Circular No. 35/2005/TT-BTC dated May 12, 2005 of the Ministry of Finance guiding the management of charges of a number of specialized aviation services not on the list of charges and fees

CIRCULAR

PROVIDING GUIDELINES ON CONTROL OF PRICES OF A NUMBER OF SPECIALIZED AVIATION SERVICES NOT COVERED BY THE LIST OF CHARGES AND FEES

PursuanttoDecree170/2003/ND-CPoftheGovernmentdated25December2003providing detailed regulationson the implementation of a number of articlesof the Ordinanceon Prices;

Pursuant to Decree 77/2003/ND-CP of the Government dated 1 July 2003 regulating the functions, duties, powersand organizationalstructureof the Ministry of Finance;

To implement the directive of thePrime Minister of the Government in OfficialLetter3941/VPCP-KTTHoftheOffice oftheGovernmentdated30July2004oncontrolofpricesofservices at airports and of flight control services;

BasedontheproposaloftheMinistryofCommunicationsandTransportationinOfficialLetter 1294/GTVT-VT dated 10 March 2004 for promulgation of a circular providing guidelines for control of prices of a number of specialized aviation services;

The Minister of Finance hereby provides the following guidelines for control of prices of a number of specialized aviation services notcoveredbythe list of charges and fees:

I. GENERAL PROVISIONS

1. Governing scope:

This Circular provides guidelineson principles of control of prices of a numberof specialised aviation services which are non-exclusive andare not subject to the governingscopeoftheOrdinanceonChargesandFees;andproceduresforpreparation, submissionandevaluationofproposalsforpricesanddeterminationofpricesofservices which are determined by the State.

2. Applicability:

This Circular shall apply to foreign and domestic organizationsand individuals (hereinafter referred to asentities) which arepermitted toprovide anduse aviation services in Vietnam.

WhereaninternationaltreatytowhichtheSocialistRepublicofVietnamisasignatoryor participantcontainsprovisionswhichconflictwiththeguidelinesprovidedinthisCircular, the provisions of the international treaty shallprevail.

II. SPECIFIC PROVISIONS

Section I. SERVICES THE PRICES OF WHICH ARE DETERMINED BY THE STATE

1. Principles and bases fordeterminationof prices:

The regulationson calculation of prices of assets, goods and services issued with Decision 06-2005-QD-BTC ofthe Minister of Financedated 18 January 2005shall apply.

2. Proceduresforpreparationandsubmissionofproposalsforpricesanddeterminationof prices:

2.1. FreightforpassengertransportationontheroutefromHanoitoHoChiMinhCity and vice versa:

The provisions of paragraph 3.4 of Section II of Circular15-2004-TT-BTCof the Ministry of Finance dated 9 March 2004providingguidelines for the implementation ofDecree170-2003-ND-CPoftheGovernmentdated 25December2003 providing detailedregulationsforimplementationofanumberofarticlesoftheOrdinanceon Pricesshallapply.

2.2. Pricesofcontrolservicesforincomingoroutgoingflightsorlandingortake-offof aircraft,provisionofservicesaddingtocontrolservicesforflightsintransit,security screeningand passenger services at airports:

ServiceprovidersshallprepareaproposalforpricesandsubmitittotheMinistryof Communications andTransportation (Vietnam Aviation Administration) for considerationandsubmissionofitsevaluationinwritingtotheMinisterofFinance fordetermination. Afileoftheproposalforpricesshallbesubjecttotheprovisions of the appendix to this Circular.

Within10workingdaysfromthedateofreceiptoftheproposalforpricestogether withtheevaluationoftheVietnamAviationAdministration,theDirectorofthePrice ControlDepartmentshallbeauthorizedbytheMinisterofFinance to determine (or notify)thepricesintheformsetoutintheappendixtothisCircular. Where[the proposal for prices] does not satisfy all conditions or contain all stipulated documents, an answer must be given within 7 working days.

Section II. SERVICES REQUIRING NEGOTIATIONS ON PRICES

1.Conditionstoorganisenegotiationsonprices,bodiesorganisingnegotiationsonprices, resultsofnegotiationsonprices,andfilesandproceduresfornegotiationsonpricesshall be subject to the provisions of Decree 170/2003/ND-CP of the Government dated 25

December2003 providing detailed regulations for the implementation of a number of articles of theOrdinance on Pricesand Circular 15/2004/TT-BTC of the Ministry of Financedated9March2004providingguidelinesfortheimplementationofDecree170/2003/ND-CP.

