Tiếng Việt| THE MINISTRY OF FINANCE | SOCIALIST REPUBLIC OF VIET NAM |
| No: 36/2006/QD-BTC | Hanoi, July 07, 2006 |
THE MINISTER OF FINANCE
Pursuant to the Government's Decree No. 77/2003/ND-CP of July 1, 2003, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;
Pursuant to the Government's Decree No. 134/2005/ND-CP of November 1, 2005, promulgating the Regulation on management of foreign loans and payment of foreign debts;
At the proposal of the director of the External Finance Department,
DECIDES:
Article 2.- This Decision takes effect 15 days after its publication in "CONG BAO."
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FOR THE MINISTER OF FINANCE
VICE MINISTER
Tran Van Ta
ON MANAGEMENT AND SUPERVISION OF THE USE OF CAPITAL FROM INTERNATIONAL BONDS ISSUED BY THE GOVERNMENT IN 2005
(Promulgated together with the Finance Minister’s Decision No. 36/2006/QD-BTC of July 7, 2006)
This Regulation provides for management and supervision of the use of capital from international bonds issued in 2005 for modernization and upgrading of seagoing shipbuilding industry of the Vietnam Shipbuilding Industry Corporation (VINASHIN) under the Prime Minister's Decision No. 914/QD-TTg of September 1, 2005, on issuance of Government bonds to international capital market in 2005, the Government's Resolution No. 11/2005/NQ-CP on its September 2005 regular meeting and Resolution No. 12/2005/NQ-CP of October 24, 2005, on the issuance levels of international bonds.
Article 2.- Interpretation of terms
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International bond capital source means a fund gained from the issuance of Government bonds to international capital market in the October 2005 issue, which has a face value of USD 750 million.
Issuance-underwriting bank is the Credit Suisse First Boston Bank (now the Credit Suisse Bank, called CSFB for short), which shall provide issuance guarantee for the Finance Ministry under the bond sale and purchase contract signed between the two parties on October 27, 2005.
Fiscal agent is the Bank of New York, which acts as the Finance Ministry's agent to pay bonds under the fiscal agency contract signed between it and the Finance Ministry on November 3, 2005.
Authorized company is the VINASHIN's Shipbuilding Industry Financial Company, which is authorized to perform the tasks specified in Article 6 of this Regulation by VINASHIN, which shall take full responsibility for the company's activities.
Re-lending contract is contract No. 01/2005/BTC-VINASHIN on re-lending the Government's international bond capital, signed between the Finance Ministry and VINASHIN on November 3, 2005.
VINASHIN shall have to use this source of capital properly and efficiently, ensuring the whole system's financial balance for full and timely payment of debts, and must not use this capital to offset its losses or risks.
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1. Re-lending value shall be equal to the face value of the 2005 international bond issuance drive, which is USD 750 million (seven hundred and fifty million US dollars).
2. Re-lending currency shall be US dollar (USD).
3. Re-lending interest rate shall be equal to the bond interest rate (coupon) which is 6.875%/year of the bonds' face value. Bond interests shall be paid once every 6 months on their maturity dates, which shall be January 15 and July 15 every year. The first interest payment shall be on January 15, 2006.
4. Debt-acknowledgement time: VINASHIN acknowledges its debts as from November 3, 2005.
5. Re-lending term shall be equal to the bond term. Bond principals shall be paid in lump sum on the bonds' maturity date, which is January 15, 2016.
6. Charges: Annually, VINASHIN shall bear expenses payable to the fiscal agent according to the Finance Ministry's official notice for each term which shall coincide the bond interest-payment term. VINASHIN shall not have to pay domestic re-lending charges to the Finance Ministry.
7. Debt payment: Bond principals and interests and arising charges shall be paid by VINASHIN directly to the fiscal agent on the basis of the Finance Ministry's written notices, enclosed with vouchers supplied by the fiscal agent.
8. VINASHIN shall pay debts in US dollar (USD). In case of foreign currency shortage, it can pay debts in Vietnam dong based on a specific agreement with the Finance Ministry according to the provisions of Article 11 of this Regulation. The applicable exchange rate shall be the USD selling rate announced by the Bank for Foreign Trade of Vietnam at the time of money transfer.
9. Bond money transfer procedures: Right after receiving money, the Finance Ministry shall transfer the whole sum into the VINASHIN's account for the latter's use and VINASHIN shall have to make written certification of the full reception of this sum; such written certification shall be sent to the Finance Ministry within one day after the money arrives in the account.
