Circular No. 76/2001/TT-BTC dated September 25, 2001 of the Ministry of Finance guiding a number of points in the regulation on export support credit, issued together with the Prime Minister’s Decision No. 133/2001/QD-TTg dated September 10, 2001

CIRCULAR

GUIDING A NUMBER OF POINTS IN THE REGULATION ON EXPORT SUPPORT CREDIT, ISSUED TOGETHER WITH THE PRIME MINISTER’S DECISION NO. 133/2001/QD-TTG OF SEPTEMBER 10, 2001

In furtherance of the Prime Minister’s Decision No.133/2001/QD-TTg of September 10, 2001 promulgating the Regulation on export support credit, the Finance Ministry hereby provides specific guidance on a number of points in the said Regulation as follows:

I. GENERAL PROVISIONS

1. In this Circular, the following words and phrases shall be construed as follows:

a/ Units mean subjects defined in Article 3 of the Regulation on export support credit, issued together with the Prime Minister’s Decision No.133/2001/QD-TTg of September 10, 2001.

b/ Export bidding participation guarantee means a written commitment to ensure bidding participation obligation of the exporter (the guaranteed party) towards the bid solicitor (the guarantee-receiving party), issued by the Development Assistance Fund.

c/ Export contract performance guarantee means a written commitment, issued by the Development Assistance Fund to the importer (the guarantee-receiving party), to ensure the performance of all obligations by the exporter (the guaranteed party) towards the importer.

d/ Reciprocal guarantee means a form of guarantee, issued by the Development Assistance Fund to a credit institution, requesting the latter to grant guarantee for obligations of the units being subjects entitled to bidding participation guarantee or export contract performance guarantee of the Development Assistance Fund. In cases where arise guarantee obligations, which must be performed by the credit institution, the Development Assistance Fund shall have to perform the reciprocal guarantee obligation towards the credit institution.

e/ Guarantee contract means a written agreement between the Development Assistance Fund and the guaranteed party, on the concerned parties rights and obligations in guarantee and repayment.

f/ Credit institutions mean those credit institutions set up and operating under the provisions of the Law on Credit Institutions.

2. The Development Assistance Fund is allowed to mobilize medium- and long-term capital; have its charter capital and post-investment interest rate-support capital allocated and the interest rate difference covered by the State budget under the State’s plan, for performance of the export support credit task.

II. MEDIUM- AND LONG-TERM INVESTMENT LOANS

1. Loan subjects:shall comply with the provisions of Article 6 of the Regulation on export support credit, issued together with the Prime Minister’s Decision No.133/2001/QD-TTg of September 10, 2001.

In cases where Vietnamese enterprises borrow capital for contribution to joint-ventures with foreign parties for the production, processing or order-production of export goods, they must satisfy the following two requirements:

- The joint-venture project must be granted the investment license by the competent agency as prescribed by law.

- The export value under the plan on the sale of products of the joint-venture project makes up at least 80% of the annual turnover.

2. Loan capital levels:shall comply with the provisions of Article 8 of the Regulation on export support credit, issued together with the Prime Minister’s Decision No.133/2001/QD-TTg of September 10, 2001.

In case of borrowing capital for contribution to a joint-venture, the maximum loan capital level shall be equal to 90% of the capital amount contributed by the Vietnamese enterprise as inscribed in the investment license.

3. Loan security assets:shall comply with the provisions of Article 12 of the Regulation on export support credit, issued together with the Prime Minister’s Decision No.133/2001/QD-TTg of September 10, 2001.

In case of borrowing capital for contribution to a joint-venture, the concerned unit must have assets for mortgage or pledge, with the value equal to at least 30% of the loan capital amount.

III. POST-INVESTMENT INTEREST RATE SUPPORT

1. Subjects entitled to post-investment interest rate support:shall comply with the provisions of Article 13 of the Regulation on export support credit, issued together with the Prime Minister’s Decision No.133/2001/QD-TTg of September 10, 2001.

2. Principles for determination of post-investment interest rate support

- The levels of post-investment interest rate support for projects shall be determined on the basis of the difference between the credit institutions’ lending interest rate and the State’s development investment credit interest rate according to the following principles:

+ Such levels shall apply to both projects borrowing capital in domestic currency and those borrowing capital in foreign currencies from credit institutions.

+ The interest rate difference for calculation of the post-investment interest rate support levels shall be equal to at most 50% of the State’s development investment credit interest rate.

