Circular No.110/2000/TT-BTC of November 14, 2000 guiding the management and use of State Enterprises’ Capital forinvestment and Construction

THE MINISTRY OF FINANCE
——-

SOCIALIST REPUBLIC OF VIET NAM
Independence – Freedom – Happiness
———-

No.110/2000/TT-BTC

Hanoi, November 14, 2000

 

CIRCULAR

GUIDING THE MANAGEMENT AND USE OF STATE ENTERPRISES’ CAPITAL FORINVESTMENT AND CONSTRUCTION

Pursuant to the State Enterprises Law;
Pursuant to the Government’s Decree No.52/1999/ND-CP dated July 8,1999 promulgating the Regulation on Investment and Construction Management;
Pursuant to Decree No.12/2000/ND-CP dated May 5, 2000 amending andsupplementing a number of Articles of the Regulation on Investment and ConstructionManagement issued together with the Government’s Decree No.52/1999/ND-CP dated July8, 1999;
Pursuant to the Government’s Decree No.59/CP of October 3, 1996promulgating the Regulation on financial management and business cost-accounting for Stateenterprises;
Pursuant to the Government’s Decree No.27/1999/ND-CP dated April20, 1999 amending and supplementing the Regulation on financial management and businesscost-accounting for State enterprises, issued together with the Government’s DecreeNo.59/CP dated October 3, 1996
After consulting with the Ministry of Construction, the Ministry ofFinance hereby guides the management and use of State enterprises’ capital forinvestment and construction as follows:

I. GENERAL PROVISIONS

1. Subject to this Circular are projects using development investmentcapital of State enterprises (abbreviated to SEs), including those operating in the fieldof production and business and public utility under the State Enterprises Law.

2. Projects using the SEs’ development investment capital are projectsthat use part of the capital supported by the State budget, capital of the State budgetorigin, capital accumulated by enterprises themselves, commercial credit capital fordevelopment investment, development investment funds, financial reserve funds (to offsetproperty losses), welfare funds (for investment in welfare projects), capital for fixedasset depreciation and the State’s revenues left to enterprises for investment.

3. For projects on fixed asset repair, the management and payment ofexpenses therefor shall comply with the SEs’ current financial management regime. Wherethe SEs use their own development investment capital for investment in the repair of fixedassets, they shall have to comply with the provisions of this Circular.

4. Projects using the SEs’ development investment capital shall have tostrictly observe the investment and construction procedures and be included theenterprises’ annual capital construction investment plans. The SEs may organize payment bythemselves or select capital-paying organizations to assist them in managing the paymentof development investment capital.

The SEs shall strictly observe the accounting and statistical regime and settle theinvestment capital according to current regulations.

5. Investors of projects using the SEs’ development investment capitalshall have to organize the management and implementation of investment projects, takeself-responsibility for projects’ capital preservation and investment efficiency onthe basis of strict compliance with the current regimes and policies on investment andconstruction management as well as the Bidding Regulation.

6. The agencies managing the SEs’ finance shall perform the function ofState finance management and supervise the use of capital, ensuring the safety andefficiency for projects invested with the SEs’ development investment capital. The StateTreasury the Development Assistance Fund, the commercial banks and State creditinstitutions (hereinafter referred collectively to as the capital-paying organizations)shall have to assist the SEs in inspecting and strictly controlling various stages of thecapital-paying process, ensuring the timely and adequate supply for the projects strictlyaccording to the prescribed regime and the project execution tempo, and at the same timedetect for prompt prevention the use of capital for the wrong purposes or in contraventionof the prescribed regime, which cause wastage or loss of the SEs’ capital.

7. The ministries, ministerial-level agencies, agencies attached to theGovernment, State corporations, associations and mass organizations (referred collectivelyto as ministries) as well as the People’s Committees of the provinces and centrally-runcities (referred collectively to as the provincial People’s Committees) shall have tomanage and use investment capital according to the State’s regulations on investment andconstruction management as well as the provisions of this Circular.

II. SPECIFIC PROVISIONS

1. The SEs development investment capital shall be usedfor investment and construction for the following purposes:

– Investment projects for new construction, renovation and upgrading of the alreadyinvested projects.

– Investment projects for the procurement of properties, includingequipment and machinery not requiring installation, and new science and technologyproducts.

