THE MINISTRY OF FINANCE
SOCIALIST REPUBLIC OF VIET NAM
Hanoi, June 16, 2000
GUIDING THE IMPLEMENTATION OF A NUMBER OF PROVISIONS OF THE GOVERNMENT’S DECREE No. 01/2000/ND-CP OF JANUARY 13, 2000 PROMULGATING THE REGULATION ON THE ISSUANCE OF GOVERNMENT BONDS
In furtherance of the Government’s Decree No.01/2000/ND-CP of January 13, 2000 promulgating the Regulation on the Issuance of Government Bonds, the Finance Ministry hereby guides a number of provisions on Government bonds and the issuance thereof through the State Treasury system as follows:
I. GENERAL PROVISIONS ON GOVERNMENT BONDS
1. Forms of the Government bonds:
1.1. The Government bonds shall be issued in form of certificates or book entries.
a/ A Government bond certificate has two parts: the detachable main part to be given to the organization or individual that buys the bond (bond buyer for short); and the counterfoil to be kept at the State Treasury. The forms of the bond certificate shall be determined by the Finance Ministry with the following main contents:
– The name of the issuing agency;
– The bond’s par-value and serial number;
– The bond’s term and interest rate;
– The name of the organization or individual that owns the bond (for registered bonds);
– The dates of bond issuance and maturity;
– The signature of the general director of the State Treasury.
Basing itself on the already ratified Government bond-issuing plan, the central State Treasury shall have to organize the unified printing and management of bond certificates throughout the country.
b/ Book entry is a form of issuance without using the bond certificates. The State Treasury or the authorized units shall open books to monitor the bond purchase by each individual or organization.
The Government bonds issued through the State Treasury system in form of book entries shall apply to the buyers of bonds valued at 500,000,000 VND (five hundred million dong) or more or at the bond buyers’ request. A bond-purchase monitoring book shall be made in two copies according to the set form: the first copy to be kept at the bond-issuing State Treasury and the second copy to be given to the bond-buying individual or unit.
1.2. The Government bonds shall be issued in form of registered and bearer bonds.
a/ Registered bonds are those with the names of bond-owning organizations or individuals being inscribed on the bond certificates or the bond-purchase monitoring books.
b/ Bearer bonds are those with the names of the bond-owning organizations or individuals not inscribed on the bond certificates.
2. The Government bonds’ interest rates:
2.1. The Government bonds’ interest rates shall be announced by the Finance Ministry for each issuance series by one of the following modes:
– The fixed interest rate, which is applicable to the whole term of the bonds;
– The flexible interest rate, which depends on fluctuation of the capital market. The official interest rate shall be announced in advance for each time of issuance or at the time of payment of bond interests.
– The directed interest rate for organization of bidding for selection of the issuance interest rate: is the maximum interest rate at which the bid participating units may win the bidding. Depending on the market situation, the Finance Ministry may determine the directed interest rate for selection of the issuance interest rate or not.
2.2. Bases for determination of the Government bonds’ interest rates:
– The average market price index announced by the General Department of Statistics.
– The credit institutions’ interest rates for capital mobilization.
– The bonds’ terms.
– The demand of mobilizing capital for the State budget and for investment.
– The market’s capital supply capacity in each period.
3. Modes of payment of the Government bonds’ principals and interests:
3.1. The bonds’ principals shall be paid in lump-sum upon their maturity.
3.2. The bonds’ interests shall be paid as follows:
– Lump-sum payment together with the bonds’ principals upon their maturity.
– Payment on the biannual and annual basis.
– Payment right at the time of issuance.
The Finance Ministry shall specify the mode of payment of the bonds’ principals and interests for each issuance series.
4. Invalid bonds:
4.1. Fake bonds;
4.2. Bonds with letters or numerals thereon erased, crossed out or corrected;
4.3. The bonds are torn apart or deformed, failing to keep their original form or contents.
II. TREASURY BONDS ISSUED VIA THE STATE TREASURY SYSTEM
1. Issuance of bonds:
1.1. Organization of bond issuance
The Government bonds issued via the State Treasury system are the treasury bonds that have a term of 1 year or more.
The State treasuries shall directly organize the issuance of treasury bonds to the bond buyers under decision of the Finance Minister and guidance of the central State Treasury.
1.2. Form of the bond sale:
For each issuance series, the State Treasury shall sell bonds to different subjects in one of the two following forms:
a/ Par-value equivalence:
This form shall apply in cases where the bonds are issued continuously in a year or for a long period without the pre-set time for issuance cessation.