2.The Ministry of Communications and Transportation (Vietnam Aviation Administration) shall consider particularly services requiring negotiations on prices in order to provide guidelines to entities toenable them to implement in accordance with the applicable regulations.

Section III. SERVICES THE PRICES OF WHICH ARE DETERMINED BY ENTITIES

1. Principles and bases fordeterminationof prices:

1.1. Pricesofservicesatairportsorlandingareaswithrespecttointernationalflights (regardlessof whether the aircraft belongs to the Vietnam Airlinesor to foreign airlines) shall be determined on thebasis of reasonable expenses; in order to recoverinvestedcapitalandgenerateaccumulatedprofitforrespectiveentitiesand incompliancewiththequalityoftheservicesandtheaveragepricesofservicesof the same type in the region.

1.2. Pricesofservicesatairportsorlandingareaswithrespecttodomesticflightsshall be determined on the basis of reasonable expenses; inorder to generate reasonableprofit; in compliance with the qualityof the services and domestic market prices; taking the relation between thedomestic prices and international pricesofservicesofthesametypeintoaccount;andincompliancewiththepolicy on socio-economicdevelopment from time to time.

1.3. FreightforpassengertransportationontheroutefromHanoitoHoChiMinhCity and vice versa:

The air transport enterprises shall,on thebasis of the freight for passenger transportationontheroutefromHanoitoHoChiMinhCityandviceversaforthe economy class (Y class) provided by the Ministry of Finance, bepermitted to provide and apply specific airfares subject toeach object, season, transport condition and so forth in compliance with theirprice policiesin order to attract passengers and makeuse of their transport capacity but[such airfares] cannot exceed the freight provided by the Ministry of Finance.

1.4. Freightforpassengertransportationondomesticroutes(exceptfortheroutefrom HanoitoHoChiMinhCityandviceversafortheeconomyclass-Yclass)andthe freightfor cargotransportationondomesticroutesshallbedeterminedonthebasis of reasonable expenses; to generate reasonable profit; in compliance with the qualityoftheservicesandthepolicyonsocio-economicdevelopmentfromtimeto time; with respect to the freight for passenger transportation, it must ensure the interrelationwiththefreightfortransportationontheroutefromHanoitoHoChi Minh City.

2.Entitiesshall, onthebasisoftheaboveprinciples,determinepricesofservicesatairports andlandingareasandofairtransport services(except fortheservicessetoutin Sections 1and2)atthesametime,assubmittingareporttotheMinistryofCommunicationsand Transportation (Vietnam Aviation Administration) and the Ministry of Finance (Price Control Department)before the prices¹become effective.

III. ORGANIZATION OF IMPLEMENTATION

1. A service provider shall beobliged to:

1.1. ImplementtheprovisionsonpricesofservicessetoutinthisCircularandrelevant legal instruments.

1.2. Display the prices of services at the place of purchase, sale and provision of services. WithrespecttoservicesthepricesofwhicharedeterminedbytheState, itmustdisplaythestipulatedprices. Withrespecttopricesofservicesissuedby the entity, itmust display the issued prices.

1.3. Where necessary, upon the request of the Ministry of Communications and Transportation (Vietnam Aviation Administration) or of the Ministry of Finance (Price Control Department), the entityshall prepareand send a reporton its implementationofpricesofservices. Withrespecttopricesofservicesofentities being a member enterprise of the Vietnam Airlines Corporation, the reportson implementation ofprices as stipulated by this Circular shall be gathered and submitted bythe Vietnam Airlines Corporation.

2. Inspectionand examination of the implementation of prices ofservices:

The Price Control Department (under the Ministry of Finance) or the Vietnam Aviation Administration(undertheMinistryofCommunicationsandTransportation)shallcarryout independentorjointinspectionsandexaminationsofthecomplianceofpricesandState regulationsonpricecontrolbyentities;andshalldealinatimelymannerwithbreachesin accordancewith the applicable regulations.

IV. IMPLEMENTATIONPROVISIONS

1. ThisCircularshallbefullofforceandeffectfifteen(15)daysfromthedateofpublication intheOfficialGazette. PreviousprovisionswhichareinconsistentwiththisCircularare hereby repealed.

2. IfanyproblemsariseduringtheimplementationofthisCircular,entitiesshouldprovidea timely report on them to the Ministry of Communications and Transportation and the Ministry of Finance for considerationand resolution.