The SEs shall have to manage and use capital according to the currentrelevant regulations when using the development investment capital for the followingpurposes:

– Buying shares, contributing stock capital, contributing capital tojoint-ventures or other forms of investment.

– Investing in joint-ventures with foreign countries.

2. The SEs’ development investment capital shall be created from thefollowing sources:

2.1. The SEs’ own capital, including:

+ The development investment fund;

+ The fixed asset depreciation capital;

+ The capital of the State budget origin;

+ The capital initially allocated by the State budget;

+ The welfare fund (used for investment in welfare projects);

+ The State’s revenues left to enterprises for investment.

The financial reserve fund shall be used only to offset losses, damageor price reduction of the SEs’ properties due to objective or subjective causes.

For corporations set up under the Prime Minister’s DecisionNo.91/TTg and Decision No.90/TTg dated March 7, 1994 (hereinafter called corporations91/TTg and corporations 90/TTg for short), the general directors shall, as authorized bythe Managing Boards, decide the partly mobilization of the development investment capitalof independent cost-accounting member enterprises to meet the corporations’ demandfor concentrated investment under the current financial management regime.

2.2. The development investment capital mobilized by the SEs,including:

– The investment capital supported by the State budget: The SEs’investment projects using the State budget-supported development investment capital shallcomply with the provisions of the State Budget Law and the Regulation on Investment andConstruction Management issued together with the Governments Decree No.52/1999/ND-CP datedJuly 8, 1999 and Decree No.12/2000/ND-CP of May 5, 2000 amending and supplementing anumber of articles of the Regulation on Investment and Construction Management.

– The State’s development investment credit capital andState-guaranteed credit capital: The SEs’ projects using these development investmentcapital sources shall comply with the provisions of the Government’s DecreeNo.43/1999/ND-CP dated June 24, 1999 on the State’s development investment credit andthe State’s Regulation on Investment and Construction Management.

– The commercial credit capital: The SEs’ projects using thecommercial credit capital source shall have to comply with the State’s currentregulations and the capital-lending credit institutions’ guidance on the use of suchcapital on the basis of the capital-lending contracts.

– The capital mobilized from other sources, such as the issuance ofenterprise bonds, joint-venture cooperation…: The SEs’ investment projects usingthese capital sources shall have to comply with the State’s current regulations.

3. The competence to decide investment and investment execution forprojects using the SEs’ development investment capital is stipulated as follows:

3.1. For group-A projects using all above capital sources (mentioned inPart II.2), the competence to decide investment and investment execution shall apply asprovided for projects using the State budget capital in the Investment and ConstructionManagement Regulation issued together with the Government’s Decree No.52/1999/ND-CP datedJuly 8, 1999 and Decree No.12/2000/ND-CP dated May 5, 2000.

3.2. For group B- or C- projects using the SEs’ own capital(mentioned at Point 2.1, Part II. 2), the SES shall base themselves on the branchdevelopment planning or plans already approved by the competent authorities to decide theinvestment; for projects which use land, the land locations and areas must be approved bythe competent People’s Committees of the localities where the land exist and the SEs mustfill in the procedures for land allotment or land lease according to the provisions of theland legislation. The competence to decide investment for group B- or -C projects usingthe SEs’ own capital is defined as follows:

– For the SEs being member enterprises of corporations 91/TTg or90/TTg, the Managing Boards’ approval is required;

– For independent SEs with Managing Boards, the investment must beapproved by the Managing Boards.

– For independent SEs without Managing Boards, the investment must beapproved by the enterprise general directors (or directors).

– For investment projects of the public utility SEs, the agenciesdeciding their establishment shall decide the investment or authorize the enterprises todecide it.

Enterprises shall take self-responsibility for the projects’ investmentexecution process on the basis of strict compliance with the State’s current regimes andpolicies on investment and construction management as well as the Bidding Regulation.

4. Elaboration and submission of reports on the SEs’ investment capitalplans:

4.1. On the basis of the execution tempo of projects being invested,projects having gone through the investment preparation stage and the SEs’ plans formobilization and use of investment capital sources, the member SEs, independent SEs orcorporations shall elaborate their annual investment capital plans.