Under this form, the bond buyers shall have to pay to the State Treasury a sum of money equal to the bond’s par value. The bond-issuing date shall be the day the State Treasury receives the bond buyer’s money or a bank credit note (for bond purchase by account transfer).
– The bonds are issued in series and the duration for each issuance series shall not exceed 2 months, with the pre-set issuing time and ending time.
– The bonds issued in a series shall bear the same issuing and the same maturity date.
– The bond’s selling price shall be the sum of money which shall be paid to the State Treasury by the bond buyer and determined by one of the two following methods:
+ Method 1: The date of issuance is determined as the first day of the bond issuance series. The formula for calculating the bond’s selling price is as follows:
MG x Ls x n
G: is the bond’s selling price
MG: is the bond’s par-value
Ls: is the bond’s interest rate (/year)
n: is the number of days counted from the date of issuance to the date of actual purchase.
+ Method 2: The date of issuance is determined as the last day of the bond issuing period. The formula for calculating the bond’s selling price is as follows:
MG x Ls x n
G: is the bond’s selling price
MG: is the bond’s par-value
Ls: is the bond’s interest rate (/year)
n: is the number of days counted from the date of actual purchase to the date of issuance.
The Finance Ministry shall specify the method of determining the bond’s selling price for each issuance series.
1.3. The State Treasury may sell bonds to buyers for cash or by account transfer. Overseas Vietnamese who want to buy bonds may buy them through their representative organizations or individuals in Vietnam.
2. Settlement of treasury bonds:
2.1. Organization of the bond settlement:
The State Treasury shall directly pay the bonds’ principals and interests to their owners upon maturity.
When it is time to pay the bonds’ principals or interests but the bond owners fail to appear for the settlement, such principals or interests shall be kept for refunding to the bond owners upon their demands, without incorporating the interests into the principals and without calculating interests for the post-maturity period.
2.2. Form of bond settlement:
When settling bonds, the bond owners may receive cash or request the State Treasury to transfer all the due bonds’ principals and interests into their respective accounts. The money transfer fee shall be deducted from the money amounts the bond owners will receive.
2.3. Authorized settlement of bonds:
Where due to force majeure reasons the bond owners cannot come to settle their due bonds, they may authorize other persons to do so. The persons coming to settle bonds must bring along their identity cards and the bond owners’ letters of authorization certified by the State Notary Public or the People’s Committees of the localities where the bond owners register their permanent residence.
3. Transfer of issuance and settlement capital:
3.1. All revenues from the issuance of treasury bonds shall be remitted to the central budget to meet the spending demands according to the State budget estimates already approved by the National Assembly.
3.2. Upon the bonds’ maturity, the State Budget Department shall carry out the procedures to transfer capital to the State Treasury for payment to the bond owners.
3.3. Where the bonds mature but the central budget has not arranged enough capital sources for the bond settlement, the State Budget Department shall carry out the procedures to advance the State Treasury’s stock capital for settlement according to the current prescribed regime.
4. Bond transfer:
4.1. Bearer bonds: shall be freely transferred without going through the procedures at the State Treasury where the bonds are issued.
4.2. The transfer of registered bonds must go through the procedures at the State Treasury where the bonds are issued.
a/ Case of bond repurchase and resale:
– The bond transferor (the seller) and the bond transferee (the buyer) shall have to come together to the State Treasury to fill in the procedures for transfer of the ownership right over the bonds.
– For bonds issued in form of certificates: After checking details inscribed on the bond given by the bond transferor, if ensuring that they tally with the original dossier, the State Treasury’s official shall write the name and address of the transferee, request the transferor to sign his/her name, and submit the bond to the head of the agency for signature and stamp affixture on the prescribed place in the bond. At the same time, the transferee shall have to give two sample signatures on the counterfoil of the bond to be kept at the State Treasury. Where the bond is transferred for the third time, the State Treasury shall carry out the procedures for granting a new bond and keep the old one together with the original dossier.
– For bonds issued in form of book entries:
When coming to fill in the transfer procedures, the representatives of the transferor and transferee units shall have to bring along the authorization letters of the heads of their respective agencies. Where the transferor and transferee are individuals, they must bring along their identity cards. After checking details inscribed in the bond-buying book brought by the transferor, if ensuring that they tally with the book kept at the State Treasury, the State Treasury’s official shall request the transferor to sign for transfer certification on the bond-buying book; and carry out the procedures for granting a new bond-buying book to the transferee. The authorization letter and bond-buying book of the transferor shall be kept at the State Treasury.
b/ Case of gifts, donation:
The presentor or donor and the presentee or donee shall together go to the State Treasury to fill in the procedures for the transfer of the bond ownership right as in case of repurchase and resale.
