Circular No. 99/1997/TT-BTC

CIRCULAR

GUIDELINES FOR THE FINANCIAL MANAGEMENT REGULATIONS OF THE BÌNH ĐỊNH PROVINCE DEVELOPMENT INVESTMENT FUND

- BASED ON Decree No. 178/CP dated October 28, 1994 of the Government stipulating the tasks, powers, and organizational structure of the Ministry of Finance;

- BASED ON Decision No. 1086/QD-UB dated April 11, 1997 of the Chairman of the People's Committee of Bình Định Province on the establishment of the Bình Định Province Development Investment Fund;

- BASED ON Decision No. 2201/QD-UB dated March 18, 1997 of the Chairman of the People's Committee of Bình Định Province approving the charter for the organization and operation of the Bình Định Province Development Investment Fund;

The Ministry of Finance provides guidelines for the financial management regulations of the Bình Định Province Development Investment Fund as follows:

I. GENERAL PROVISIONS

1. The Bình Định Province Development Investment Fund (hereinafter referred to as the Fund) is a state financial organization established to mobilize idle funds from various economic sectors, social organizations, communities, domestic and foreign aid, and other sources to invest in development, provide loans to support projects and important programs aimed at promoting economic and social development in Bình Định Province;

2. The Fund has legal personality, with a registered capital of 50,000,000,000 VND (fifty billion VND) upon establishment, has its own seal; it can open accounts at the State Treasury and commercial banks within its jurisdiction; the Fund has rights and responsibilities regarding assets within the scope of its registered capital according to the provisions of the law.

3. Implement revenue and expenditure, accounting, and settlement of financial revenues and expenditures in accordance with the Accounting and Statistics Ordinance and the financial regulations of the State. The fiscal year of the Fund starts on January 1 and ends on December 31 each year.

4. The operations of the Fund are carried out under the principle of financial autonomy, preservation and development of capital, self-sufficiency in costs, and bearing risks independently. The Fund is subject to state financial management in accordance with the guidelines set forth in this circular.

5. The Fund is responsible for registering, declaring, and fully fulfilling its obligations to the State regarding taxes payable according to the provisions of the Law.

II. CONTENTS OF FINANCIAL MANAGEMENT

1. Sources of operating capital: The Fund's capital includes:

- Registered capital;

- Mobilized capital;

- Entrusted capital;

- Other sources of funding (if any).

a) Registered capital and additional sources of capital:

- The registered capital when establishing the Fund is 50 billion VND (fifty billion VND), formed from existing revenues of Bình Định Province according to the provisions of the law, including:

1. Capital transferred from the local budget according to the resolution of the Provincial People's Council.

2. Voluntary contributions from individuals and organizations both domestically and internationally.

3. Accumulated capital of the Bình Định Development Investment Fund and other lawful sources.

- The registered capital may be supplemented annually. The mechanism for supplementing the registered capital is provided for in Article 16 of the Charter for Organization and Operation of the Fund.

b) Mobilized capital: The Fund can mobilize medium- and long-term capital and accept capital from the following sources:

- Domestic borrowing from organizations and individuals belonging to various economic sectors in the form of project bonds, enterprise bonds, and entrusted bonds by the principal investor, in compliance with government regulations and approved by the Ministry of Finance.

- Commercial borrowing. The total outstanding debt of commercial credit borrowings is limited to not more than one (1) time the registered capital of the Fund at the corresponding time (including reserve funds and supplementary registered capital).

- Funds received from sponsorships and aid;

- Funds received from entrusted sources.

2. Use of capital:

2.1. Principles of using capital: The investment and use of the Fund's capital must ensure financial independence, efficiency, preservation, and development of capital; meet the regular payment requirements of the Fund and comply with the following principles:

- The Fund may use up to 20% of its registered capital to purchase shares of other enterprises, with a maximum of 10% of the shares of one enterprise. In cases where purchasing shares of one enterprise exceeds 10%, approval from the Chairman of the Bình Định Provincial People's Committee is required, in compliance with current laws, but the shareholding ratio must be reduced to 10% within three to five years.

- The Fund may provide loans for specific projects with loan interest rates determined by the Provincial People's Committee based on the proposal of the Management Board, but these rates cannot exceed the ceiling for medium- and long-term loan interest rates published by the State Bank at the time of lending.

- The authority to determine the limit of capital usage by the Fund is implemented according to the provisions of Article 20 of the Charter for Organization and Operation of the Fund.

2.2. Investment capital:

The Fund is permitted to use allocated capital (including reserve funds for supplementary registered capital) and mobilized capital to invest in the following objects:

a. Strategic investment projects serving economic and social development needs, structural economic transformation, and contributing to increasing provincial revenue.

b. Projects that need to be completed quickly and put into use immediately to achieve immediate benefits.

c. Loans to provincial enterprises in development requiring expansion.

d. Other objects as specified by the Management Board.

3. Payment and preservation of capital:

- The Fund is responsible for fully and timely repaying principal and interest on borrowed funds.

- The Fund must purchase asset insurance, business risk insurance, and other types of insurance as prescribed by the State.