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VINASHIN shall assign the authorized company to do the following jobs on its behalf:
1. To receive and manage the whole source of international bond capital.
2. To disburse capital, retrieve debts from owners of investment projects or business schemes defined in Article 3 of this Regulation.
3. To carry out professional operations to preserve and develop temporarily- idle capital sources according to the provisions of this Regulation and its decentralization.
4. To supervise the use of loans and take responsibility before law for supervising the spending from the international bond capital source according to this Regulation and relevant provisions of law.
5. To pay due debts to the Finance Ministry.
6. To open and keep accounting books so as to oversee and account all economic operations related to the reception, use and repayment of international bond capital according to the provisions of this Regulation and relevant provisions of law; to make and keep financial statements on the use and payment of international bond principals, interests and charges.
VINASHIN shall sign an authorization contract with the authorized company, clearly defining rights and obligations of the concerned parties on the basis of the provisions of this Regulation and provisions on decentralization and authorization of the management of its international bond capital source and shall fully be responsible for its authorization under the provisions of law.
Article 7.- Use of the international bond capital source
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- Being included in branch plannings, socio-economic plannings or construction plannings already approved by competent authorities. In case a project has not yet been included in a planning, a written agreement of the authority competent to approve such planning is required.
- Having feasibility study reports and investment decisions approved by competent authorities in accordance with the provisions of law and legal documents on investment and capital construction.
- In special cases, if technical designs and total cost estimates of group-A projects have not yet been approved, investment decisions must clearly state the capital level of each project item, accompanied by the design and cost estimate approved for such item.
2. Elaboration of capital-use plans
VINASHIN shall have to elaborate an overall plan to allocate international bond capital for investment projects and/or schemes on a case-by-case basis and with yearly phases. Such plan (including the adjustment and supplementation plan) must be handed immediately to the Finance Ministry and the servicing bank to serve as a basis for supervision of the use of capital.
The authorized company shall, basing itself on the overall plan on allocation of the bond capital, elaborate annual specific capital-use plans, divided by quarters, (including the plan on capital withdrawal for projects and the plan on the use of idle capital). These plans must be approved by VINASHIN and sent to the Finance Ministry and the servicing bank for supervision of implementation.
Based on the approved annual plans on the use of bond capital, the authorized company shall elaborate quarterly capital-use plans and a cumulative sum-up on the use of capital from the beginning of the year, which shall be sent to VINASHIN for approval, and to the Finance Ministry and the servicing bank as well.
A quarterly plan must be sent before the 15th of the last month of the preceding quarter while an annual plan must be sent before November 15 of the preceding year.
VINASHIN may request project owners to immediately acknowledge debts under the overall plan on allocation of international bond capital but the withdrawal of capital for advancement or payment to projects shall comply with the provisions of Clause 3 of this Article. The debt-acknowledgement interest rate shall not exceed the interest rate applicable by domestic commercial banks to loans of the same term.
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- The withdrawal of capital from the international bond capital source for advancement or payment shall comply with the regulations on advancement and payment of capital construction investment capital and accord with the overall capital allocation plan already approved by VINASHIN.
- The withdrawal of capital shall be effected only after the competent authority issues a decision approving an investment project or an investment decision, and shall be made for various bidding packages of the project, except for common expenses of such project, which shall not be apportioned into bidding packages.
- The capital advancement levels and time limits for repayment of advanced capital for bidding packages shall comply with the provisions of law and the yearly capital plan for the concerned project.
- A newly arising volume must be approved by a competent authority (if subject to bidding), or its additional cost estimate must be approved by a competent authority (if not subject to bidding) before any payment is made.
- When wishing to withdraw capital, a project owner shall send a written request therefor to the authorized company, concurrently producing the following vouchers:
i/ For common expenses of the project:
1. Regarding compensation and ground clearance: The competent authority's decision approving the compensation and ground-clearance scheme;
2. Regarding the project management expenses and other expenses: Invoices and vouchers compliant with the investment decision.
ii/ For bidding packages executed by project owners themselves:
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2. The work's cost estimate approved by the competent authority; in special cases where such cost estimate has not yet been approved but some supplies, equipment or structures of large value require advance reserves or processing or some expenses are needed for production preparation in order to ensure construction progress, such must be approved in writing by the authority competent to approve the cost estimate.
