DECREE

ON THE ISSUANCE OF THE GOVERNMENT'S BONDS, BONDS GUARANTEED BY THE GOVERNMENT AND BONDS OF LOCAL GOVERNMENT

THE GOVERNMENT

Pursuant to the Law on Government's Organization dated 25 December, 2001;
Pursuant to the Law on the State Budget dated 16 December, 2002;
Upon the proposal of the Minister of Finance;

DECREES:

Chapter I

GENERAL PROVISION

Article 1. Governing scope

...

...

...

2. This Decree shall not govern:

a. The Bonds issued by the Credit Institutions in accordance with provisions of the Law on Credit Institutions;

b. The Bonds issued by enterprises under the method of self-borrowing, self-payment in accordance with the Law on the State owned enterprises and the Law on Enterprises;

Article 2. Interpretation

1. Government's Bond shall be a kind of debt securities, which are issued by the Government with term face value, interest and confirmation by the Government of its repayment obligation to Bonds' owners.

2. Bond guaranteed by the Government shall be a kind of debt securities, which are issued by enterprises to mobilize capital for projects designated by the Prime Minister, for which investors are guaranteed by the Government of the timely payment of issuing organizations. In case where issuing organizations fail to perform their repayment obligation (principals, interests) at the maturity date, the Government shall be responsible for the performance of the debt repayment in lieu of issuing organizations.

3. The Bond of local Government shall be a kind of debt securities, which are issued by the provincial people's committee with term, face value and confirmation by local Governments of their debt repayment obligation to Bonds' owners.

4. Issuing organization shall be a legal entity, which borrows funds by issuing Bonds in accordance with provisions of this Decree.

5. Bond issue shall mean the sale of Bonds to buying subjects.

...

...

...

7. Underwriting shall mean a process whereby an underwriting organization assists the issuing organizations in completing procedures prior to the issue of Bonds to the securities market, distribute Bonds to investors, undertake to buy Bonds for resale or to buy the remaining bonds that are not yet distributed.

8. Bonds auction shall be the selection of organizations, which or individuals participating in the auction, who fully satisfy requirements of the issuing organization.

9. Issuing agents shall mean the entrustment made by the issuing organization to another organization to perform the sale of Bonds to investors.

10. Bonds custody shall mean the deposit made by Bond's owners of their Bonds at an organization, which is permitted to preserve, maintain Bonds so that such organization performs rights relating to the Bonds for their owners.

11. Agent for Bonds payment shall mean the authorization made by an issuing organization to another organization to perform the payment of Bond principals and interests at the due date.

12. Mortgage shall mean the delivery of Bonds by their owners to an organization or individual to hold for the security of the performance of their civil obligations.

Article 3. Bond issuer

1. The issuer of Government's Bonds shall be the Government;

2. The issuer of Bonds guaranteed by the Government shall be enterprises;

...

...

...

Article 4. Classification of Bonds

1. Government Bonds shall include:

a. Treasury Bills;

b. Treasury Bonds;

c. Bonds for central Government's projects;

d. Investment Bonds;

dd. Foreign currency Bonds;

e. Government's Bonds for the construction of Motherland.

2. Bonds guaranteed by the Government.

...

...

...

Article 5. Issue and payment currency

1. Bonds shall be issued and paid in Vietnam Dong or freely convertible foreign currencies;

2. The issuance of foreign currency Bonds shall only be applicable to cases, which are provided for in Section V, Chapter II of this Decree.

3. Currency used for the payment of Bonds shall be the currency, which is used for issuance.

Article 6. Forms of issuance

Bonds shall be issued in form of non-bearer or bearer certificates or book-entry.

Article 7. Face value of bonds

1. The face value of Bonds, which are issued and paid in Vietnam Dong, shall be 100,000 Dong at the minimum. The Minister of Finance shall provide for specific face value.

2. The face value of Bonds, which are issued and paid in foreign currencies, shall be stipulated specifically for each issue.

...

...

...

Bonds buying subjects shall be Vietnamese organizations, individuals or Vietnamese, who permanently reside in foreign countries, foreign organizations, which and individuals, who are lawfully working and living in Vietnam. Organizations of Vietnam shall not be permitted to use sources of expenditure granted by the State Budget to buy Government's Bonds.