- The Fund is responsible for managing and using capital for the intended purpose and target, efficiently, recovering principal and interest promptly and fully to ensure capital recovery, cost coverage, and timely and full repayment to organizations and individuals who have lent to the Fund.

- In case of risk, capital loss, or asset damage, the Fund must clearly identify the cause, extent of loss, and develop a handling plan. For cases where responsibility is clearly identified for individuals or groups causing asset losses, they must compensate; the compensation amount is decided by the Management Board in accordance with the law. If risks and losses are due to objective reasons, they will be covered by the Financial Reserve Fund; if they are due to force majeure such as natural disasters, typhoons, etc., after using the Financial Reserve Fund to cover the losses and still insufficient, the Management Board of the Fund must report the cause and extent of the damage to the Provincial People's Committee for consideration and resolution after consulting the Ministry of Finance.

4. Depreciation of fixed assets, basic construction costs, procurement, and management of fixed assets:

- The Fund shall strictly comply with the regulations on the extraction and utilization of depreciation of fixed assets as stipulated in Decree 59/1996/NĐ-CP dated October 3, 1996, and Decision 1062/TC/QĐ/CSTC dated November 14, 1996, issued by the Ministry of Finance.

- Sources of capital for new construction, repair, and procurement of fixed assets of the Fund include the following:

+ A portion of the charter capital for initial physical infrastructure construction (the level of charter capital usage for infrastructure construction is decided by the Management Board upon submission to the People's Committee of Binh Dinh Province);

+ Fixed asset depreciation funds;

+ Other sources such as foreign and domestic organization aid funds under various sponsorship projects...

The Fund shall implement basic construction investment, fixed asset procurement within the available capital scope and in accordance with the provisions of the Investment Management and Construction Regulation promulgated together with Decree No. 42/CP dated July 16, 1996, of the Government and Decree No. 43/CP dated July 16, 1996.

III. INCOME AND EXPENSES OF THE FUND

1. Income items of the Fund:

- Interest income from investments;

- Income from direct investment activities;

- Interest income from loan financing;

- Interest income from deposits at State Treasury, banks;

- Management fees from entrusted investment capital according to entrusted contracts;

- Recovery of reserve fund write-offs;

- Other income generated during operations outside the above items;

2. Operating expenses:

a. Business expenses:

- Expenses related to joint ventures, partnerships, and share capital contributions (if applicable);

- Interest payments on raised bonds;

- Interest payments on medium and long-term loans;

- Interest payments on entrusted capital according to entrusted contracts;

- Expenses for issuing bonds, stocks, and raising capital;

- Costs incurred in investment appraisal, lending, inspection, and debt recovery for investment projects or investment funding projects;

- Service and brokerage commissions as per budget estimates and economic contracts;

- Other business expenses

b. Administrative expenses:

- Wages and various wage supplements;

- Contributions to social insurance, health insurance, and other mandatory deductions based on salary as prescribed by state regulations;

- Allowances for members of the Management Board and other兼任职务的津贴；聘请国内外专家的费用（如有）；

- Operating expenses of the Management Board approved by the People's Committee;

- Depreciation of fixed assets in accordance with state regulations;

- Purchase and provision of working materials and equipment;

- Rent for office space and other fixed assets (if any);

- Repair and maintenance costs for assets;

- Travel expenses;

- Communication and advertising fees;

- Office supplies and seals;

- Training and professional development costs;

- Uniforms and occupational safety equipment costs;

- Necessary and reasonable expenses such as electricity, water, sanitation, hospitality, conferences, transactions, etc.;

- Provision for price reduction of assets.

3. Financial Revenue and Expenditure Management:

All revenue and expenditure items of the Fund are recorded based on the aforementioned revenue and expenditure categories and valid vouchers.

a. The Fund is responsible for collecting all revenue generated during operations accurately, fully, and promptly, recording it as income; No revenue should be left off the books or not recorded as income.

b. The Fund may allocate expenditures for its operations as follows:

- Business expenses: Actual business expenses arising from the specified expenses in paragraph a of point 2 above;

- Administrative expenses:

+ The Director of the Fund establishes economic and technical norms, indirect cost standards for approval by the Management Board as a basis for managing the Fund's activities.

+ Salaries and allowances for full-time and part-time staff of the Management Board and Supervisory Board are implemented according to current regulations.

+ Salaries and allowances for operational staff: Based on staffing norms and state-prescribed salary scales, the Fund determines the total salary budget, formulates appropriate remuneration and bonus systems suitable for its operational characteristics, and submits them for approval by the People's Committee of the Province. In cases where the Fund faces operational difficulties, it must still ensure a minimum basic salary for its employees. The salary fund cannot be used for other purposes.

+ Depreciation expenses of fixed assets: All fixed assets of the Fund must be utilized in its operations and depreciated in accordance with state regulations.

+ For expenses that do not comply with regulations, the person who makes the incorrect decision is responsible for compensation; excess expenses beyond approved limits must clearly identify responsibility and propose solutions to the Management Board for handling. The Management Board of the Fund is responsible for its decisions and must report in writing to the People's Committee of the Province.