3. Economic contracts and/or vouchers and invoices compatible with the approved cost estimate of the work or the written approval by the competent authority.
iii/ for other bidding packages
1. The decision approving the contractor-selection results. Where the investment decision, the decision approving the survey blueprint and formulation of the investment project or the decision approving the bidding plan has identified the executing unit, such decisions may be used as substitutes.
2. The economic contract.
3. The written record on pre-acceptance test of lawfully completed volumes, with regard to payment for construction and installation or consultancy bidding packages.
4. The hand-over written record and warehousing bill, with regard to payment for bidding packages on procurement of domestic equipment, which has not yet been installed.
5. The pre-acceptance test written record, with regard to payment for bidding packages on procurement of domestic equipment, which need to be installed.
6. The set of valid vouchers, with regard to payment for bidding packages on importation of equipment.
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* With regard to the swap of investment capital sources: Apart from the above-prescribed vouchers, project owners must supply to authorized company with documents evidencing that they have used other capital sources to pay contractors.
4. With regard to the swap of investment loan capital sources: Where project owners have been executing investment projects with other loan capital sources (including sources of loan capital provided by financial and credit institutions and other loan capital sources) in accordance with the objectives mentioned in Article 3 of this Regulation, which, however, are less favorable compared to the international bond capital source, VINASHIN may use the international bond capital source to lend project owners for the latter's swap in order to raise the investment efficiency, provided that such is approved by creditors and the pre-paid expenses do not exceed expenses for lending international bond capital.
5. Use of temporarily idle capital sources
In order to raise the efficiency of the capital use, VINASHIN may, through the authorized company, invest temporarily idle capital sources, including (i) the international bond capital source available pending debt acknowledgement by project owners; (ii) capital sources available after project owners have acknowledged debts but have not yet withdrawn capital; (iii) receivables from projects invested with the international bond capital and approved business schemes, which have not yet come due.
The use of idle capital sources must ensure safety, efficiency and not affect the Finance Ministry's plan on the payment of debts when they come due as well as on the capital withdrawal schedule of approved investment projects and business schemes. Priority shall be given to loans for export ship-building projects and satisfaction of member units' demand for working capital; loans for support of other programs and targets of VINASHIN in each period under the Prime Minister's direction.
The authorized company shall carry out professional operations of capital preservation and development within the scope of its operation license granted by the State Bank, under authorization and decentralization by VINASHIN, including the borrowing of capital from domestic and foreign organizations and individuals to make up for temporary cash deficit for capital disbursement and withdrawal or for debt payment to the Finance Ministry.
Pending the withdrawal of capital for projects, VINASHIN may use temporarily idle capital according to legal provisions and this Regulation. The authorized company shall report to VINASHIN on the whole income from temporary investment of debts already acknowledged by project owners, after subtracting relevant business expenses, and shall distribute it to project owners based on the effective balance of the idle capital sum in each accounting period of such project owners. Project owners must not account this revenue as incomes from financial activities but have to reduce it directly into lending expenses to calculate the capitalized expenses of projects or investment schemes in accordance with the provisions of law.
The authorized company must open a separate book to monitor capital sources awaiting payment by project owners, which are independent from its other assets as well as assets it keeps for other organizations and individuals in order to account all economic operations related to debt acknowledgement, withdrawal of capital for payment and temporary trading of loans already acknowledged as debts by project owners, which shall serve as a basis for the Finance Ministry to inspect and supervise the capital withdrawal process.
Article 8.- Payment of bond principals, interests and charges
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2. Three days before the bonds' maturity date, VINASHIN shall temporarily calculate the payable bond interest amount and transfer such amount into its account opened at BIDV.
3. After receiving money-claim vouchers, including vouchers for payment of principals, interests and arising charges, vouchers relating to charges, supplied by the fiscal agent (Bank of New York), the Finance Ministry shall examine the accuracy of such vouchers and send all copies thereof together with a payment request to VINASHIN.
4. Based on the Finance Ministry's payment request, VINASHIN shall pay principals, interests and charges directly into the fiscal agent's account for repayment to bondholders.
5. In case the Finance Ministry advances money to pay debts for VINASHIN or VINASHIN pays debts in Vietnam dong, the Finance Ministry shall pay directly to the fiscal agent for repayment to bondholders.