- The post-investment interest rate support shall be provided to investors after the investment projects (works, work items, projects) are completed and put into exploitation and use and the investors have repaid debts (principals and interests) to credit institutions.

- Regarding overdue debts and debts to be repaid within the extended duration, units shall not be provided with post-investment interest rate support. Regarding debts repaid ahead of time, the post-investment interest rate support level shall be calculated according to the actual loan term of such capital amount.

- For projects with frozen debts, the debt-freezing duration shall not be counted into the actual loan term for calculation of the post-investment interest rate support and the maximum support duration shall be equal to the loan term stated in the credit contract.

3. Determination of post-investment interest rate support levels

- The post-investment interest rate support levels shall be determined according to the following formula:

- The actual loan term for calculation of post-investment interest rate support is the period of time from the date of debt acknowledgement to the date of repayment of the due debt principal to the credit institution, which shall be determined on the following principles:

+ The determination of the actual loan term for post-investment interest rate support shall be based on the time of receiving loan capital as inscribed in the loan contract and the time of repaying the debt principal by the concerned unit to the credit institution, as inscribed in the debt-repayment voucher.

+ The period of time between the first repayment of the due debt principal and the first disbursement of the loan capital shall be used to calculate the actual loan term of the first-time repaid debt principal, which shall serve as basis for backward calculation and determination of the actual loan terms of the debt principal amounts to be repaid subsequently.

- For projects borrowing capital in foreign currencies, the post-investment interest rate support levels shall be determined the orginal currency. That, together with the USD/VND average exchange rate on the inter-bank market or cross exchange rates applied to different foreign currencies and Vietnam dong announced by the State Bank of Vietnam at the time of providing the support money, shall serve as basis for determination of the post-investment interest rate support levels in Vietnam dong for the projects.

IV. INVESTMENT CREDIT GUARANTEE

1. Subjects eligible for guarantee for borrowing investment capital:shall comply with the provisions of Article 16 of the Regulation on export support credit, issued together with the Prime Minister’s Decision No.133/2001/QD-TTg of September 10, 2001.

2. Handling of financial liability when investors fail to repay debts on schedule

When units are unable to repay debts under the signed credit contracts, the capital-lending credit institutions shall coordinate with the Development Assistance Fund and concerned agencies in applying the law-prescribed measures to supervise and speed up the recovery of debts from the capital-borrowing units or allowing these units to reschedule debts under the regulations of the credit institutions.

After applying measures for debt recovery, if the capital-borrowing units still fail to acquire enough capital sources to repay debts on schedule, the following handling measures shall apply:

- On the last day of each quarter, the capital-lending credit institutions shall notify in writing the Development Assistance Fund of the overdue loan capital amount arising in the quarter.

- The Development Assistance Fund shall conduct an inspection and must, within 15 days, repay the credit institutions a money amount equal to 50% of the overdue loan capital amount arising in that quarter. The total money amount to be repaid by the Development Assistance Fund to the credit institutions on behalf of the units shall be equal to 50% of the total overdue debts arising under projects, which, however, must not exceed 50% of the guarantee levels already agreed upon in the guarantee contracts between the Development Assistance Fund and respective units.

In cases where the Development Assistance Fund provides guarantee for only part of the loan capital of a project, the money amount to be repaid by the Development Assistance Fund to the concerned credit institution on behalf of the unit shall also be determined according to the proportion of the guaranteed capital amount to the total investment capital amount of the project, based on the above-mentioned principle.

- The capital-borrowing units shall have to acknowledge compulsory debts with the Development Assistance Fund regarding the money amounts that the latter have repaid for them at the penalizing interest rate of 130% of the credit institutions lending interest rate currently applied to their loans.

- When having capital sources to repay debts, units shall have to repay them simultaneously to credit institutions and the Development Assistance Fund in equal proportions (50:50).

- The post-investment created assets shall be managed by credit institutions. In cases where the post-investment created assets must be handled for overdue debt repayment, the proceeds from the asset disposal must also be paid to the credit institutions and the Development Assistance Fund in equal proportions (50:50).

V. SHORT-TERM LOANS

1. Loan subjects:shall comply with the provisions of Clauses 1 and 2, Article 21 of the Regulation on export support credit, issued together with the Prime Minister’s Decision No.133/2001/QD-TTg of September 10, 2001, which shall be announced annually or periodically by the Prime Minister at the proposal of the Trade Ministry.