Article 9. Fees for the issue, payment of Bonds

Organizations that underwrite the bonds issue, provide auction services, act as agents, undertake the entrustment in organizing the issue and payment of Bonds shall be entitled to fees in accordance with provisions of the Finance Ministry.

Article 10. Underwriting organizations, issuing agents

Organizations that underwrite or act as agents for cases of bonds issue under the method of underwriting or issuing agents shall be Securities Companies, Investment Funds, Finance Companies, Banks, which are legally operating in Vietnam.

Article 11. Listing and transaction

1. Government's Bonds, local Government's Bonds shall be bought, sold in the monetary market or discounted, mortgaged at the State Bank in accordance with provisions of applicable laws.

2. Government's Bonds, Bonds guaranteed by the Government and local Government's Bonds shall be listed and transacted in the securities market in accordance with provisions of applicable laws.

Article 12. Bonds custody and deposit

...

...

...

Article 13. Redemption of Bonds by issuing organizations

Issuing organizations shall have the right to redeem Bonds, which have been issued prior to their maturity.

Article 14. Interests of Bond's owners

1. To be guaranteed by the issuing subjects of the full and timely payment of Bond principals and interests upon their maturity.

2. To be entitled to use their Bonds for sale, presentation, donation, inheritance or mortgage, discount

3. To be exempted from income tax for incomes from Bonds in accordance with provisions of applicable laws.

Article 15. Limits for repayment and circulation of Bonds

Bonds shall not be used for replacement of money in circulation or performance of financial obligations toward the State Budget.

Article 16. Lost or damaged Bonds

...

...

...

Bearer Bonds, which are lost, torn to pieces, damaged, shall be repaid by the issuing organizations upon their maturity if persons who lost the Bonds can prove their ownership over their bonds, and these bonds have not yet been taken advantage of for repayment.

Article 17. Counterfeiting or taking advantage of Bonds

All acts of misusing or counterfeiting Bonds shall be dealt with in accordance with applicable laws

Chapter II

GOVERNMENT BONDS

Section I.- TREASURY BILLS

Article 18. Issuing organization and use purposes

Treasury Bills are a kind of Government Bonds with a term of less than 1 year, which are issued by the State Treasury to develop the monetary market and mobilize funds to cover the temporary deficit of the State Budget within the fiscal year.

Article 19. Mode of issuance

...

...

...

2. Volume and interest rates of Treasury Bills shall be determined through the auction result.

3. The Ministry of Finance can entrust the State Bank, the State commercial banks to perform the issuance and repayment of Treasury bills.

Article 20. Subjects entitled to participate in the auction of the Treasury Bills

1. Credit Institutions that are operating in accordance with the Law on Credit Institutions

2. Insurance companies, Insurance funds, investment funds that are legally operating in Vietnam; branches of foreign investment funds in Vietnam.

3. In case where subjects provided for in paragraph 1, 2 of this Article do not yet buy up the volume of a Treasury Bills issue, the State Bank shall be entitled to buy the remaining part.

Article 21. Use and repayment of Treasury Bills

1. All funds from the Treasury Bills issue shall be concentrated into the Central Budget for use in accordance with provisions of the Law on the State Budget.

2. The Central Budget shall secure the sources of funds to repay principals, interests of Treasury Bills upon their maturity and the payment of expenses relating to the organization of the issuance, repayment to organizations, which are entrusted with the issuance.

...

...

...

Article 22. Issuing organization and use purposes

Treasury Bonds are a kind of Government's Bonds with term of 1 year and up, which are issued by the State Treasury to mobilize funds to cover the State Budget's deficit under annual State Budget Plan decided upon by the National Assembly.

Article 23. Mode of issuance

1. Placement through the system of the State Treasuries;

2. Auction through the stock exchange;

3. Underwriting;

4. Issuing agents

Article 24. Treasury bonds buying subjects

1. Subjects stipulated in paragraph 1, 2 Article 20 of this Decree.

...

...

...

