CIRCULAR

GUIDING THE IMPLEMENTATION OF DECISION No.05/2000/QD-TTg OF JANUARY 5, 2000 OF THE PRIME MINISTER ON AMENDMENTS AND SUPPLEMENTS TO HIS DECISION No.95/1998/QD-TTg OF MAY 18, 1998 ON THE SECOND-PHASE DEBT HANDLING AND SETTLEMENT

In furtherance of Decision No.05/2000/QD-TTg of January 5, 2000 of the Prime Minister amending and supplementing his Decision No.95/1998/QD-TTg of May 18, 1998 on the second-phase debt handling and settlement; After obtaining the State Bank’s comments in Official Dispatch No.41/CV-TD.3 of January 27, 2000; The Finance Ministry hereby guides the amendments and supplements on the second-phase debt handling, settlement and accounting as follows:

I. GENERAL PROVISIONS

- Creditors and debtors, whose debts have been declared and acknowledged or have not been declared but already compared and acknowledged by themselves according to Decision No.277/CT of July 29, 1992 of the Chairman of the Council of Ministers (now the Prime Minister) and the second-phase debt settlement plan shall be subject to this Circular.

- The second-phase debt handling and settlement shall be based on the provisions of the second-phase general debt settlement plan, the Prime Minister’s Decision No.95/1998/QD-TTg of May 18, 1998, Joint Circular No.102/1998/TTLT-BTC-NHNN of July 18, 1998 of the Finance Ministry and the State Bank as well as the Prime Minister’s Decision No.05/2000/QD-TTg of January 5, 2000 on amendments and supplements to the second-phase debt handling and settlement, the legislation at the debt-arising time and this Circular.

- Creditors and debtors shall be accountable for handling and settlement of the second-phase debts of their respective units.

- The debt settlement boards of all levels shall have to urge, inspect and supervise the debt handling and settlement and propose the competent level to handle administratively or by means of law units that are in debts but fail to handle or settle them.

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II. SPECIFIC PROVISIONS

1. Debt-handling bases

Where the debt-handling dossier is incomplete as defined in Joint Circular No.102/1998/TTLT-BTC-NHNN of July 18, 1998 of the Finance Ministry and the State Bank guiding the implementation of the Prime Minister’s Decision No.95/1998/QD-TTg of May 18, 1998 on the second-phase debt handling and settlement, there must be at least the following grounds:

- The IOU card (already acknowledged by the debtor), or the debt comparison minutes already acknowledged by the creditor and the debtor.

- The minutes analyzing causes of arising debts made by the provincial debt-settlement board, for locally-run enterprises, or by the ministerial/branch debt settlement board, for centrally-run enterprises.

For debtors which haven been dissolved, gone bankrupt, ceased operation or fails to submit complete dossiers as prescribed, the agency which has decided the establishment thereof and the debt-settlement boards of the same level shall make a minutes certifying the incompleteness of dossiers prescribed as basis for handling, and at the same time notify the creditors of the dissolution decision or make a written certification of such units’ dissolution, bankruptcy or cessation of operations (the time of dissolution, bankruptcy or cessation of operation and the financial situation of the enterprises).

- For a debt which has been decided by a written award of the State Economic Arbitration or a civil court judgement but for which the IOU card has not been made, the award or judgement shall be considered as basis for the debt settlement and handling.

2. On the exchange rates:

- The units shall make debt-claiming cards for the right to use foreign currency(ies) already acknowledged by the debtors; if the debtors have fully paid the term currency amount at the internal accounting exchange rates set by the State, they shall be considered as having fully paid debts to the creditors.

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+ US dollar: 7,900 VND/USD

+ Gold: 373,000 VND/one tenth of a tael

+ Yen: 76 VND/JPY

+ Franc: 1,420 VND/Fr.

+ Chinese yuan: 886 VND/Yuan

+ Russian rouble: 4,000 VND/Rouble

The other foreign currencies shall be converted into USD (US dollar) at the exchange rates at the debt declaration time (April 30, 1991).

3. Competence to decide debt handling:

a/ Debts of State enterprises shall be handled by the Managing Boards or general directors, directors (for enterprises without Managing Boards) on the following principles:

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Debts to be paid to creditors that have no longer exited may be accounted into enterprises’ irregular incomes.

Debts to be recovered with their value being smaller than the debt-claiming expenses (as estimated) shall be accounted into the financial reserve fund. If this fund is not enough, the deficit shall be accounted into the enterprises’ business results, which shall take self-responsibility therefor and do not have to report such to the State management agencies. When handling the above-mentioned debts, enterprises shall still have to conduct the off-balance-sheet supervision and continue the debt recovery. The recovered debt amounts shall be accounted into the enterprises’ irregular incomes.

b/ For debts (to be recovered) by the State-owned commercial banks, which have been put them the debt payment networks with certification of the local debt settlement boards (on the acknowledged debt amounts, the financial situation and payment capability), the State-owned commercial banks may handle them as for the debts of State enterprises stipulated at Point a above and report such to the State Bank. For debts being the banks’ loan capital converted into the State budget’s allocated capital, the commercial banks shall have to report them to the State Bank for further reporting to the Finance Ministry for consideration and decision on reduction of capital to be allocated to the commercial banks and increase of capital for enterprises that have their loan capital converted into the allocated capital.

