Circular No. 93/2003/TT-BTC guides the financial management regime for the Vietnam Environmental Protection Fund

CIRCULAR

Guidelines for Financial Management

of the Vietnam Environmental Protection Fund

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Pursuant to Decision No. 82/2002/QĐ-TTg dated June 26, 2002 of the Government Chairman on the establishment, organization, and operation of the Vietnam Environmental Protection Fund, the Ministry of Finance hereby provides guidelines for financial management of the Vietnam Environmental Protection Fund 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.

Article 1. These guidelines apply to the Vietnam Environmental Protection Fund.

Article 2. The Vietnam Environmental Protection Fund shall be capitalized with state budget funds. The Fund is responsible for ensuring capital repayment and covering costs, exempt from tax and other state budget payments for activities in the field of environmental protection.

Article 3. The Vietnam Environmental Protection Fund is an independent accounting entity, using its income to cover expenses during operations; it may distribute financial surplus according to the provisions of this circular.

Article 4. The Management Board and Director of the Vietnam Environmental Protection Fund are responsible to the Prime Minister for the safekeeping of the Fund's capital and assets, using capital for its intended purpose effectively.

Article 5. The Ministry of Finance performs the function of state management over finance, guiding, inspecting, and approving annual financial settlement reports of the Vietnam Environmental Protection Fund.

Chapter II. PROVISIONS ON CAPITAL AND ASSETS

Clause 1. The operating capital of the Vietnam Environmental Protection Fund includes:

Point 1.1. Authorized Capital Includes:

- VND 200 billion provided by the State Budget.

- Additional contributions from the supplementary authorized capital fund.

When there is a request to change the level of authorized capital, the Chairman of the Management Board of the Vietnam Environmental Protection Fund shall propose to the Ministers of Natural Resources and Environment, Finance, and Planning and Investment to submit to the Prime Minister for decision.

Point 1.2. Compensation money for environmental damage paid by organizations and individuals into the state budget as stipulated by law.

Point 1.3. Fifty percent of annual environmental protection fees. The collection, payment, and allocation of these funds to the Vietnam Environmental Protection Fund shall be carried out in accordance with government regulations on fees and charges.

Point 1.4. Ten percent of the state budget annually allocated for state management activities related to environmental protection. This source of funding is determined in the annual state budget plan and allocated to the Vietnam Environmental Protection Fund.

Point 1.5. Donations, grants, and voluntary contributions from domestic and foreign organizations and individuals.

Point 1.6. Entrusted capital from domestic and foreign organizations for lending or capital provision under entrustment contracts.

Point 1.7. Recovery of principal loans.

Point 1.8. Other capital as prescribed by law.

The sources of capital from Points 1.2 to 1.5 above are referred to as the annual supplementary capital of the Vietnam Environmental Protection Fund.

Clause 2. The operating capital of the Vietnam Environmental Protection Fund must be used for its intended purposes, efficiently, safely, and for the following objectives:

- Providing loans at preferential interest rates for environmental protection projects as follows:

+ The loan amount does not exceed 70% of the total cost of environmental protection investment programs and projects.

+ Interest rates are set by the Management Board for each group of borrowers but do not exceed 50% of the commercial loan interest rate. The Ministry of Finance will announce the interest rate as a basis for the Management Board to determine the loan interest rate for each period.

+ For each project, the loan interest rate is determined at the time of signing the loan agreement and remains fixed throughout the loan term.

+ In cases where loan projects violate loan agreements or fail to repay on schedule, the project owner must pay overdue interest at 200% of the loan interest rate.

- Supporting interest rates for loans and financing environmental protection activities as prescribed.

- Investing in and purchasing fixed assets for the operation of the Vietnam Environmental Protection Fund not exceeding 7% of the Fund's authorized capital. All investment and procurement activities for fixed assets of the Vietnam Environmental Protection Fund are carried out in accordance with regulations applicable to state-owned enterprises. Annually, the Vietnam Environmental Protection Fund must develop an investment and procurement plan for fixed assets, submit it for review and approval by the Management Board, and implement within the approved plan.

- Purchasing government bonds from temporarily idle capital not originating from the state budget based on the consent of the capital provider.

Clause 3. The Ministry of Finance allocates and disburses the authorized capital and state budget capital to the Vietnam Environmental Protection Fund according to the state budget estimate, the State Budget Law, and implementing regulations. Compensation money for environmental damage and annual environmental protection fees are provided to the Vietnam Environmental Protection Fund according to current state regulations.

Clause 4. Annually, the Vietnam Environmental Protection Fund must balance its capital sources and needs for environmental protection activities; implement plans for mobilizing capital sources.