3. Foreign organizations that are legally operating in Vietnam

4. Vietnamese citizens, Vietnamese permanently residing in foreign countries and individuals being foreigners who are working and living lawfully in Vietnam

Subjects that buy Bonds under the mode of auction through the stock exchange must fully satisfy conditions in accordance with provisions on securities and securities market.

Article 25. Interest rate of Treasury Bonds

Interest rates of Treasury Bonds shall be decided upon by the Minister of Finance on the basis of the actual conditions in the financial market at the time of issuance. In case of interest rate auction, the interest rate shall be determined in accordance with the auction result.

Article 26. Use and repayment of Treasury Bonds

1. All funds from the Treasury Bonds issue shall be concentrated into the Central Budget for use in accordance with provisions of the Law on the State Budget.

2. The Central Budget shall secure the sources of funds to repay principals, interests and the payment of expenses relating to the organization of the issuance, repayment of Treasury Bonds

Article 27. Organization of the repayment of Treasury Bonds when due

...

...

...

2. Finance, Credit Institutions shall be entrusted by the Ministry of Finance for the repayment of Bond principals, interests to their owners when due in respect of Treasury Bonds, which are issued under the mode of auction, issuing agent or underwriting.

Section III.- BONDS FOR THE CENTRAL GOVERNMENT'S PROJECTS

Article 28. Issuing organization and use purposes

Bonds for the central Government's projects are a kind of Government Bonds with a term of 1 year and up, which are issued by the State Treasury to mobilize funds under the decision of the Prime Minister for projects, which are invested by the Central Budget, included in the plan but not yet provided with the budget capital in the year.

Article 29. Conditions for issuance

1. Projects are included in the list of annual key investment projects of the Government;

2. The Plan of Bonds issuance, the plan for the use of borrowed capital and the plan for the repayment of the borrowed funds when due shall be performed in accordance with the decision of the Prime Minister on the basis of the program, which are designed under the leadership of the Ministry of Finance.

Article 30. Mode of issuance

Bonds for the Central Government's projects shall be issued under the mode of placement through the system of the State Treasuries, auction or underwriting.

...

...

...

Subjects that buy bonds for the central Government's projects shall be those as provided for the Treasury Bonds in Article 24 of this Decree.

Article 32. Interest rates of Bonds

Interest rates of Bonds for the central Government's bonds shall be decided upon by the Minister of Finance on the basis of actual conditions in the financial market at the time of issuance. In case of interest rate auction, the interest rate shall be determined by the auction result.

Article 33. Use and repayment

1. All funds from the Bonds issue for the central Government's projects shall be concentrated into the Central Budget for investment in projects approved by the Prime Minister. The Central Budget shall secure the repayment of principals, interests and expenses in respect of the Bonds for the central Government's projects.

2. The organizations of repayment of principals, interests of the Bonds for the central Government's projects when due shall be performed as in the case of Treasury Bonds stipulated in Article 27 of this Decree.

Section IV.- INVESTMENT BONDS

Article 34. Issuing organization and use purposes

Investment Bonds are a kind of Government's Bonds with a term of 1 year and up, which are issued by the State finance organizations, finance, credit institutions designated by the Prime Minister to mobilize funds for investment under the Government's policy.

...

...

...

1. Bonds are issued separately for each economic objective;

2. The total value of the issue shall not be in excess of the target approved by the Government or the Prime Minister for each economic objective or each specific year.

3. The plan of issue is appraised by the Ministry of Finance

4. The level, time of the issue, the face value, term of Bonds shall be made by the agreement between issuing organization and the Ministry of Finance.

5. The Minister of Finance shall decide on the ceiling interest rate of the Bond issue.

Article 36. Issuing mode, Bond buying subjects

Issuing mode, subjects that buy investment Bonds shall be the same as for the Bonds for the central Government's projects stipulated in Article 30 and Article 31 of this Decree.

Article 37. Interest rate of Bonds

The Minister of Finance shall decide on the ceiling interest rate of the investment Bonds from time to time on the basis of actual conditions of the financial market and funds requirements of issuing organizations. In case of interest rate auction, the interest rate shall be determined by the auction result within the ceiling limit decided upon by the Minister of Finance.

...

...

...

Funds from the issuance of investment Bonds shall be separately monitored and only used for economic objectives, which have been approved by the Prime Minister.