Article 9.- Payment and compensation security
VINASHIN shall apply the following measures to secure the settlement of its international bond liabilities:
1. It shall reach agreement with project owners and decide on re-lending interest rates applicable to project owners so as to secure the annual payment of bond interests and charges, offsetting relevant expenses and ensuring the provision.
2. It may apportion the initial bond-issuance expenses to project owners that use the international bond capital source in the form of authorized collection and spending.
3. It shall request project owners to use the international bond capital source to purchase insurance for assets formed from the use of international bond capital in accordance with the provisions of law.
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5. At least 6 months before the deadline for payment of bond principals, VINASHIN shall elaborate and send to the Finance Ministry a scheme to mobilize money sources for debt payment and shall monthly report to the latter on the implementation of this scheme and any amendments and/or supplements thereto.
6. Mortgaged assets and loan security:
VINASHIN shall use all assets formed with capital sub-lent from the Government's international bond capital source as mortgage and security for sub-lent money. In case the assets are formed from different capital sources, the mortgaged assets and loan security shall be calculated in proportion to the contribution of each capital source. VINASHIN shall supply the Finance Ministry and the servicing bank with all lists of projects and assets it has invested with money gained from the issuance of international bonds and used as mortgage and loan security.
The Finance Ministry shall sign contracts to authorize the servicing bank to exercise the right to supervision of mortgages and loan security and shall, in case of necessity, apply sanctions on the mortgage of assets and loan security according to current law and regulations of the bank to recover debts.
7. When necessary, the Finance Ministry may apply sanctions on the mortgage of assets and loan security according to legal provisions in order to retrieve debts.
8. Priority right to debt payment: The supreme priority right in relation to the debt payment shall be given to loans from the Government's international bond capital source. When VINASHIN has several debts come due at the same time, it shall, first of all, pay the Government's international bond debts.
9. Where VINASHIN cannot settle its liabilities, the Finance Ministry shall, at its own discretion, request VINASHIN to pay compensation in accordance with the provisions of law, and may also request all servicing banks to blockade VINASHIN's accounts for the payment of debts.
Article 10.- Capital advancement
1. In extraordinary cases where VINASHIN cannot arrange enough money to fully pay its due debts, it shall request in writing the Finance Ministry to advance capital for debt payment. The request must be sent one month before the debts fall due (in case of interest and charge payment) or three months (in case of principal payment).
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3. Payment procedures: In case the Finance Ministry advances capital for VINASHIN, it shall effect the debt payment directly into the fiscal agent's account. After making payment, the Finance Ministry shall issue an official written notice on the advanced money amount, plus the money transfer charge, which shall be officially recorded in the lending subcontract.
4. The Finance Ministry shall advance capital for payment for only one interest-payment term and a subsequent advancement of capital shall be made only when VINASHIN has repaid capital of the previous advancement.
5. All capital advancement procedures shall comply with the Regulation on management of the foreign debt payment-accumulation fund, issued together with the Finance Minister's Decision No. 10/2006/QD-BTC of February 28, 2006.
Article 11.- Debt payment in Vietnam dong
1. Advance notice: In case of foreign currency shortage, VINASHIN may pay debts in Vietnam dong. To do so, it must send an official written notice thereon to the Finance Ministry one month before a debt's maturity date (for interest and charge payment) or three months (for principal payment) so that the latter can effect the conversion of Vietnam dong into US dollar.
2. Payment procedures: VINASHIN shall transfer the whole sum of Vietnam dong amount, equivalent to the USD amount which can be arranged and converted at the exchange rate mentioned in Article 5, Clause 8 above by the Finance Ministry as it has notified, plus the money transfer charge, into a bank account designated by the Finance Ministry. The Finance Ministry shall transfer the payable money amount to the fiscal agent according to the provisions of Article 8, Clause 5 of this Regulation.
3. Settlement of amounts paid in Vietnam dong: After transferring money to the fiscal agent, the Finance Ministry shall officially notify VINASHIN of the Vietnam dong amount equivalent to the paid foreign currency amount (including also the money transfer charge). The settlement of the transferred money amount shall be conducted right after the Finance Ministry transfers the payable amount to the fiscal agent.
i/ Where the payable Vietnam dong amount exceeds that already transferred by VINASHIN to the Finance Ministry, the Finance Ministry shall officially notify in writing VINASHIN of the deficit and within two working days the latter shall have to fully pay this amount into the former's account.
ii/ Where the payableVietnam dong amount is less than that already transferred by VINASHIN to the Finance Ministry, the Finance Ministry shall officially notify in writing VINASHIN of the surplus and shall, within two working days, transfer this amount into VINASHIN's account.
