Decision No. 95/1998/QD-TTg On Debt Settlement Phase II

Pursuant to …;

On the Settlement of Debt in Phase II

PRIME MINISTER

Pursuant to the Government Organization Law dated September 30, 1992;

At the proposal of the Central Committee for Comprehensive Debt Settlement,

DECISION:

A. GENERAL PROVISIONS:

Article 1. The parties with receivables and payables that have been declared and confirmed as debts, or have been verified according to the regulations of the Central Committee for Comprehensive Debt Settlement, are the subjects implementing this Decision.

Article 2. The directors of enterprises with receivables are responsible for taking all measures to recover debts.

Article 3. The directors of enterprises and debtors with payables are responsible for repaying debts. If they fail to repay, the enterprises and debtors shall be subject to coercive measures by competent authorities, including deductions from enterprise funds and asset auctions.

Article 4. Organizations and individuals who guarantee loans, deferred payment purchases of materials and goods for enterprises but which the enterprises have not been able to repay shall bear the responsibility to repay on behalf of the enterprises. Enterprises that are repaid on their behalf must accept the debt and repay it to the organizations and individuals who guaranteed them.

B. SPECIFIC PROVISIONS:

I. DEBTS TO THE STATE BUDGET

Article 5. Debts of state-owned enterprises currently operating to the State budget shall be classified and settled as follows:

1. Debts of basic depreciation funds that should be paid to the State budget but have not yet been paid:

- If the enterprise has used the basic depreciation fund for investment in construction projects, it is allowed to record the State budget revenue from the basic depreciation fund payable, record expenditure for capital investment in construction projects for the enterprise, and the enterprise must accept capital from the State and pay the income from capital usage according to current regulations;

- If the enterprise has used the basic depreciation fund to supplement working capital, it is allowed to record State budget revenue from the basic depreciation fund, record expenditure for working capital supplementation for the enterprise, and the enterprise must accept capital from the State and pay the income from capital usage according to current regulations.

2. Debts of various taxes, price differences, and profits payable:

If the enterprise has used the tax, price difference, and profit payable to the State budget for investment in construction projects, it is allowed to record State budget revenue from the tax, price difference, and profit payable, record expenditure for capital investment in construction projects, and the enterprise must accept capital from the State and pay the income from capital usage according to current regulations.

3. In cases where state-owned enterprises have borrowed money from the State budget to purchase export goods to repay foreign debts, establish a national reserve fund through exports, or to purchase circulating goods, but due to price fluctuations, the enterprises have not purchased sufficient goods as required, after being confirmed by the provincial or centrally-administered municipal debt settlement board or the economic management ministry, the debt may be waived.

4. In cases where state-owned enterprises have been assigned to sell imported goods under government protocols without receiving payment or not fully paying into the State budget, the following measures shall apply:

- If the enterprise has used the proceeds from sales for investment in construction projects or fixed asset acquisitions, it is allowed to record State budget revenue from the sale proceeds under the protocol, record expenditure for capital investment in construction projects for the enterprise, and the enterprise must accept capital from the State and pay the income from capital usage according to current regulations;

- If the enterprise has used the proceeds from sales to supplement working capital, it is allowed to record State budget revenue and record expenditure for working capital supplementation for the enterprise, and the enterprise must accept capital from the State and pay the income from capital usage according to current regulations;

- If the enterprise has sold goods but has not received payment, after carefully reviewing the regulations at the time of occurrence, if it is not due to the fault of the enterprise, the provincial or centrally-administered municipal debt settlement board or the economic management ministry shall report to the Central Committee for Comprehensive Debt Settlement, Ministry of Finance to submit to the Prime Minister for consideration of debt waiver for each case;

- In cases where imported goods under the protocol are unsuitable for market requirements and require a price reduction compared to the price received from the State, the enterprise is allowed to settle according to the actual amount received, and the shortfall can be waived.

5. For loans from the State budget taken by enterprises, the enterprises are responsible for repaying the debt to the State budget. If they cannot repay the debt, the enterprises must report to the Ministry of Finance for resolution.