Article 39. Repayment of Bonds

1. Issuing organizations shall be responsible for the repayment of principals, interests of investment Bonds upon their maturity and other expenses concerning the organization of issuance and repayment.

2. The State Budget shall be used for the entire or partial repayment of Bond interests or for the compensation for interest differences to issuing organizations in accordance with the decision of the Prime Minister in respect of each specific economic objective.

Section V.- FOREIGN CURRENCY BONDS

Article 40. Issuing organization and use purposes

Foreign currency Bonds are a kind of Government's Bonds with a term of 1 year and up, which are issued by the Ministry of Finance for objectives designated by the Prime Minister.

Article 41. Issue currency

1. Currency of the issue shall be freely convertible foreign currencies.

...

...

...

Article 42. Issuing modes and buying subjects

1. Placement through the system of the State Treasuries:

a. Subjects that buy foreign currency Bonds shall be those that buy Treasury Bonds as provided for in Article 20 of this Decree.

b. The Minister of Finance shall decide on the location to issue foreign currency Bonds under the mode of placement through the system of the State treasuries.

2. Auction through the State Bank:

a. Subjects participating in the auction of foreign currency Bonds shall be Credit Institutions, which are operating under the Law on Credit Institutions.

b. The State Bank shall act as an agent of the Ministry of Finance in the issuance and repayment of foreign currency.

Article 43. Principles for issuance

1. Foreign currency Bonds shall be issued under each issue. The Ministry of Finance shall set up a specific scheme for each issue and submit it to the Prime Minister for decision.

...

...

...

3. The Minister of Finance shall decide on the time of the issue, currency, level of issue, interest rates, face value, term of foreign currency Bonds.

Article 44. Use and repayment of foreign currency Bonds

1. Foreign currencies from the Bonds issue shall be used for objectives designated by the Prime Minister.

2. The State Budget shall repay the due foreign currency Bonds (principal and interests).

In case where foreign currencies from the Bonds issue are sold to the State Bank to increase the foreign exchange reserve of the State, the State Bank shall be responsible for the resale of foreign currencies to the Ministry of Finance to repay principals, interests of due foreign currency Bonds.

3. The Ministry of Finance shall provide in details for the level of expenses for the issuance and repayment of foreign currency Bonds.

Section VI.- GOVERNMENT'S BONDS FOR CONSTRUCTION OF MOTHERLAND

Article 45. Issuing organization and use purposes

Government's Bonds for the construction of Motherland shall be issued by the Government to mobilize funds from the people to invest in the construction of national important projects and other necessary projects for the sake of the production, the improvement of living conditions and for the creation of the material, technical foundations for the country

...

...

...

Government's bonds for the construction of the Motherland shall be issued in accordance with provisions in the Ordinance No. 12/1999/PL-UBTVQH10 dated 27 April, 1999 of National Assembly's Steering Committee on the issuance of Government's Bonds for the construction of the Motherland.

Chapter III

BONDS GUARANTEED BY THE GOVERNMENT

Article 47. Issuing organization and use purposes

Bonds guaranteed by the Government are a kind of Bonds with a term of 1 year and up, which are issued by enterprises to mobilize funds for investment projects under the designation of the Prime Minister.

Article 48. Conditions for issuance

1. Issuing organizations are enterprises, which are designated by the Prime Minister to act as investors of the State projects.

2. Investment projects that have completed procedures in accordance with provisions of applicable laws

3. The issuance of Bonds is permitted by the Prime Minister to mobilize investment funds for projects

...

...

...

5. The scheme on the issuance, use and repayment of borrowed funds is approved in writing by the Ministry of Finance.

Article 49. Principles for issuance

1. Bonds shall be issued for each specific project

2. Total value of Bonds to be issued for a project shall not be in excess of the total value of the project. The specific issuing level of each project shall be in compliance with the decision of the Prime Minister.

3. No new issue shall be made for the repayment of due Bonds.

4. Issuing plan, time of issuance, and term of Bonds shall be agreed upon between the issuing subjects and the Finance Ministry.

