CIRCULAR

ON GUIDING THE COLLECTION AND UTILIZATION OF REVENUES FROM THE SALE OF STATE-OWNED RESIDENTIAL HOUSES TO SITTING LEASE HOLDERS

Pursuant to Decree No.61/CP dated 5 July 1994 of the Government on purchasing, selling and trading in residential houses, the Ministry of Finance provides hereby some guidance's for collection and utilization of revenues from the sale of state-owned residential houses to sitting leaseholders as follows:

I. GENERAL PROVISIONS

1- The state-owned residential houses which are under the management of administrative and non-productive bodies, armed forces, socio-political organizations, mass associations and state-run enterprises shall be transferred to house trading companies in compliance with the valid current sate regulations on delivery and receipt of property, capital allocation and safe keeping of funds.

2- Directors of House trading companies of the provinces, cities under central authority, chairmen or vice-chairmen of the People's Committee of provincial cities, tows and districts, not having house trading companies (hereafter referred to as selling party), managing or taking over the state-owned reserve of houses (as mentioned in heading 2, article 8, Decree No.61/CP), when selling state-owned houses must comply with the terms of this circular on collection of receipts from house sale.

3- Those who are sitting leaseholders shall be entitled to buy state-owned houses where they are living in.

4- Sale of state-owned house is determined on the basic of:

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- Contract of house purchase and sale, mutually signed by buying and selling parties. Amount to be paid for house shall include: price of the house (based on its remaining value) and that of land when the land use right is assigned (or price of assigned land)

5- State-owned houses to be sold to sitting leaseholders includes:

- Houses built by budgetary capital (central and local budget) under the following forms: investment in building houses to be transferred to local housing management; Direct investment in administrative and non-productive bodies, armed forces, Party organizations, mass associations (commonly called as non-productive economic units) by providing them with residential houses; investment in building houses allocated to members of state-run enterprises; purchased houses allocated to governmental employees.

- Houses, built by financial resources of administrative and non-productive units and state-run enterprises which are originated from the state budget.

- Houses of other origination of property, having been transferred to state property.

- Hoses built by budgetary capital with some financial contribution from organizations or individuals.

6- During the process of selling and transferring houses, the parties concerned (as mentioned heading 2, article 8, Decree No.61/CP) must combine with the financial management body directly in charge to confirm and control the available reserve and funds of residential houses and land in compliance with the valid system of fixed assets management, land management.

7- All receipts from the sale of state-owned houses that include: amount paid for house, for assigned land and fines imposed on violation of contract must be contributed to the state budget through state treasuries.

8- Privileged treatment on housing and land to persons who made great contribution to the country must be in compliance with the preferential policy of the state decimated to them.

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1- Settlement forms:

a/ Based on the signed contract of purchase and sale, selling party makes out receipt document (receipt of payment, generally issued by the Ministry of Finance). Depending on the mode of payment noted in the contract, the settlement may be taken in some forms as follows:

- In case the buyer makes a lump sum payment just after signing the contract, he shall enjoy a reduction of 10% of price.

- In case of payment by installment's within 1 year, the first installment to be paid right after signing the contract must at least equal to 20% of the total payment, the buyer shall enjoy a reduction of 2% of price.

- In case of payment by installments within 10 years, the first installment to be paid right after signing the contract must not less than 20% following installment's to be paid every year-not less than 8% of the total payment.

- The unpaid amount shall be evaluated in gold (0,98 gold) to be basic for the next installment's. The volume of gold to be paid each time shall be converted into Vietnamese currency (VND) in accordance with the selling price of 0,98 gold issued by the state Bank (the state-owned gold and silver Trading company in the place) on the date of payment.

Example: A contract of house purchase and sale, signed between Mr. Nguyen Van A (buying party) and N provincial House Trading Company (selling party) is:

- Total payment: 81,000,000 VND consisting of 20,000,000 VND for the house and 61,000,000 VND for the assigned land.

- Settlement form: payment by installment's within 10 years, the first installment to be paid right after signing the contract is 20% the total payment. The following installments must not less than 8% of the total payment. Thus, Mr.A must settle up in the following way:

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The unpaid amount of 64,000,000 VND, being evaluated in 0,98 gold at the moment with a price of 480,000 VND par chi (1/10 of one teal of gold) shall be:

64,000,000 VND : 480,000 VND = 135 chi

For the next 9 years, to settle up the contract the buying party must pay each following installment an amount of money equal to:

135 chi : 9 = 15 chi

+ The second installment (the 2nd year)

According to the selling price of 0,98 gold at the moment, that is 500,000 VND/chi, buying party must pay:

15 chi x 500,000 VND = 7,500,000 VND

+ The third installment (the 3rd year)

The selling price of 0,98 gold at the moment is 450,000 VND/ chi and the amount to be paid shall be:

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Thus, the volume of gold left after the 3rd year is :

135 chi - 30 chi = 105 chi

For the remaining installment's (from the 4th to the 9th) the calculation of each payment is in the same way, until the initial volume of gold (153chi) is paid up.

b/ A fine of 5% of the contract value shall be imposed on illegitimate violations of contract in the following cases: the buyer does not pay up before the expiration of the contract duration, the buyer refuses to pay the due installment as noted in the contract.