6. Construction projects mentioned in Points 1, 2, and 4 of this Article, when settling, must have an inventory record of assets and be settled according to the State's regulations.

Article 6. Debts of state-owned enterprises currently operating to the State budget shall be classified and settled as follows:

1. Subsidies or supplementary payments according to the prescribed regulations that have not yet been disbursed, the budget level that owes must allocate funds for payment to the enterprise. If there is no source, it must report to the Ministry of Finance for consideration and resolution.

2. Amounts that enterprises have overpaid to the budget, the budget shall refund to the enterprise or deduct from the next payment period.

3. Debts arising from completed investment construction projects and assets put into use but not yet settled:

- If within the State plan but not yet settled, the basic depreciation fund and development investment fund must be used to repay the debt, if insufficient, the budget will settle the difference for the enterprise;

- If outside the State plan but the enterprise has used the asset, the enterprise must use the basic depreciation fund of the used asset and the development investment fund to settle the debt. If still insufficient, the budget will support to repay the debt. The budget support portion, the enterprise must accept capital from the State and pay the income from capital usage according to current regulations;

In some cases, if deemed necessary and reasonable investment, but the enterprise currently lacks the ability to settle, the provincial and municipal debt settlement boards (if the enterprise is managed locally), the minister or head of a ministry-level agency (if the enterprise is central) shall report to the Central Committee for Comprehensive Debt Settlement and the Ministry of Finance to report to the Prime Minister for consideration of budget capital allocation for specific cases.

4. Local budgets that have assumed repayment responsibilities when transferring enterprise assets to public institutions and local state management agencies must allocate budget funds to repay the enterprise's debt.

II. DEBTS RELATED TO BANKS

Article 7. For debts that have been put on the bank's debt settlement network:

Allow the remaining debts of state-owned enterprises, collective enterprises that have been dissolved or suspended for dissolution, cooperatives that have disbanded, individual borrowers who have died or gone missing, to be written off after all assets (if any) have been fully recovered; and debts of enterprises and households whose debts have been written off according to Government Decisions. The sources for compensating the write-off of debts shall be handled as follows:

1. Utilize the State Bank of Vietnam loan funds of commercial banks to write off debts.

2. If the commercial bank does not have a balance of loans from the State Bank of Vietnam, or if the balance of loans from the State Bank of Vietnam is insufficient to write off debts, then allow the commercial bank to compensate from the following sources:

- Risk reserve fund (if any);

- Gradually incorporate into the annual expenses of the commercial bank;

- Deduct a portion of the profit paid to the state budget according to the annual plan.

If the compensation sources are insufficient, the State Bank of Vietnam will consult with the Ministry of Finance to report to the Prime Minister for resolution.

Article 8. Interest on debts that are currently being monitored in off-balance-sheet accounts due to loans from banks that have been put on the debt settlement network, if confirmed by the debt settlement boards at various levels, may be allowed to be written off for the enterprise.

Article 9. For state-owned enterprises currently operating (type 10) that have loans from banks that have been put on the debt settlement network but are suffering losses, they should be divided into two categories:

1. Enterprises that are continuously losing money and cannot be resolved, need to cease operations according to the Enterprise Bankruptcy Law, and debt repayment shall be carried out according to the provisions of the Enterprise Bankruptcy Law.

2. Enterprises that have reorganized production and have a direction for development shall be handled as follows:

- Enterprises with commercial bank loans that have been written off, allow the conversion from loans to state budget capital within the scope of the commercial bank's debt at the State Bank of Vietnam at the time of handling;

- Enterprises with commercial bank loans that have been put on the debt settlement network, if due to objective reasons but not yet written off, shall be allowed to be handled according to Circular Joint No. 03/1997/TTLT-NHNN-BTC dated November 22, 1997, issued by the Ministry of Finance and the State Bank of Vietnam guiding the handling of overdue debts of state-owned banks after inspection.

The source of capital for commercial banks for the amount of debt converted into capital provided to enterprises shall be handled as prescribed in Article 7 of this Decision.