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1. VINASHIN shall have to conduct accounting in strict accordance with the State's current bookkeeping regime.
2. VINASHIN shall have to make and send to the Finance Ministry reports on capital use plans according to the provisions of Article 7, Clause 2 of this Regulation.
3. Monthly, quarterly and annually, VINASHIN shall have to send to the Finance Ministry reports on the situation of capital withdrawal, arrangement and use of international bond capital which is temporarily idle.
A monthly report must be sent before the 5th of the subsequent month; a quarterly report, before the last day of the first month of the subsequent quarter; and an annual report, before January 31 of the subsequent year.
4. At the end of a fiscal year, VINASHIN shall select an audit company to audit all annual financial statements made by the authorized company and submit them to the Finance Ministry within 15 days after obtaining the audit records.
5. VINASHIN shall be responsible for inspecting the proper and efficient use of international bond capital by units and organizations within its system.
6. VINASHIN (including units re-borrowing its capital from the international bond capital source) shall have to implement the regime of investment capital accounting and settlement according to current regulations.
Article 13.- Responsibilities of VINASHIN
1. To take full responsibility before law for the use of the Government's international bond capital it has been sub-lent for the purposes approved by the Government. All acts of using this capital for improper purposes or failing to perform the obligations committed in the sub-lending contract shall be handled in accordance with the provisions of law.
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3. Through the authorized company, to open and keep accounting books and gather appropriate documents and vouchers on the withdrawal of capital and use of this loan according to the provisions of Article 7 of this Regulation.
4. To send plans and reports to the Finance Ministry and the servicing bank on the situation of the use of money and the fulfillment of bond-related obligations according to the provisions of Article 7, Clause 2; Article 9, Clause 5 and Article 12 of this Regulation.
Article 14.- Responsibilities of the servicing bank
1. To perform the payment function strictly according to current regulations.
2. To manage the reception, to transfer VINASHIN's money for repayment of international bond capital under the Finance Ministry's authorization, to timely report to the Finance Ministry on the situation of capital withdrawal, assess the actual situation of the use of capital by VINASHIN and problems arising in the course of performance of the assigned tasks.
3. To perform the function of supervising mortgaged assets and loan security, which are formed from the international bond capital source, ensuring that such assets shall not be used for purposes other than those mentioned in Article 9, Clause 6 of this Regulation and strictly comply with the terms of the authorization contract signed with the Finance Ministry.
4. To strictly implement the terms of the "framework agreement on cooperation in management of VINASHIN's capital relent by the Finance Ministry from the source of capital generated through the issuance of government bonds to international market," which was signed between VINASHIN and BIDV on November 3, 2005.
5. To coordinate with the Finance Ministry in supervising and inspecting the use of international bond capital by VINASHIN.
Article 15.- Responsibilities of the Finance Ministry
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- The purchase agreement signed between the Finance Ministry and the issuance-underwriting bank (CSFB);
- The fiscal agent agreement, signed between the Finance Ministry and the Bank of New York;
- The table on settlement by the Finance Ministry and the issuance-underwriting bank, of expenses accounted into the sum of money gained from the issuance of international bonds.
2. To promptly transfer into VINASHIN's account the money as soon as it arrives in the Finance Ministry's account.
3. To check all sums of interests and charges, which are accompanied by actual vouchers, supplied by the fiscal agent, and promptly notify such to VINASHIN to make payment.
4. When it is necessary to advance capital or pay debts in Vietnam dong, the Finance Ministry shall have to promptly fulfill its payment obligations (payment of bond principals, interests and charges) toward the fiscal agent.
5. To regularly and extraordinarily inspect the use of international bond capital as well as VINASHIN's capability of paying international bond debts.
- 1 Circular No. 218/2013/TT-BTC dated December 31, 2013, financial management of programs and projects funded by ODA and concessional loans granted by foreign donors
- 2 Decree No. 134/2005/ND-CP of November 1, 2005, issuing regulations on control of foreign loans and loan repayments.
- 3 Resolution No. 11/2005/NQ-CP of October 04, 2005, the Government''s regular meeting - September 2005
- 4 Decree No. 77/2003/ND-CP of July 01st, 2003, defining the functions, tasks, powers and organizational structure of the Finance Ministry.