2- Collection of receipts from the sale of Houses.

a/ Selling party (directors of House trading companies of the provinces, cities under central authority, or Housing departments of provincial cities, towns, districts which are on behalf of the chairmen or vice-chairmen of the respective People's Committee) shall be responsible for selling action, giving instructions, supervising the process of contract implementation until the termination of the contracts as follows:

- To compile settlement sheets in 3: the 1st one is kept by the selling party as a stub, the 2nd one-sent to the state treasury for payment collection, and the last one is given to the buyer.

- To open a special book, watching for the implementation of contracts, mode of payment, contract forfeitures, and other transactions concerned.

- To keep the documents of each case such as: the contract, the settlement sheet, receipts of payment etc.

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b/ Buying party have the obligation to:

- Comply with the contract contents

- Carry out the payment for house with the local state treasury

- Keep all documents and paper concerned

c/ The state treasury is responsible for:

- Collecting the payments on the basic of the settlement sheet drawn up by selling party, compiling the receipt of payment to be given to the state budget. Each receipt of payment shall be made in 3 exemplars the 1st exemplar is kept in the state treasury, the 2nd one is for the selling party and the last one-for the buyer.

- Opening the book-keeping register for each case

- Watching for another transactions concerned

For state-owned house, which was built with some financial contribution of organizations or individuals, selling party will sell only that part of the house built by budgetary capital.

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Mode of payment, collection etc. are the same as mentioned above.

3- Revenue from selling state-owned houses shall be paid into state budget in compliance with circular No.68/TC-NSNN dated 15 August 1994 of the Ministry of Finance on the amendment of and addition to the present budget nomenclature.

4- Account system and Accounting report.

State-owned house selling party must fulfill the accounting statistic system in compliance with valid state regulations on financial management, making periodical reports on the implementation of "House-sale project" to the chairman of People's Committee of the relevant province or city under central authority, and to the Ministry of Construction as well.

State treasuries are responsible to account of receipts from house-sale, making reports to the supervisor state treasury and the financial authority at the same level on the situation of collecting the receipts from selling state owned residential houses.

The central state treasury shall make summary to report to Ministry of Finance.

Revenues from selling state owned residential houses paid into state budget shall be entered in the chapter, type, item, range with the heading "revenue from selling the state owned residential houses and land when the land use right is assigned" in the present Budget Nomenclature.

III. UTILIZATION OF REVENUE FROM SALE OF STATE OWNED RESIDENTIAL HOUSES.

Amount collected from sale of state owned residential houses shall be invested in house building and supporting the development of housing fund (hereafter referred to as housing fund development) as stipulated in article 11, Decree 61/CP dated 5 July 1994 of the Government.

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a/ Pursuant to the House sale project approved by chairmen of the People's Committee of province or city under central authority, selling party plans the collection of payments for houses. Revenue from house sale must be put into annual budget collection plan of the province or city.

b/ Based on the approved plan of payment collection, the People's Committee of province or city under the central authority shall conduct functioning bodies to work out a suitable annual plan of housing fund development of the province or city.

The plan of housing fund development is composed of the following contents:

b.1- A plan to build new residential houses, to upgrade the existing multistory houses or re-build houses of the 4th class (making them multistory) for sale. This kind of houses, after being completed, will be taken over to the local House selling council which is liable to delineate a project to sell them out as stipulated in point 3 Article 8 Decree No. 61/CP dated 5 July 1994 of the government. Households who are living in houses noted in points 1, 2 and 3 article 5 Decree No.61/CP dated 5 July 1994 of the Government shall have a priority to purchase houses of kind

selling price includes:

- Construction cost of house plus apportioned expense of infrastructure building (if any)

- Land price when land use right is assigned (or assigned land price) as stipulated in point 2, article 7 Decree No. 61/CP dated 5 July 1994 of the Government. In case the above mentioned house are sold to those who are homeless or living in a quite crammed accommodation, selling price includes:

- Mutually agreed price of house, noted in the contract of house purchase and sale (plus the apportioned expense of infrastructure building if any)

- The assigned land price, calculated in accordance with the current local price and the regulations on land prices issued by the state.