3. For enterprises with commercial bank loans due to subjective reasons, the responsibility of organizations and individuals must be clearly defined and dealt with according to the law.

Article 10. For debts of local finance agencies borrowed from the State Bank of Vietnam or commercial banks at the directive of the Ministry of Finance to pay salaries and social insurance, allow deductions from the amounts that the banks must pay to the state budget.

Article 11. In cases where commercial bank loans that have been put on the debt settlement network are due to the subjective reasons of the bank, the person causing the consequences must be dealt with according to the law. Unrecoverable debts must be gradually deducted from the post-tax profits of commercial banks.

Article 12. Debts guaranteed by banks:

1. Debts guaranteed by commercial banks for enterprises borrowing funds, if the guaranteed enterprise cannot repay the debt, the guaranteeing bank must repay it instead.

2. Guarantees by commercial banks for enterprises borrowing funds according to government policy, if the bank has repaid the debt, the amount repaid by the bank shall be compensated from the sources as prescribed in Point 2 of Article 7 of this Decision.

3. For debts of the Vietnam Foreign Trade Bank borrowed from abroad for enterprises or guarantees for foreign payments during the period designated by the state, now that enterprises cannot repay the debt, the State Bank of Vietnam and the Ministry of Finance will compile and submit to the Prime Minister for special consideration.

III. NATIONAL RESERVE DEBTS

Article 13. For debts arising from advance payments for purchasing rice, processing rice for export, or borrowing rice from the National Reserve Agency in the years 1988-1990, if the units have returned the full advance payment and paid the full price according to the purchase price at the time of borrowing but still owe the debt when calculated by quantity according to the repayment price, allow the debt to be written off.

Article 14. For national reserve rice debts that have been adjudicated by judicial bodies (Courts, Economic Arbitration) to be compensated, enforcement agencies must implement coercive measures to recover. In cases where the debtor has no assets to enforce the judgment, if there is confirmation from the enforcement agency, the debt can be written off.

Article 15. For national reserve rice debts of units that have ceased operations, dissolved, or declared bankrupt, if confirmed by the agency responsible for establishing the enterprise, the debt can be written off.

Article 16. For national reserve rice debts or advance payment debts for purchasing rice, if the debtor has been arrested or fled, allow the transfer of the debt to the provincial or municipal people's committees for them to handle according to the law.

Article 17. Allow the writing off of debts for rice borrowed by provincial or municipal people's committees from the National Reserve Fund after the 1989 typhoon and flood to assist the population and restore public works.

Article 18. For debts where the debtor has died, after recovering all assets, the remaining debt can be written off.

Article 19. The price of rice for settling debts with the National Reserve Fund shall be applied according to the agricultural tax price at the time of borrowing.

Article 20. Debts of the National Reserve Agency that are written off or transferred to localities shall reduce the capital of the National Reserve Agency. The Ministry of Finance will compile and issue a decision to reduce the capital of the National Reserve Agency.

IV. OTHER DEBTS OF STATE-OWNED ENTERPRISES CURRENTLY OPERATING

Article 21. Enterprises importing goods according to directives of the State to distribute according to the State plan but unable to collect money to repay debts, the Ministry of Finance will compile and report to the Prime Minister for a decision to resolve the situation for the enterprise so that the enterprise has the means to settle its debts.

Article 22. Enterprises importing goods according to directives of the State but the goods are in stock, stagnant, and unsellable, allow liquidation and reduction of the enterprise's capital. Liquidation must be carried out according to current regulations.

Article 23. A business that borrows and repays on its own or purchases goods on credit must ensure its own sources to repay debts in accordance with the law. In cases where it cannot repay the debt, the business shall report to the Chairman of the People's Committee of the province or centrally-administered city (if it is a local business); the Ministry or sector (if it is a central business) for consideration and reporting to the Ministry of Finance for consolidation and submission to the Prime Minister for resolution.

Article 24. Businesses undertaking foreign loans to import goods according to the State's directive or according to the State's plan, if there is a discrepancy in exchange rates between the time of borrowing for imports and the time of repayment making the business unable to repay the debt, the Ministry of Finance shall inspect and consider allocating budget funds for the exchange rate discrepancy so that the business has the source to repay the debt.