Monthly, the State-owned commercial banks shall have to report the debt handling progress to the Central Steering Board for General Debt Settlement and the Finance Ministry for synthesizing and reporting the situation to the Prime Minister.

c/ For debts owed to the State budget by enterprises, the finance agency of the same level shall assume the prime responsibility in handling them according to the provisions of Joint Circular No.102/1998/TTLT-BTC-NHNN of July 18, 1998 of the Finance Ministry and the State Bank (the Finance Ministry shall handle debts owed to the central budget by enterprises while the provincial/municipal Finance Services shall handle debts owed to the local budgets by enterprises), or report them to the competent level for decision.

d/ For debts owed to the National Reserves by enterprises, the National Reserves shall assume the prime responsibility in handling them. Before the handling, the local debt settlement board’s participation is required on the basis of the prescribed debt settlement and handling regime. The National Reserves shall sum up the already handled debt amounts and report them to the Central Steering Board for General Debt Settlement and the Finance Ministry so that the Finance Ministry may issue decision on capital reduction for the National Reserves. Monthly, the National Reserves shall report the handling progress to the Central Steering Board for General Debt Settlement and the Finance Ministry.

e/ Where the debts are guaranteed by the ministries, branches and localities or the ministries, branches and localities permit trading enterprises to borrow capital, procure supplies and goods by the mode of deferred payment to foreign parties, the provisions of Clause 4, Article 1 of the Prime Minister’s Decision No.05/2000/QD-TTg of January 5, 2000 on amendments and supplements to his Decision No.95/1998/QD-TTg of May 18, 1998 on the second-phase debt handling and settlement, shall apply.

4. For debts to be recovered due to subjective causes, after the persons who have to pay material compensation are identified, there must be specific decisions on the levels of material compensation; the difference between the to-be-recovered debt amount and the compensation amount shall also be accounted into the financial reserve fund; any deficit shall be accounted into the enterprise’s production and business results.

5. For debts having signs of law violation, if it is certified that the creditors cannot claim the debts, such creditor shall transfer the dossier to the Police for investigation. Within 6 months, the investigating agency shall have to make conclusions and transfer the dossier to the Economic Court for trial. After trying, the Court shall notify the creditor and concerned agencies of the debt amounts to be recovered by the creditor as well as the unrecoverable amounts. These unrecoverable amounts shall be offset by the financial reserve fund. If the fund is not enough, the deficit shall be accounted into the enterprise’s business results (for enterprises’ debts) or the National Reserves’ capital shall be reduced or the debts payable to the State budget shall be cancelled (for debts owed to the National Reserves and the State budget). If the debts are recovered in assets after the handling, enterprises shall have to evaluate and account them into their irregular incomes (for enterprises’ debts) or remit them into the local State budget (for debts owed to the National Reserves and the State budget).

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7. State enterprises may account once or many times bad debts into the financial reserve fund; if the fund is not enough, the deficit shall be accounted into the enterprises’ annual production and business results for not more than 5 years. If due to the accounting of debts into their annual production and business results, enterprises suffer from profit reduction or loss increase corresponding to the amounts of their bad debts, such enterprises shall still enjoy the following interests:

- To continue borrowing capital from the banks for production and business if meeting other conditions defined by the State-owned commercial banks.

- To enjoy the wage fund as before the accounting of bad debts into the production and business results.

- To maintain their grades.

- To deduct the reward and welfare funds as before the handling of debts according to current regulations.

8. If 2 operating State enterprises owing debts to each other (already acknowledged) cannot themselves settle the debts, they must report such to the finance agency of the same level for the increase of the State capital for the debtor enterprise and reduction of the State capital for the creditor enterprise (the creditor’s reduced capital amount shall at most be equal to the State’s capital at the enterprise). The provincial/municipal Finance and Pricing Department shall report debts to the provincial People’s Committee for issuance of decision on capital increase or reduction for the locally-run enterprises, while the Finance Ministry shall issue decisions on capital increase or reduction for the centrally-run enterprises.

III. ORGANIZATION OF IMPLEMENTATION

1. The ministers, the heads of the ministerial-level agencies and agencies attached to the Government, the presidents of the People’s Committees of the provinces and centrally-run cities shall have to direct creditors and debtors under their management to quickly analyze, classify and definitely deal with the second-phase debt settlement according to the above stipulations. Cases not provided for in this Circular shall be handled according to current regulations.

2. The debt-settlement boards of all levels (with the finance agencies as their standing bodies) shall urge and inspect the handling of debts by enterprises that have declared the second-phase debts, and propose the competent authorities to discipline enterprise directors who fail to handle and settle the enterprises’ debts.

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Any organizations or individuals that counterfeit vouchers, abuse the debt handling and settlement to cause loss to the State’s assets for personal interests shall be handled according to current law provisions.

Monthly, the debt-settlement boards of all levels shall report the second-phase debt settlement and handling results to the Central Steering Board for General Debt Settlement on the fifth of the following month at the latest so that the latter may sum up and report them to the Prime Minister.

3. Apart from the provisions of this Circular, the second-phase debt settlement and handling shall still comply with Joint Circular No.102/1998/TTLT-BTC-NHNN of July 18, 1998 of the Finance Ministry and the State Bank guiding the implementation of the Prime Minister’s Decision No.95/1998/QD-TTg of May 18, 1998.

This Circular takes effect from the effective date of the Prime Minister’s Decision No.05/2000/QD-TTg of January 5, 2000 which amends and supplements his Decision No.95/1998/QD-TTg of May 18, 1998 on the second-phase debt handling and settlement.

In the implementation course, if problems arise, the ministries, branches and localities should promptly report them to the Finance Ministry, the State Bank and the Central Steering Board for General Debt Settlement for study and solution.

FOR THE FINANCE MINISTER
VICE MINISTER




Tran Van Ta