Where due to some reasons, the bond presentor or donor cannot go to the State Treasury, the presentee or donee shall, when going to fill in the transfer procedures, have to bring along his/her identity card and written agreement on the gift presentation or donation (with signature of the presentor or donor). Where the identity card is not available, a written verification by the local administration where the presentee or donee registers his/her permanent residence, is required.
c/ Case of inheritance:
– A heir to bond(s) coming to fill in the transfer procedures shall have to bring with him/her the following papers:
+ The death certification and testament of the bond owner (in case of testamentary inheritance) or certification of the lawful inheritance right prescribed by law (in case of inheritance at law).
+ The identity card or certification by the local administration where the heir registers his/her residence.
– Where the heir is a minor or has no civil act capacity, he/she must have a guardian or lawful representative to fill in the inheritance procedures for him/her. When coming to fill in the inheritance procedures for the heir, in addition to the death certification and the testament or lawful inheritance right certification, the guardian or lawful representative shall have to bring with him/her:
+ The identity card;
+ The decision of the competent agency or certification by the local administration regarding the guardian or lawful representative.
– The procedures for bond transfer in case of inheritance shall be effected as for cases of the bond repurchase and resale. The testament or certification of the lawful inheritance right shall be kept at the State Treasury together with the original dossier.
5. Bond certification for filling in the pledge procedures:
5.1. For bearer bonds: The State Treasury must not certify the bond owners in all circumstances.
5.2. For registered bonds: When a credit institution has a written request for certification of the legality and validity of the pledged bond, the head of the State Treasury (who must not authorize another person) shall sign for certification of the bond owner’s name and money amount to buy such bond after checking and comparing the details inscribed in the bond (or bond-buying book) and ensuring that they tally with the kept dossier.
6. Bond-related expenses:
6.1. Expenses for the bond issuance and settlement:
All expenses for the treasury bond issuance and settlement shall be covered by the central budget, including:
– The expense for printing bond certificates.
– The expense for the bond issuance and settlement activities of the State Treasury system, which shall represent 0.5 of the issuance value.
6.2. Expenses for the bond preservation and keeping:
The expenses for the Government bond preservation and keeping at the State Treasury shall comply with the provisions of the Finance Ministry’s Circular No.80/1999/TT-BTC of June 29, 1999 guiding the management of a number of rare and precious properties as well as valuable certificates preserved and kept by the State Treasury.
6.3. Charge for transfer of bond settlement money:
The expense for the transfer of bonds’ principals and interests into the bond owners’ accounts at their requests shall be paid by the bond owners at the level set for via-bank payment.
III. INVESTMENT BONDS
1. Mode of issuing investment bonds:
Investment bonds shall be issued by the mode of bidding through the central securities trading market, guaranty or issuance agency.
2. Dossier for issuance of investment bonds:
2.1. Investment bonds to mobilize capital for projects:
When there are demands to mobilize capital for investment in projects, the ministries, branches or People�s Committees of the provinces and centrally-run cities shall compile and file the dossiers for issuance of investment bonds to the Finance Ministry. Such a dossier includes:
– A written proposal to the Finance Ministry for the issuance of investment bonds;
– The investment decision of the competent authority;
– The investment bond- issuing plan with such contents as the name of the project; the brief description of the project’s socio-economic efficiency; the total investment capital for the project, including the estimated amount of capital to be mobilized through the issuance of investment bonds; the form of mobilization and the amount of capital to be mobilized (divided for each year), the bond�s term, interest rate and mobilization duration; sources of capital for the payment of the bond principals and interests upon maturity.
– The plan for investment in the project’s capital construction investment, which was approved by the competent authority;
– The certification by the Finance Ministry (for the centrally-run projects) or by the provincial/municipal People’s Committee (for the locally-run projects) of the arrangement of capital sources in the State budget plan for payment of the bond principals and interests upon maturity;
The bond-issuance dossier must be sent to the Finance Ministry 60 days before the projected date of issuance. After receiving the complete dossier, the Finance Ministry shall, within 15 days, verify its legality and validity and submit it to the Prime Minister for consideration and approval of the issuance plan. Where the dossier is incomplete or invalid, the Finance Ministry shall issue a document guiding the supplement thereto or clearly stating the reasons for non-issuance.