Article 25. For businesses borrowing foreign capital with guarantees from administrative authorities but unable to repay the debt, the guarantor agency shall be responsible for repaying the foreign debt on behalf of the business. If the guarantor agency is unable to repay the debt, the guarantor agency shall report to the Ministry of Finance for submission to the Prime Minister for resolution.

V. DEBTS OF STATE ENTERPRISES STILL IN OPERATION RELATED TO ENTERPRISES THAT HAVE STOPPED OPERATIONS

Article 26. State enterprises still in operation with receivables and payables but without counterparties to collect from or pay to, shall be accounted for in the enterprise's business results. In cases where state enterprises have large receivables that cannot be collected, the People's Committee of the province or centrally-administered city, and the Ministries managing the sectors shall report to the Ministry of Finance for consolidation and submission to the Prime Minister for consideration and support in part of the capital so that the enterprise has the source to repay the debt and operate normally.

Article 27. For state enterprises that have ceased operations and been dissolved with foreign payables and payables to other state enterprises with foreign debts, the state enterprise at which level shall allocate budget funds at that level to repay the debt. If the budget under management at that level cannot balance, it shall report to the Ministry of Finance for consolidation and submission to the Prime Minister for consideration and support.

Article 28. For state enterprises that have been reorganized and have large payables that they are unable to repay, the People's Committee of the province or centrally-administered city, and the Ministries managing the sectors shall report and propose financial handling measures to the Ministry of Finance for submission to the Prime Minister for consideration and decision.

VI. DEBTS OF PUBLIC INSTITUTIONS ENGAGED IN LIVELIHOOD ECONOMIC ACTIVITIES

Article 29. Public institutions engaged in livelihood economic activities currently in operation with payables shall bear responsibility for debt settlement.

In cases where organizations engaged in livelihood economic activities of public institutions that have been dissolved and ceased operations have payables to other units (excluding bank debts and national reserve debts handled according to Article 7 and Article 15 of this Decision), the public institution with the organization engaged in livelihood economic activities shall be responsible for allocating its own budget to settle the creditors. The Ministry of Finance shall guide the preparation of budgets and the use of budget funds allocated to public institutions to create sources for debt settlement.

VII. IMPLEMENTATION ORGANIZATION

Article 30. Creditors, debtors, guarantors, and successors shall be responsible for debt settlement according to this Decision. The authority deciding or authorized to establish the business shall be responsible before the Government for handling debt settlement.

In cases where both creditors and debtors remain unresolved and unable to settle the debt, the authority deciding to establish the business shall discuss with the State Capital and Asset Management Agency at the business or the Financial Authority to resolve the issue.

The Chairman of the People's Committee of the province or centrally-administered city, the Ministry of Finance, the State Bank of Vietnam, and the Ministries managing the sectors are the authorities directing and proposing measures to handle issues, and in cases of unresolved issues, they shall report to the Prime Minister for decision.

Article 31. Consolidation Debt settlement boards at all levels shall work regularly to examine and promptly handle debt settlement matters in accordance with regulations. Decisions on debt settlement must be based on the collective opinion of the debt settlement board.

Debt settlement boards at all levels shall examine serious cases with signs of criminal activity and recommend competent authorities to initiate prosecution and investigation.

Article 32. Ministers of Ministries, Heads of agencies equivalent to Ministries, and Chairmen of the People's Committees of provinces or centrally-administered cities shall be responsible for directing creditors and debtors within their jurisdiction to promptly resolve the final phase II debt settlement process according to the above regulations. Cases not specified in this Decision shall be handled according to current regulations.

Article 33. This Decision shall take effect fifteen days from the date of issuance.

Article 34. Ministers, Heads of agencies equivalent to Ministries, Chairmen of the People's Committees of provinces or centrally-administered cities, the Central General Debt Settlement Steering Board, and debt settlement boards at all levels shall be responsible for implementing this Decision./.