Joint Circular No. 9/TC-NT guiding the implementation of the system of monetary incentives for production and export delivery

JOINT CIRCULAR

Guidelines for Implementing the Reward System to Encourage Production and Export Deliveries in Vietnamese Currency

xuất khẩu bằng đồng Việt Nam

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

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

I. PURPOSE OF THE REWARD SYSTEM

Establishing a reward system to encourage production and export deliveries in Vietnamese currency aims to motivate cooperatives, production groups, and production corporations (hereinafter referred to collectively as collective production units) to strive to fully and exceed their state plan targets for production and export deliveries, increase income for workers, and create additional material conditions for collective production units to expand production, increase the volume and quality of exported goods.

II. RECIPIENTS AND CONDITIONS FOR RECEIVING AWARDS

A. Recipients of awards include:

- Production groups,

- Production corporations,

- Production cooperatives, which have fully completed export delivery contracts signed with local Import-Export Joint Ventures, specialized local companies (such as rattan and bamboo companies, handicraft companies, etc.). Hereinafter referred to collectively as local Import-Export Joint Ventures, for goods exported by local Import-Export Joint Ventures to the Central Import-Export Corporation according to state-directed prices for central export purposes to earn foreign exchange for the state's centralized foreign exchange fund.

B. Conditions for receiving awards:

- Collective production units must fully complete contracts with local Import-Export Joint Ventures regarding the portion of goods delivered to the Central Corporation for export. The quantity signed in the contract must not be lower than the state plan target for export deliveries to the Central Corporation assigned by the People's Committee of the province or centrally-administered city to the collective production unit (the export product plan target assigned by the People's Committee of the province or centrally-administered city to subordinate collective production units must not be lower than the state plan target assigned to the provinces or cities).

Completing a contract means that collective production units must fulfill all terms stipulated in the contract, mainly 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 collective production unit and the local Import-Export Joint Venture only take effect after the state plan target assigned to the People's Committee of the province or centrally-administered city has been adjusted downward. The deadline for adjusting the contract between the parties is 15 days from the date of the state plan adjustment. The final adjustment date is September 30 each year.

If, during the year, due to objective conditions, the state fails to provide sufficient raw materials (confirmed by a document from the State Planning Commission) for collective production units to produce goods for export to the Central Corporation, then the collective production unit may correspondingly reduce its obligation to deliver goods for export to the Central Corporation.

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

III. AMOUNT OF REWARDS.

Based on Decision No. 177-HĐBT, collective production units that comprehensively complete state plan targets for production and export deliveries will receive rewards in Vietnamese currency equal to 4%-5% of the contract value (excluding the value of raw materials supplied by the state for production).

Specific reward rates applicable to each group of products are as follows:

a) Agricultural, forestry, and livestock products 5%

b) Other products 4%.

The value of raw materials supplied by the state excluded when calculating rewards refers to the value of raw materials provided by organizations responsible for import and export to collective production units for producing goods to be exported to the Central Corporation.

The bases for determining the quantity and value of raw materials and materials supplied by the state are as follows:

- Economic and technical norms on the consumption of raw materials, fuel, and materials to produce goods for export to the Central Corporation, as prescribed by the competent authority.

- The quantity of raw materials and materials supplied by the state.

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

IV. ORGANIZATION AND MANAGEMENT OF THE REWARD FUND

1. Establishment and Management of the Reward Fund. To ensure a source of Vietnamese currency for rewarding collective production units that complete export delivery contracts to the Central Corporation, when annual financial plans are prepared, central trading organizations for import and export are budgeted for the following reward levels:

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

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

Central trading organizations for import and export base these ratios to declare foreign trade profit and loss adjustments when goods are exported and set aside a fund for encouraging exports in Vietnamese currency.

When implementing the practice of allocating exchange rates to trading organizations for import and export, central Import-Export Corporations are allowed to allocate, based on the above ratios, to establish a fund for encouraging exports in Vietnamese currency from the Vietnamese currency provided by the Bank according to the exchange rate group approved by the Exchange Rate Council.

The amount of the reward fund for encouraging exports in Vietnamese currency of 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 unit completes the contract and no later than June 30 of the following year.

- After collective production units complete export delivery contracts to the Central Corporation, local Import-Export Joint Ventures are responsible for preparing award review files for collective units that meet the award conditions.

- 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 stock company alliance failing to process the application for award consideration, the Joint Ministries will require the local import-export joint stock company alliance to allocate from its own reward fund to pay the collective production base the amount of bonus they should have received according to this Circular.

The documents for award consideration for collective production bases include:

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

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

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

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

After completing the award application documents, the local import-export joint stock company alliance transfers them to the relevant central trading organization.

Upon receipt of the award application documents, the central trading organizations are responsible for rechecking the documents and then transferring the entire file to the supervising ministry. The supervising ministry reviews and issues a decision on the award for the collective production bases according to Form No. 4 (three copies). After the supervising ministry completes the review, it returns the entire file to the central trading organization (including the entire file sent by the local import-export joint stock company alliance and the award decision).

Based on the review results of the supervising ministry, the central trading organizations inform the local import-export joint stock company alliance of the ministry's award decision while sending the ministry's award decision and transferring the award money directly to the collective production base entitled to receive it.

3. Reporting and settlement of 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, the bonus has not been disbursed to the collective production bases in time, the central trading organizations must estimate the bonus expenditure. Any surplus in the export incentive bonus fund after disbursement and deduction of estimated bonus expenditure must be remitted to the State Budget no later than December 31 each year. Subsequently, the central trading organizations must settle the use of the estimated expenditures with the Ministry of Finance and this must be reflected in the quarterly and annual reports of the unit.

4. Use of bonuses. Collective production bases distribute the bonuses into the following funds:

- 30% to the reserve fund,

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

5. Implementation Organization.

To maximize 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 fully understand the purpose and content of the system, recognizing their obligations and benefits in the production and delivery of export goods.

- Local import-export alliances and central trading organizations need to thoroughly understand and strictly implement 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 periodic or spot checks on the implementation of this award system. During inspections, the Ministry of Finance may invite the supervising ministry (of the entities being inspected) to participate in the inspection.

This circular takes effect to award collective production bases fulfilling their obligation to deliver export goods to the central government 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 stock company alliances can apply this system to award collective production bases that have completed export delivery contracts with the alliance to achieve the province's export turnover, but the award level shall not exceed the level specified in this guiding circular.