The Vietnam Environmental Protection Fund is allowed to open accounts at the State Treasury and commercial banks as prescribed.

Clause 5. Inventory and revaluation of assets

Point 5.1. The Vietnam Environmental Protection Fund must conduct inventory and asset revaluation in the following situations:

- Conducting inventory and revaluation of assets according to the decision of the competent state authority.

- Recovering collateral assets when the investor cannot repay the debt.

- Liquidation and Sale of Assets

Point 5.2. Asset inventory and revaluation must comply with current regulations applicable to state-owned enterprises. Any increases or decreases in value due to asset revaluation (excluding recovered collateral assets and assets formed from Fund loans when the investor cannot repay the debt) are accounted for as increases or decreases in the Fund's capital according to regulations applicable to state-owned enterprises.

Clause 6. In cases of asset loss by the Fund, the Vietnam Environmental Protection Fund must identify the cause and handle it accordingly:

Point 6.1. If the asset loss is due to the fault of a collective or individual, the collective or individual causing the loss must compensate according to the law.

Point 6.2. If the asset was insured according to the law, it shall be handled according to the insurance contract.

Clause 7. The establishment and use of depreciation reserves for fixed assets of the Vietnam Environmental Protection Fund shall be carried out in accordance with the guidance of the Ministry of Finance for enterprises.

8. The Vietnam Environmental Protection Fund has the right to lease assets under its management according to the principle of efficiency, preservation, and development of capital in accordance with the Civil Code and other relevant laws.

9. The Vietnam Environmental Protection Fund may liquidate and sell off assets that are substandard, deteriorated, irreparably damaged, technologically obsolete, or inefficiently utilized.

When liquidating assets, the Vietnam Environmental Protection Fund must appraise the assets and organize auctions in accordance with the law. The difference between the proceeds from the liquidation or sale of the assets and their remaining book value on accounting records, along with any liquidation or sale expenses, shall be recorded as income for the Vietnam Environmental Protection Fund.

III. PROVISIONS ON ESTABLISHING A RISK RESERVE FUND

1. The Vietnam Environmental Protection Fund is allowed to establish a risk reserve fund to compensate for losses caused by external factors arising during the lending process for environmental protection projects.

2. The level of contribution to the Risk Reserve Fund is determined annually by the Management Board but must be at least 0.2% of the annual outstanding loan balance of the Fund. Contributions are made once a year upon the completion of the fiscal year.

3. The Risk Reserve Fund can be used to cover risks of projects arising due to force majeure such as losses from natural disasters or fires, after deducting any compensation received from insurance agencies (if applicable).

4. At the end of the year, if the Risk Reserve Fund is not fully utilized, the remaining balance will be carried over to the next year's Risk Reserve Fund. In cases where the remaining balance of the Risk Reserve Fund is insufficient to cover losses incurred during the year, the Management Board of the Vietnam Environmental Protection Fund shall report to the Ministry of Natural Resources and Environment and the Ministry of Finance for submission to the Prime Minister for consideration and decision.

5. Authority to handle risks

- The Chairman of the Management Board decides on debt extension, interest reduction, and write-off based on the proposal of the Fund Director. The maximum extension period cannot exceed one-third of the loan term specified in the credit agreement.

- The Ministry of Finance, in collaboration with the Ministry of Natural Resources and Environment, reports to the Prime Minister for approval to write off debts based on the proposal of the Management Board of the Fund.

IV. INTEREST SUBSIDY FOR LOANS

1. Principles for determining and providing interest subsidies

- Project sponsors are only eligible to receive interest subsidies for the amount of loans invested in financial institutions within the total project investment budget. Sponsors are not eligible for interest subsidies for overdue debts.

- Interest subsidies are provided when the project is completed, put into operation, and able to repay the loans to financial institutions.

- The level of interest subsidy is decided by the Management Board of the Fund but shall not exceed the ceiling rate announced by the Ministry of Finance at the time of signing the interest subsidy agreement.

2. Determining the level of interest subsidy

3. Planning interest subsidies

Annually, based on the supplementary capital plan and the interest subsidy needs of projects, the Vietnam Environmental Protection Fund develops an interest subsidy plan for eligible projects.

The total amount of interest subsidies provided annually shall not exceed 20% of the Fund’s annual supplementary capital, excluding state budget equity capital.

The annual interest subsidy plan must be approved by the Management Board of the Vietnam Environmental Protection Fund and reported to the Ministry of Finance and the Ministry of Natural Resources and Environment.