For the SEs being member enterprises of corporations 91/TTg or 90/TTgor the SEs with Managing Boards, their plans on the use of investment capital must beapproved by the Managing Boards. For independent SEs without Managing Boards, theirinvestment capital plans shall be approved by the general directors (or directors).

4.2. After their investment capital plans have been approved by thecompetent authorities, the SEs shall notify such to the bodies managing finance ofenterprises so that the latter have basis for monitoring, inspection and supervision, andat the same time report the already approved investment capital plans to the corporations(if any), the ministries or the provincial People’s Committees (for projects falling undertheir management competence).

4.3. The ministries, the provincial People’s Committees and theManaging Boards of corporations 91/TTg shall synthesize them into their annual investmentcapital plans to be addressed to the Ministry of Finance and the Ministry of Planning andInvestment.

5. Conditions for payment of the SEs investment capital:

5.1. For investment projects:

– Investment preparation: There must be documents issued by thecompetent authorities according to the responsibility division prescribed in theRegulation on Investment and Construction Management, permitting the preparation forinvestment; and the corresponding cost estimates therefor.

– Preparation for project execution: There must be investment reportsor feasibility study reports and investment decisions issued by the competent authoritiesaccording to the responsibility division prescribed in the Regulation on Investment andConstruction Management; and the cost estimates therefor.

– Execution of investment projects: There must be technical designs andtotal cost estimates, which have already been approved by the competent authorities. Forgroup A- or B- projects with technical designs and total cost estimates not yet approved,the investment decision must specify the capital level of each project item with thealready approved design and cost estimate for its construction in the year.

5.2. For projects that have been included in the enterprises’investment capital plans correspondingly to the project execution tempo in the plan year,there must be decisions to set up the project management boards (for cases where projectmanagement boards must be set up) and to appoint the heads of the management boards, chiefaccountants or persons in charge of accountancy to assist the SEs in managing the projectsaccording to regulations.

5.3. For projects for which bidders have been appointed or biddingshave been organized for consultant selection, equipment procurement, construction andinstallation under the Bidding Regulation, there must be decisions approving the biddingresults, issued by the competent authorities and economic contracts between the SEs andthe contractors.

5.4. There must also be the SEs’ approval of payment for theconstruction and installation, equipment procurement or consultancy volumes, irrespectiveof the form of self-performance or bidding contracts.

Upon each payment of investment capital, contractors shall have to handover to the SEs the following dossiers:

– For the completed construction and installation volume:

+ The minutes on the pre-acceptance test of the completed constructionand installation volume, attached with the written calculation of the pre-acceptancetested volume.

+ The price bills and payment vouchers.

– For equipment volume:

+ The invoices-cum-delivery bills (for domestically procuredequipment); or import voucher set (for imported equipment).

+ The warehousing bills (for equipment requiring no installation) orminutes on the pre-acceptance test of the equipment installation volume (for equipmentrequiring installation).

+ The vouchers on transportation, insurance, taxes and warehousingcharges.

+ The price bills and payment vouchers.

– For consultancy volume:

+ The minutes on the pre-acceptance test of the consultancy volume.

+ The payment vouchers.

For other paid jobs outside the jobs performed by hired consultants ofthe projects, the expenses therefor shall be paid when there are enough grounds to provethat the jobs have been performed.

Basing themselves on the dossiers mentioned at Points 5.1, 5.2 and 5,3(dossiers sent only once) and the payment-requesting dossiers mentioned at Point 5.4(dossiers sent for each payment request), the SEs shall agree to make payment when thecompleted volumes or jobs in such dossiers are compatible with the above-prescribeddossiers as well as the current system of investment and construction management policies.

6. Organization of investment capital payment:

The SEs shall, basing themselves on their annual constructioninvestment plans, approved projects and contracts signed with contractors (orself-performance contracts), ensure enough capital sources to make payment on schedule tothe contracting units. The investment capital payment by enterprises shall be effected inthe following forms.

– The SEs make self-payment: In this case, the SEs shall takeself-responsibility for the control of investment capital payment to the contractors andsuppliers.

– The SEs make payment through capital-paying organizations: In thiscase, the SEs shall transfer their development investment capital to the capital-payingorganizations in localities where they deploy the execution of the investment projects.The capital- paying organizations shall control and make payment at the SEs’ requests.