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b.2- A plan to build new residential houses, to up grade the existing multistory houses or re-build houses of the 4th class for rent. After being completed, houses of this kind shall be taken over to house managing and trading bodies. People, noted in points 1, 2 and 3 article 3, article 5 Decree No.61/CP dated 5 July 1994 of the government shall have priority to lease these house. House managing and trading bodies shall manage and rent out these houses in compliance with valid state regulations on housing management and lease. For those who are homeless or living in a quite cramped accommodation, House managing and Trading bodies shall rent out houses to them at a rental, mutually agreed upon in the leases.

Local financial bodies shall conduct the units, having houses to be transferred to house managing and trading bodies, to determine and account their resources in compliance with valid state system of fixed assets management and financial management.

b.3- A plan to build infrastructures in areas and zones that have been planed for residential house building. Chairman of the city's or provincial People's Committee with appoint relevant functional offices to draw up and implement this plan. When building of infrastructures is completed, construction final cost of infrastructures will be apportioned among the house to be built there.

House managing and trading units, which rare appointed by the People's Committee to implement the plan for building residential houses for sale or rent, must receive and preserve the fund of infrastructures and assigned land prices that will serve as a basic for calculation house selling prices in the future.

b.4- A plan to improve living conditions of residential quarters where the accommodation is poor, including:

- Improving internal road network

- Improving water system

- Improving service system

- Installing public lighting

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b.5- A plan to execute social policy on, housing, including 2 cases as follows:

- Gift-houses to be offered to revolutionary martyr's families that are short of manpower and not having relatives to lean on

- Houses for those who made great contribution to the revolution.

b.5.1) In case houses are built according to a plan, the planned capital shall include: building expenditure, payment for the assigned land, and other expenses concerned.

b.5.2) In case some allowance are given to objects of social policy on housing, city's or provincial People's Committee shall assign functional offices to work out financing alternative for each concrete case. Units which are appointed by city's or provincial people's

Committee to make or/and implement plan for building and supporting housing fund must draw up their respective plans in compliance with regulations and schedule stipulated by the People's Committee and send them to city's or provincial planning committee and financial Department, the last will classify and balance them to report to the chairman of People's Committee, who will consider and submit them to the People's council at the same level for approval.

c/ Housing fund development plan (in form of projects) approved by people's council will be put into the annual capital construction investment plan of province under central authority to submit to state planning committee, Ministries of Finance and Construction for reporting to the government.

d/ Management and allocation of capital for housing fund development plan, approved by the people's council and chairman of People's Committee, shall be implemented as follows:

- Plans, noted in points b.1, b.2, b.3, b.5 shall be implemented in compliance with valid state system of capital construction investment fund management.

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2- Making plan for expenditure of House selling operation

a/ List of expenditure for house selling operation to be given to selling party and House selling council, shall be drawn up by selling party in compliance with valid quota of financial expenses.

This list is composed of the following main contents:

- Expenses on printing documents, Stationers.

- Expenses for training

- Expenses for transaction conducting

- Expenses for renting of working facilities of house selling council

- Expenses for assessment of remaining value of houses

- Expenses for meeting, project consideration and evaluation

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b/ Estimate of expenses, drawn up by selling party during making and implementing housing fund development plan, shall be examined by local financial office and passed by house selling council, then submitted to chairman of People's Committee of province or city under central authority for approval. Plan of house selling expenses must be described in annual budgetary expenses plan of city or province in the principle that total estimated expenses for house selling operation must not exceed 2% of revenues from the sale of state owned houses.

c/ Management and delivery of budgetary credits to cover expenses for house selling operation shall be carried out by local financial office in compliance with valid state system of non-productive credits management. In coming time (the 4th quarter, 1994) the above mentioned credits shall be given in advance by local financial offices and, when the amount will be returned revenue from house sale is available.

IV. IMPLEMENTATION

1- People's Committee of provinces and cities under central authority shall conduct house selling bodies and others units concerned to implement house sale, collection of payments and utilization of revenue from sale of state owned residential houses to sitting leaseholders in compliance with the guidance's of this circular.

2- People's Committee of and provinces and cities under central authority should report on revenue from house sale and the utilization of theses revenue related to houses sold before the promulgation of Decree No.61/CP dated 5 July 1994 to the Prime Minister and the Ministry of Finance for consideration and treatment.

3- This circular shall come into effect from 5 July 1994. All previously issued documents which are in contrary to this circular shall be hereby repealed. Any problem arise from the process of implementation should be reported to the Ministry of Finance for consideration and settlement.

FOR THE MINISTRY OF FINANCE
VICE MINISTER




Nguyen Sinh Hung

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