V. CAPITAL SUPPORT

1. Principles of Capital Support

The Vietnam Environmental Protection Fund provides support to eligible entities as stipulated in the Charter of the Vietnam Environmental Protection Fund.

The maximum level of support from the Vietnam Environmental Protection Fund is 50% of the costs required to fulfill tasks.

2. Planning Capital Support

Annually, based on the supplementary capital plan and the support needs of eligible entities, the Vietnam Environmental Protection Fund develops a capital support plan for those entities as prescribed.

The total amount of capital support provided annually shall not exceed 30% of the Fund’s annual supplementary capital.

The annual capital support plan must be approved by the Management Board of the Vietnam Environmental Protection Fund and reported to the Ministry of Finance and the Ministry of Natural Resources and Environment.

VI. INCOME AND EXPENSES

1. Income of the Vietnam Environmental Protection Fund includes all actual receipts generated from its business activities and other services during the year, including:

1.1. Income from business operations:

- Interest income from loans to projects financed by the Vietnam Environmental Protection Fund;

- Interest income from deposits of the Vietnam Environmental Protection Fund at the State Treasury and commercial banks;

- Receiving fees for handling entrusted loans according to the entrustment contracts;

- Receiving from other business operations and services;

1.2. Financial activity income:

- Interest income from government bond trading activities;

- Income from asset leasing activities;

- Other financial service income.

1.3. Unusual activity income:

- Fine income;

- Proceeds from the liquidation or sale of Fund assets (after deducting residual values and liquidation or sale expenses);

- Income from revaluation gains on collateralized assets when borrowers default on loans funded by the Fund;

- Recovery of previously written-off debts;

- Other unusual income.

2. Expenses of the Vietnam Environmental Protection Fund include necessary expenditures for its operations, supported by valid invoices and receipts. The level and objects of expenditure are implemented in accordance with legal provisions. Where there are no legal provisions, the Fund bases its expense levels on its financial capacity, makes decisions on expenditures, and assumes responsibility under the law.

Expenses must be included in the annual financial plan approved by the Management Board, including:

2.1. Operational activity expenses:

- Capital raising expenses;

- Payment service expenses;

- Entrusted agency expenses;

- Risk reserve fund contribution expenses;

- Other operational activity expenses.

2.2. Expenditures for employees directly working at the Vietnam Environmental Protection Fund:

- Wages and allowances according to state enterprise wage regulations;

- Social insurance, health insurance contributions, and trade union fees as prescribed by state regulations;

- Meals allowance: The amount spent per person shall not exceed the minimum wage prescribed by the State for workers and employees;

- Allowance for transaction uniforms, personal protective equipment expenses as prescribed;

- Allowance for members of the Management Board and part-time staff; hiring experts' fees.

2.3. Administrative expenses:

- Depreciation expenses of fixed assets

- Expenses for management and public service activities:

+ Purchase and supply expenses for labor tools and office supplies;

+ Postal and telecommunication expenses: Including postal fees, telecommunication, telegraph, telex, fax... paid according to invoices from postal authorities;

+ Expenses for electricity, water, health care, and office sanitation.

+ Fuel expenses for transportation serving officials, civil servants, and employees on business trips as prescribed by the State;

+ Travel expenses for officials, civil servants, and employees on domestic and international business trips, settled according to the current regulations of the Ministry of Finance;

+ Publicity, press conference, transaction, foreign affairs, and conference expenses within the approved financial plan;

+ Inspection and supervision expenses as prescribed;

+ Maintenance and repair expenses for assets according to the annual financial plan;

+ Training and professional instruction expenses.

- Reserve fund for termination benefits. The contribution rate ranges from 1% to 3% of the basic salary fund subject to social insurance contributions of the Vietnam Environment Protection Fund.

The reserve fund for termination benefits is used to pay termination benefits and unemployment benefits as stipulated in Article 12 and Article 13 of Decree No. 39/2003/NĐ-CP dated April 18, 2003, detailing and guiding the implementation of certain provisions of the Labor Code regarding employment.

If the reserve fund for unemployment benefits is not fully utilized in a year, the remaining balance will be carried over to the next year. In cases where the reserve fund for unemployment benefits is insufficient to cover termination benefits and unemployment benefits for employees in the fiscal year, the entire shortfall will be recorded as administrative expenses of the enterprise for that period.

- Other administrative expenses as prescribed.