In order to receive and manage the investment capital payment by theSEs for investment projects at the capital-paying organizations, investors shall have tofill in the procedures to open separate accounts for monitoring investment projects atsuch organizations. The procedures for account opening shall comply with the guidance ofthe capital-paying organizations. The capital-paying organizations shall have to createfavorable conditions for investors to open accounts and use them at the serving units.

The SEs shall base themselves on the investment project executiontempo, their investment capital plans for investment projects, their capital sources’balance at the paying organizations and the demand for capital at the time of payment totransfer investment capital to the paying organizations.

7. The selection of the forms of advancing capital, paying capital andrecovering advance investment capital shall be agreed upon by the SEs (investors) andthe contractors (for construction and installation, procurement of equipment, consultancy)and effected on the basis of the SEs’ annual investment capital mobilization plansand the State’s current policies through contracts.

8. Investment capital settlement: Upon the completion ofconstructions or investment projects, investors shall have to settle the total investmentcapital of the projects according to the Finance Ministry’s regulations guiding theinvestment capital settlement.

The Ministry of Finance shall have to verify and approve the investmentcapital settlements for group-A projects; the authorities competent to decide theSEs’ investment shall have to verify and approve the investment capital settlementsfor group B- and C- projects.

9. Quarterly and annually, investors shall have to report the situationon the use of investment capital by enterprises to the corporations (if any), theministries, the provincial People’s Committees directly managing them and theagencies managing finance of enterprises. The agencies deciding the establishment ofenterprises, the ministries, the provincial People’s Committees, the Managing Boards ofcorporations 91/TTg shall have to make sum-up reports to the Ministry of Finance and theMinistry of Planning and Investment.

III. RESPONSIBILITIES OF THE RELEVANT AGENCIES

1. The ministries, the provincial People’s Committees:

– To guide the management and use of the SEs’ development investmentcapital according to the SE finance management function assigned by the Government.

– To direct the management and control of the process of managinginvestment capital and organize the summing up of the situation on the use of the SEs’investment capital sources according to current regulations and provisions of thisCircular.

2. The Managing Boards of corporations 91/TTg and 90/TTg, theManaging Boards of independent enterprises, the general directors (or directors) of theSEs shall have to manage, preserve and efficiently use capital sources assigned to them bythe State; and take self-responsibility for investment decision and the efficiency ofinvestment projects.

– To direct the SEs (investors) in the management and control of theprocess of managing investment capital and organize the summing up of the situation on theuse of the SEs’ investment capital sources according to current regulations and provisionsof this Circular.

3. Investors:

– To organize the management and execution of investment projects,preserve and efficiently use the projects’ investment capital on the basis of strictimplementation of the current regimes and policies on investment and constructionmanagement as well as Bidding Regulation.

– To provide necessary documents and dossiers to the agencies managingfinance of enterprises, the capital-paying organizations and other relevant agenciesaccording to the State’s current regulations.

– To use investment capital for the right purposes, the right subjects,in a thrifty and efficient manner and strictly abide by the current regime on themanagement of investment and construction capital.

– To abide by the regime on periodical reporting and investment capitalsettlement according to the provisions of this Circular.

4. Capital-paying organizations:

– To organize the control, payment and accounting of investment capitalstrictly, according to the prescribed regime.

– To certify the already paid capital amount for each project upon thesettlement.

– To closely control payment-requesting vouchers, ensuring the supplyof capital in strict accordance with the contracts and ratified projects.

– To be answerable to the investors and State’s laws for the management andpayment of the SEs’ investment capital.

5. The agencies managing finance of enterprises: shall take responsibility for theinspection and implementation of investment decisions and settle the SEs’ investmentcapital.

IV. IMPLEMENTATION PROVISIONS

1. This Circular takes effect after its signing. All the earlierprovisions on the management and use of the SEs’ capital for investment and constructioncontrary to this Circular are now annulled.

2. In the course of implementation, if problems arise, the ministries,the provincial People’s Committees, the corporations, the SEs and investors are requestedto promptly report them to the Finance Ministry for study, amendment and/or supplement.

 

 

FOR THE FINANCE MINISTER
VICE MINISTER

Vu Van Ninh

 

 

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