministry of Finance may invite the supervising ministry (of the inspected entities) to participate in the inspection.

This circular takes effect to award collective production bases for fulfilling their obligation to deliver export goods to the central government starting from January 1, 1986. For collective production bases under the Fisheries sector fulfilling their obligation to deliver goods to the central government, a separate system is applied. Local import-export joint venture companies may apply this system to award collective production bases that have completed export delivery contracts with the joint venture to achieve the province's export turnover, but the award level shall not exceed the level specified in this guiding circular.