5. The Minister of Finance shall decide on the ceiling interest rate applicable to each issue of Bonds.

Article 50. Guarantee of the bonds payment

1. The Ministry of Finance shall, on behalf of the Government, guarantee the payment or authorize the State finance organizations, state credit institutions to guarantee the payment of bonds;

...

...

...

3. Enterprises that issue bonds shall be liable to pay the organizations, which provide the guarantee a guarantee fee equivalent to 0.05% of the guaranteed amount per annum, at the maximum. The guarantee fee shall be included in the project value for those projects, which are in the stage of investment and included in the operating cost for those projects, which have been completed and put in operation.

4. Organizations that issue the guarantee for the bonds payment shall be responsible for the funds arrangement to make the payment of due Bonds in lieu of issuing enterprises when they fail to perform their payment obligations.

Article 51. Issuing modes

Bonds guaranteed by the Government shall be issued under the mode of auction, underwriting or issuing agents, listed in the securities market and deposited centrally at depository organizations.

Article 52. Bond buying subjects

Subjects participating in the purchase of Bonds guaranteed by the Government shall be the same as those provided for the treasury bonds stipulated in Article 24 of this Decree.

Article 53. Interest rate of bonds

Minister of Finance shall decide on the ceiling interest rate applicable to each issue of Bonds, which are guaranteed by the Government on the basis of actual conditions in the financial market at the time of issuance. Interest rate of Bonds issued in form of auction shall be determined by the auction result.

Article 54. Use of proceeds from the issuance of Bonds

...

...

...

Article 55. Payment of Bonds

1. Enterprises that issue Bonds shall be responsible for the payment of principals, interests of Bonds at their maturity by their lawful sources of funds.

2. In case where the guarantee organization must make funds arrangement for the payment of due Bonds, enterprises shall be responsible for the debt recognition and the repayment to organizations, which have issued the guarantee, under the committed conditions.

3. Expenses relating to the issuance of Bonds shall be included in the value of projects that are invested by the funds from the bond issue.

Chapter IV.

LOCAL GOVERNMENT'S BONDS

Article 56. Issuing organization and use purposes

Local government's Bonds are a kind of investment Bonds with a term of one year and up, which are issued by the State treasuries or Financial, Credit Institutions in the locality under the authorization of provincial people's committee to mobilize funds for projects, works which are invested by the local budget, included in the plan but not yet provided with the budget funds in the year.

Article 57. Conditions for issuance

...

...

...

2. The scheme for the issuance of Bonds, plan for the use of borrowed funds and for the repayment of due debts are designed by the provincial people's committee to submit to the People Council for approval and accepted in writing by the Minister of Finance.

3. Availability of the decision made by the Chairperson of provincial people's committee on the authorization to the State Treasuries, Financial, Credit Institutions in the locality to take responsibility for the issuance, payment of Bonds.

Article 58. Limit of total issued Bonds

The maximum limit on the total funds mobilized with the local Government's bonds shall be in compliance with provisions in paragraph 3, Article 8 of the Law on the State Budgets. In respect of Hanoi Capital and Hochiminh city, this limit shall be in conformity with separate provisions of the Government.

Article 59. Issuing modes

Local Government's Bonds shall be issued under the mode of auction, underwriting or issuing agents.

Article 60. Bonds buying subjects

Subjects participating in the purchase of local Government's Bonds shall be the same as those provided for treasury Bonds as stipulated in Article 24 of this Decree.

Article 61. Bonds interest rates

...

...

...

2. Chairperson of provincial people's committee shall decide on specific interest rate applicable to each kind of term and each issuing mode on the basis of range limit decided upon by the Minister of Finance and the actual interest rate of Government's bonds of the same term at the time of issuance.

In case of interest rate auction, the interest rate shall be determined by the auction result within the level of actual interest rates of Government's bonds of the same term at the time of issuance plus the range limit decided upon by the Minister of Finance.

Article 62. Use and payment

1. Funds borrowed from the local Government's Bonds shall be added to the revenues of the provincial budget for spending on already approved projects.

2. The provincial budget shall be responsible for the payment of principals, interests and expenses relating to the organization of issuance, payment of local Government's Bonds.

3. The organization of the payment of principals, interests of local government's bonds when due shall be performed as for treasury bonds stipulated in paragraph 2, Article 27 of this Decree.