- For units with projects on the production, processing or order-production of export goods prescribed in Clause 1, Article 6 of the Regulation on export support credit, issued together with the Prime Minister’s Decision No.133/2001/QD-TTg of September 10, 2001, which have been lent the State’s development investment credit capital by the Development Assistance Fund, if within the capital-borrowing time limit they can sign contracts on the export of the projects’ products, they shall, in the first year after signing such contracts, be granted short-term credit capital loans as export support by the Development Assistance Fund.

2. Lending principles

- The lending of short-term capital in support of export shall be effected for each export contract signed between the units and the importer.

- At each point of time, an export contract may apply only one form of short-term capital loans (loans granted either before or after the goods delivery).

3. Loan capital level

- Lending before goods delivery: after signing an export contract, the concerned unit may borrow capital to purchase raw materials, materials and other production elements for performance of the export contract. The loan capital level shall not exceed 70% of the export contract’s value. In cases where the importer has opened a L/C, the loan level shall be equal to at most 80% of the value of the effective L/C.

- Lending after goods delivery shall apply when a unit has valid bills of exchange or set of export goods vouchers. The lending level shall not exceed 90% of the value of the valid bills of exchange or export goods voucher set.

- For goods items exported under quotas, the maximum lending level shall be equal to the remaining goods value within the quotas, calculated to the time of capital borrowing.

4. Loan security

- Lending before goods delivery: The capital-borrowing units must have assets for pledge or mortgage, with the value equal to at least 30% of the loan capital amount.

- Lending after goods delivery: The capital-borrowing units may use valid bills of exchange or export goods voucher set to prove the borrowing of capital.

5. Repayment of loan principals and interests

- Repayment of loan principals: The loan principals shall be repaid in lump-sum or installments correspondingly to the payment schedules stipulated in the export contracts.

- Payment of loan interests: the loan interests shall be paid every month.

VI. BIDDING PARTICIPATION GUARANTEE AND CONTRACT PERFORMANCE GUARANTEE

1. Subjects eligible for guarantee

Subjects eligible for bidding participation guarantee and contract performance guarantee include:

- Subjects defined in Clauses 1 and 2, Article 21 of the Regulation on export support credit, issued together with the Prime Minister’s Decision No.133/2001/QD-TTg of September 10, 2001, which shall be announced annually or periodically by the Prime Minister at the proposal of the Trade Ministry.

- Units with projects on the production, processing or order-production of export goods that have been lent the State’s development investment credit capital by the Development Assistance Fund, if having demand within the capital-borrowing time limit, may be provided with one-year bidding participation guarantee or contract performance guarantee by the Development Assistance Fund.

2. Guarantee time limits

The determination of time limit for bidding participation guarantee or contract performance guarantee shall be based on the time limits for obligation performance by units at the requests of bid solicitors and importers as inscribed in the bidding dossiers or export contracts.

3. Currency used in guarantee

- The currency used for bidding participation guarantee shall be identified according to the units’ obligations stated in the bidding dossiers or export contracts.

- The currency used for contract performance guarantee shall be identified according to the units’ obligations stated in the export contracts.

4. Guarantee levels

- For bidding participation guarantee: The maximum guarantee level shall be equal to 3% of the bid price. In cases where at the time of signing a guarantee contract, the bid price has not been determined, the guarantee level shall be based on the obligations of the bid-participating unit as prescribed in the bidding dossier.

- For contract performance guarantee: The maximum guarantee level shall be equal to 10% of the contractual value.

- The total level of bidding participation guarantee, export contract performance guarantee and investment credit guarantee provided by the Development Assistance Fund must not exceed the total amount of the State’s development investment credit capital in that year.

5. Guarantee charges

- Units provided with bidding participation guarantee or export contract performance guarantee shall not have to pay charges therefor.

- In case of reciprocal guarantee, the guarantee letter issuance charge shall be paid by the Development Assistance Fund under the regulations of credit institutions. The Development Assistance Fund is allowed to account this charge amount into its professional operation expenses.

6. Performance of guarantee obligation

- In cases where the units fail to strictly comply with bidding regulations or perform their obligations stated in export contracts, the Development Assistance Fund shall perform its guarantee obligation according to the commitments in guarantee letters.

- In case of reciprocal guarantee, when the guarantee obligation arises, credit institutions shall pay money to the guarantee-receiving party according to the commitments in guarantee letters. The Development Assistance Fund shall reimburse this money amount to credit institutions in Vietnam dong (to be converted at the sale price of the guarantee currency announced by the Bank for Foreign Trade of Vietnam at the time of reimbursement).