2.4. Financial activity expenses:

- Expenses for government bond trading activities;

- Rental asset expenses;

2.5. Unusual expenses:

- Expenses for recovering written-off debts;

- Expenses for collecting penalties as prescribed;

- Insurance expenses for assets and other types of insurance as prescribed;

- Valuation adjustment expenses due to revaluation of collateral when the project owner cannot repay the debt, assets formed from the Fund's loans;

- Support expenses for the activities of the Party and mass organizations of the Vietnam Environment Protection Fund as prescribed by the State (excluding expenses supporting trade unions at industry, local levels, and other social organizations);

- Other expenses as prescribed.

3. The Vietnam Environment Protection Fund shall not record the following expenses:

Losses compensated by the Government or reimbursed by insurance agencies or the party responsible for causing the loss;

- Penalties for administrative violations due to subjective reasons, financial system violations; budget expenditures for the Environmental Protection Agency;

- Investment construction, procurement, upgrading, and renovation expenses for fixed assets from investment construction funds;

- Expenses for repairing, maintaining, and equipping welfare assets;

- Budget expenditures for the Environmental Protection Agency.

4. During the first five years of operation, if the income of the Vietnam Environment Protection Fund is insufficient to cover expenses, the Management Board of the Fund shall report to the Ministry of Finance for specific handling.

VII. DISTRIBUTION OF INCOME AND USE OF FUNDS

1. Distribution of Income

After deducting fines for violating laws and regulations annually, the surplus shall be distributed as follows:

- Allocate 10% to the capital reserve fund;

- Allocate 50% to the development investment fund;

- Allocate to the reward and welfare fund. The allocation ratio for these two funds shall be implemented according to the regulations applicable to state-owned enterprises;

- The remaining amount after setting up the above funds shall be added to the development investment fund.

2. Purpose of Using Funds

2.1. The capital reserve fund is used to increase the registered capital of the Vietnam Environment Protection Fund according to the decision of the competent authority.

2.2. The development investment fund is used for investment, procurement of assets, technological innovation, and improvement of working conditions.

2.3. The reward fund is used for:

- Year-end or regular bonuses for staff of the Vietnam Environment Protection Fund. The bonus level is determined by the Director based on productivity and performance of each staff member at the Fund.

- Special bonuses for individuals or groups of the Vietnam Environment Protection Fund who have innovative ideas or improvements in technical procedures that bring about efficiency. The bonus level is determined by the Fund Director.

- Bonuses for individuals or units outside the Vietnam Environment Protection Fund that contribute effectively to the Fund's operations. The bonus level is determined by the Chairman of the Fund's Management Board.

2.4. The welfare fund is used for:

- Investment in construction or repair and supplementation of welfare facilities of the Vietnam Environment Protection Fund, contributing capital to joint construction of welfare facilities within the industry or with other units under agreed contracts.

- Expenses for sports, cultural, and public welfare activities for the collective of staff of the Vietnam Environment Protection Fund.

- Regular and emergency hardship assistance expenses for staff of the Vietnam Environment Protection Fund.

- Contributions to the social welfare fund and other welfare activities.

The Director of the Vietnam Environment Protection Fund shall cooperate with the Trade Union Committee of the Fund to manage and utilize this fund.

VIII. ACCOUNTING SYSTEM AND FINANCIAL PLANNING

1. The Vietnam Environment Protection Fund shall apply the accounting system of the Development Support Fund to conduct accounting for its activities.

2. Annually, the Vietnam Environment Protection Fund has the responsibility to prepare and report the following plans to the Ministry of Natural Resources and Environment and the Ministry of Finance:

- Annual capital plan including: additional state budget capital; state budget capital allocated for specified purposes; recovered loan capital; other raised capital.

- Capital utilization plan including: investment lending plan; interest subsidy plan; non-repayable funding plan.

- Revenue and expenditure financial plan accompanied by detailed explanations of revenue and expenditure items and specific expenditure standards.

3. Periodically (quarterly, annually), the Vietnam Environment Protection Fund shall prepare and submit financial reports to the Ministry of Natural Resources and Environment and the Ministry of Finance:

- Quarterly reports shall be submitted no later than the 25th day of the first month of the following quarter.

- Final accounts reports shall be submitted no later than March 30 of the following year for the Ministry of Finance to review, audit, and approve.

4. The Vietnam Environment Protection Fund is subject to financial inspection by the Ministry of Finance, including:

- Inspection of periodic or ad hoc accounting reports and final accounts reports.

- Specialized inspections according to specific financial management requirements.

IX. IMPLEMENTATION ORGANIZATION

This Circular takes effect 15 days from the date of publication in the Official Gazette. During implementation, if there are any difficulties, the Vietnam Environment Protection Fund shall report them to the Ministry of Finance for study and resolution./.1