+ Economic activities arising must be accounted for in Vietnamese Dong; if they occur in foreign currency, they must be converted to Vietnamese Dong at the official exchange rate published by the State Bank of Vietnam at the time of the transaction.

- The Fund shall not account for the following expenses:

+ Losses and damages from joint ventures, investment activities;

+ Damages compensated or reimbursed by the party causing damage or insurance companies;

+ Overseas travel expenses exceeding the state-prescribed limit;

+ Expenses for rewards and welfare such as bonuses, hardship allowances, support for social organizations, agencies, and other localities;

+ Basic construction investment and fixed asset procurement expenses funded from investment construction capital;

+ Risks covered by the financial reserve fund;

+ Expenses from other funding sources;

+ Other expenses not in compliance with the provisions of item 2 above.

4. Distribution of Surplus Income:

The surplus income of the Fund is determined by the difference between income and legitimate, valid expenses for these activities. Specifically:

(Surplus Income) = (Income) - (Legitimate, Valid Expenses)

The surplus income of the Fund is distributed in the following sequence:

1. Fulfill tax obligations as prescribed by the state.

2. Deduct fines for non-compliance with budget revenue discipline, administrative penalties, breach of contract penalties, overdue debt penalties, and legitimate expenses not deducted before determining the tax payable.

3. Deduct losses not deducted from pre-tax profit;

4. Distribute profits to capital contributors according to cooperation agreements (if applicable);

5. The remaining profit after deducting items 1 to 4 above, the Fund shall establish the following reserves:

a) Additional Capital Reserve Fund: The amount to be set aside is 15% until it equals the registered capital.

b) Financial Reserve Fund: The amount to be set aside is 10%, and this will continue until it reaches 25% of the registered capital.

c) Business Development Fund: The minimum amount to be set aside is 50%.

d) Unemployment Assistance Reserve Fund: The maximum amount to be set aside is 5%, but not exceeding six months' salary.

e) After setting aside the aforementioned funds, the bonus fund and welfare fund shall be established according to the regulations:

- The maximum amount to be set aside does not exceed three months' salary if the profit rate for the current year is not lower than that of the previous year.

- The maximum amount to be set aside does not exceed two months' salary if the profit rate for the current year is lower than that of the previous year.

f) The remaining portion shall be continued to be added to the Business Development Fund.

The contents of using the above funds shall be implemented according to the provisions of Decree No. 59/CP dated October 3, 1996 of the Government.

5. Accounting, Statistics, and Audit System of the Fund:

1. The Fund must organize separate accounting work, not overlapping with the accounting system of the Provincial Investment Support Center of Binh Dinh Province and the branch of the National Investment Support Fund. The Fund implements opening accounting books, recording vouchers, and conducting accounting operations, using financial settlement report forms in accordance with the Accounting and Statistics Ordinance and the regulations of the Ministry of Finance. For the time being, the Fund temporarily applies the accounting system of the National Investment Support Fund issued under Circular No. 49 TC/CĐKT dated August 28, 1996 of the Ministry of Finance.

2. The Fund implements the audit system according to the current regulations and organizes internal audits of the Fund's financial reports or hires independent auditors if necessary. The Management Board and Director of the Fund are responsible for the accuracy and truthfulness of these reports.

3. Annually, the Fund must disclose and publicly announce its operational results, assets, capital, and debts according to the guidelines of the Ministry of Finance and bear legal responsibility for the accuracy and truthfulness of the disclosed content.

4. The Management Board of the Fund is responsible for approving the annual financial settlement of the Fund and bears responsibility for such approval. The Fund has the responsibility to report the annual tax settlement to the Tax Authority in accordance with the law and guidance from the Tax Authority. Regularly report to the People's Committee of the Province, the provincial Tax Authority, and report to the Ministry of Finance the following documents:

- Within 15 days after the end of each quarter:

+ Report on sources and use of capital;

+ Income and expense report.

- Annually, within 30 days after the end of the fiscal year:

+ Balance sheet;

+ Income and expense settlement report;

+ Report on the balance and use of capital.

- Decision approving the financial settlement.

The Fund is subject to inspection, examination, and supervision by the financial authority in accordance with the law. The Ministry of Finance organizes inspections of the Fund's financial reporting system when necessary.

6. Financial Planning

At the time of preparing the annual budget plan, the Fund must prepare and report to the People's Committee of the province and send to the Ministry of Finance plans for raising and using capital, and financial income and expenditure plans.

The Fund is responsible for building annual and long-term financial plans to be submitted to the People's Committee of the province for approval and sent to the Ministry of Finance, including:

- Capital source plan and capital utilization plan.

- Financial income and expenditure plan.

- Plan for distributing income and expenditure differences.

IV. IMPLEMENTATION PROVISIONS

1. The Fund is legally responsible for the effective use, preservation, and development of state assets and capital raised from other organizations and individuals throughout the process of operating towards the goal of developing economic and social infrastructure in Binh Dinh Province.

2. This Circular takes effect 15 days after the date of signature; During implementation, if there are difficulties, please reflect them to the Ministry of Finance for timely review and amendment./.