7. Acknowledgement of compulsory debts

- In cases where the Development Assistance Fund performs the guarantee obligation, the concerned units shall have to acknowledge compulsory debts with the Development Assistance Fund, converting the payable money amount into Vietnam dong at the sale price of the guarantee currency as announced by the Bank for Foreign Trade of Vietnam at the time the money is paid by the Development Assistance Fund.

- In case of reciprocal guarantee, when the guarantee obligation arises, units shall have to acknowledge compulsory debts with the Development Assistance Fund for the money amounts already paid in Vietnam dong by the Development Assistance Fund to credit institutions.

- The interest rate applicable to the acknowledgement of compulsory debts shall be equal to 150% of the interest rate applicable to short-term credit capital loans in support of export.

VII. DEBT-SECURITY ASSETS AND RISK HANDLING

1. The debt-security assets (mortgages, pledges) and the procedural order of mortgaging or pledging assets to secure loan money shall comply with current regulations.

2. The risk handling shall comply with the provisions of the Regulation on export support credit issued together with the Prime Minister’s Decision No.133/2001/QD-TTg of September 10, 2001 and the Finance Ministry’s guidance.

VIII. INTEREST RATE DIFFERENCE SUBSIDIES

The granting of interest rate difference subsidies for the Development Assistance Fund to perform its export support credit task shall comply with the Finance Ministry’s guidance on the granting of interest rate difference subsidies for the State’s investment credit loans.

IX. ACCOUNTANCY COST-ACCOUNTING AND REPORTING REGIME

1. Accountancy cost-accounting

The Development Assistance Fund shall carry out the accountancy cost-accounting for export support credit activities according to the following principles:

- The capital source for export support credit activities shall be accounted and monitored as part of the operational capital sources of the Development Assistance Fund.

- The export support credit activities (using capital) of the Development Assistance Fund shall be accounted and monitored separately under the Finance Ministry’s guidance.

2. Reporting regime

- Periodically, by the 10th of every month and the 15th of the first month of every quarter at the latest, the Development Assistance Fund shall make and send reports on the situation of export support credit activities to the Finance Ministry and the Ministry of Planning and Investment. Besides the prescribed statistical data, in its reports, the Development Assistance Fund should analyze and evaluate the situation of export support credit activities, and make suggestions thereon.

- In addition to the periodical reports, when necessary, the Development Assistance Fund shall make extraordinary or specialized reports at the request of the Finance Ministry.

- The tables and forms of statistical report on the situation of export support credit activities include:

+ Report on short-term loans for export support (monthly, annual), form No.B01-TDXK

+ Report on medium- and long-term loans for export support (monthly, annual), form No.B02-TDXK

+ Report on the granting of post-investment interest-rate export-support credit, form No.B03-TDXK

+ Report on export support credit guarantee, form No.B04-TDXK

IX. ORGANIZATION OF IMPLEMENTATION

1. Responsibilities of the Development Assistance Fund

a/ To elaborate the export support credit plan to be submitted to the Ministry of Planning and Investment and the Finance Ministry, with the following contents:

- The total credit capital level for export support of all forms;

- The capital mobilization plan and solution for performance of the export support credit task;

- The plan on interest rate difference subsidies and post-investment interest-rate support.

b/ To organize and carry out export support credit activities strictly according to the provisions of the Regulation on export support credit, issued together with the Prime Minister’s Decision No.133/2001/QD-TTg of September 10, 2001 and this Circular’s provisions.

c/ To guide the order, procedures and operational process for the granting of medium- and long-term loans; to provide post-investment interest rate support, short-term loans and export support-credit guarantee.

d/ To implement the prescribed information and reporting regime.

2. Responsibilities of the Finance Ministry

- To guide and supervise the Development Assistance Fund in the performance of export support credit activities.

- To conduct regular or extraordinary inspection of export support credit activities of the Development Assistance Fund.

- To coordinate with the concerned ministries and branches in handling according to competence or submitting to the Prime Minister for consideration and handling the suggestions and proposals on export support credit activities.

X. IMPLEMENTATION PROVISIONS

1. This Circular takes effect as from September 26, 2001.

2. Projects entitled to post-investment interest-rate support under the Regulation on export support credit, issued together with the Prime Minister’s Decision No.133/2001/QD-TTg of September 10, 2001, which had signed interest rate-support contracts with the Development Assistance Fund before September 26, 2001 (stipulated in Circular No.51/2001/TT-BTC of June 28, 2001), shall also comply with the provisions of this Circular.

In the course of implementation, if any problem arises, it should be reported to the Finance Ministry for study and settlement.