Within 5 days after the Prime Minister approves the issuance plan, the Finance Ministry shall make a decision on the issuance of investment bonds to mobilize capital for the project.
2.2. Investment bonds to mobilize capital for the Development Assistance Fund:
a/ Annually, based on the development investment credit plan already approved by the Government, the Development Assistance Fund shall elaborate the investment bond-issuance plan to be sent to the Finance Ministry, including:
– The total amount of capital to be mobilized in the year;
– The amount of capital to be mobilized every quarter, specified according to the bonds’ terms.
– The copy of the State’s investment credit plan already approved by the Government.
b/ For each issuance series, the Development Assistance Fund shall work out an investment bond-issuing plan and send it to the Finance Ministry at least 45 days before the projected date of issuance. A dossier thereon shall include:
– A written proposal to the Finance Ministry for the issuance of investment bonds to mobilize capital for the Development Assistance Fund;
– The plan on the issuance of investment bonds with the following contents: the issuance time, mode and volume; the bonds’ term, interest rate and the settlement of bonds upon maturity.
After examining the legality and validity of the dossier, the Finance Ministry shall make a decision on bond issuance for the Development Assistance Fund in strict compliance with the latter’s plan.
3. Investment bond issuance, settlement, transfer and related expenses:
The issuance, settlement, transfer of, and expenses related to investment bonds shall comply with the provisions of the Finance Ministry’s documents guiding the bidding for the Government bonds through the central securities trading market, guaranty and issuance agency.
IV. ELABORATION OF THE BOND ISSUANCE PLAN, COST-ACCOUNTING ACCOUNTANCY, REPORTING ON AND FINAL ACCOUNT SETTLEMENT OF THE GOVERNMENT BONDS
1. Elaboration of the bond issuance plan:
1.1. The bond-issuing plan to mobilize capital for the State budget:
– The Finance Ministry shall elaborate the annual plan on the issuance and settlement of different types of the Government bonds for augmentation and incorporation into the State budget estimate to be submitted to the Government and the National Assembly for ratification.
– Based on the yearly norms of capital mobilization to offset the State budget deficit already approved by the National Assembly, the State Budget Department shall coordinate with the State Treasury to elaborate quarterly plans on the issuance of credit bills and treasury bonds according to the bonds’ terms and mode of issuance and notify the investors thereof so that they may participate in the credit bill and treasury bond market.
– In a fiscal year, if the State budget revenues and expenditures see big and unexpected changes, leading to the adjustment of the yearly capital mobilization plan, the Finance Ministry shall report such to the Prime Minister for decision.
1.2. Investment bond-issuance plan to mobilize capital for projects:
Annually, before the 10th of November, the ministries, branches and People’s Committees of the provinces and centrally-run cities that have the demand to issue investment bonds shall have to send the yearly investment bond -issuing plans to the Finance Ministry. Such a plan must clearly explain about the demand for capital, the mobilized capital use purposes as well as the projected time of issuance in the plan year.
1.3. Bond issuance plan to mobilize capital for the Development Assistance Fund:
Annually, the Development Assistance Fund shall work out an investment bond- issuance plan and send it to the Finance Ministry as provided for in Paragraph a, Point 2.2, Section 2, Part III of this Circular.
2. Cost-accounting accountancy:
The central State Treasury shall take responsibility for guiding the accounting of revenues and settlement of credit bills, treasury bonds and investment bonds according to the Law on State Budget, the Ordinance on Accounting and Statistics and the State Treasury’s accounting regime.
3. Reporting regime and final account settlement:
– Monthly, quarterly and at the end of each bond issuance period, the central State Treasury shall make a report on the treasury bond issuance and settlement and send it to the Finance Ministry. Such a report shall include the following contents: the proceeds from the bond sale actually remitted to the State budget, the money amount used for payment of bond principals and interests to bond owners, the money amount allocated by the State budget and the money amount advanced by the State Treasury.
– At the end of each fiscal year, the central State Treasury shall settle the final accounts with the Finance Ministry regarding the expenditures related to the treasury bond issuance work.
V. ORGANIZATION OF IMPLEMENTATION
1. This Circular takes effect as from January 28, 2000 and replaces the Finance Ministry’s Circular No.75-TC/KBNN of September 14, 1994, guiding the Regulation on the issuance and settlement of different types of the Government bonds.
2. 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 coordinate with the Finance Ministry in implementation of this Circular.
3. The general director of the State Treasury and the heads of the concerned units under the Finance Ministry shall have to guide and organize the implementation of this Circular.
FOR THE FINANCE MINISTER
Vu Van Ninh