Article 63. Suspension of issue

1. The issuance of bonds shall be suspended in following cases:

a. The issuing scheme, plan for the use of funds and scheme for payment of due bonds are infeasible;

...

...

...

c. The limit of interest rate range provided for by the Minister of Finance is not complied with.

d. The permitted issuance limit under the provisions of the Law on the State Budget is exceeded.

2. The Ministry of Finance shall supervise the entire process of local government's Bonds' issuance. In the event of discovery of violation, the Ministry of Finance shall request the provincial people's Committee to stop the issuance and report thereon to the Prime Minister at the same time.

Chapter V

STATE MANAGEMENT RESPONSIBILITIES AND RIGHTS

Article 64. Ministry of Finance

1. To provide guidance and supervise the issuance, use, payment of Government's Bonds and Bonds guaranteed by the Government.

2. To draw up schemes for the issuance of Bonds for the central Government's projects and submit to the Prime Minister for decision.

3. To organize the issuance of treasury bonds, Bonds for the central Government's projects, foreign currency Bonds and Government's Bonds for construction of the Motherland in accordance with provisions stated in Chapter II of this Decree.

...

...

...

5. To agree with issuing organizations on the issuing scheme, implementation plan for investment bonds of the Government and Bonds for projects guaranteed by the Government.

6. To decide on the interest rate of treasury Bonds, Bonds for central Government's projects; to decide on the ceiling interest rate of investment bonds, Bonds guaranteed by the Government; to decide on the limit of interest rate range of local Government's bonds.

Article 65. The State Bank of Vietnam

1. To coordinate with the Ministry of Finance to organize the auction of treasury bills, foreign currency Bonds of Government through the State Bank

2. To participate in the determination, with the Ministry of Finance, of interest rate of Government's bonds and Bonds guaranteed by the Government.

3. To organize the redemption of foreign currency sources received from the issuance of foreign currency Bonds to increase foreign exchange reserve of the State and to sell foreign currencies to the Ministry of Finance for the payment of principals, interests of foreign currency bonds at their maturity.

4. To direct Credit Institutions to issue investment bonds in accordance with the decision of the Prime Minister.

Article 66. The State securities committee

1. To coordinate with the Ministry of Finance to organize the issuance of Government's bonds through the form of auction at the securities market.

...

...

...

Article 67. People's Committees in provinces, cities under the central Government's management that issue the local Government's Bonds.

1. To draw the scheme for the issuance of Bonds, plan for the payment of borrowed funds and to submit to the provincial people's Council and send to the Ministry of Finance for appraisal.

2. To organize the issuance of the local Government's bonds under the scheme appraised by the Ministry of Finance.

3. To verify, supervise the use of funds and collection of funds borrowed by the issuance of the local Government's Bonds.

4. To balance the provincial budget in order to secure the sources for bonds payment at maturity.

Article 68. Bond issuing organizations

1. To draw the plan of issue, implementation plan in line with the demand for use of funds.

2. To organize the issuance of bonds and payment of Bonds when due.

3. To make periodical report to the Ministry of Finance on the result of issuance and payment of Bonds.

...

...

...

Organizations, which individuals, who violate provisions of this Decree, shall, depending on their act and the seriousness of violation, be subject to administrative punishment, disciplinary punishment and compensation for material damages under the provisions of applicable laws. In case of serious violation, they shall be prosecuted for criminal liability.

Chapter VI

IMPLEMENTING PROVISIONS

Article 70. Effectiveness

This Decree shall be effective after 15 days from its publication in the Official Gazette and replace the Decree No. 01/2000/ND-CP dated 13 January, 2000 of the Government on the issuance of the Regulation on the issuance of Government's Bonds.

Article 71. Responsibility for guidance

The Minister of Finance shall be responsible for the guidance on the implementation of this Decree.

Article 72. Responsibility for the implementation

Ministers, Heads of ministerial-level agencies, Heads of Governmental agencies, Chairpersons of people's committees in provinces, cities under the central Government's management shall be responsible for the implementation of this Decree.

...

...

...

FOR THE GOVERNMENT
PRIME MINISTER




Phan Van Khai