Decision No. 28/2004/QD-TTg dated March 04, 2004 of the Prime Minister on reorganizing the production of, and applying a number of measures to remove difficulties for, sugar plants and companies

DECISION

ON REORGANIZING THE PRODUCTION OF, AND APPLYING A NUMBER OF MEASURES TO REMOVE DIFFICULTIES FOR, SUGAR PLANTS AND COMPANIES

THE PRIME MINISTER

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the Resolution of the 3^rd plenum of the IX^th Party Central Committee on continued reorganization, renovation, development and raising of the business efficiency of State enterprises and the Resolution of the 5^th plenum of the IX^th Party Central Committee on agricultural and rural industrialization and modernization;

At the proposals of the Minister of Planning and Investment, the Minister of Agriculture and Rural Development, the Minister of Finance, the Vietnam State Bank Governor and the general director of the Development Assistance Fund,

DECIDES:

Article 1.- To reorganize the production of, and apply a number of measures to remove difficulties for, sugar plants and companies (hereinafter referred collectively to as plants) with a view to creating conditions for the sugar industry to continue its development and to achieve the target of one million tons of sugar, thus contributing to economic restructuring, job creation and the acceleration of the process of agricultural and rural industrialization and modernization.

Article 2.- On the basis of their current technological conditions, raw material-supplying capability and financial situation, the sugar plants are classified into 3 following groups:

Group 1: Plants which operate efficiently and need to be continually maintained in status quo and to enjoy support policies for better development;

Group 2: Plants which must be reorganized, equitized (where the State needs not to hold equities) or experimentally sold, business contracted or leased;

Group 3: Plants which must be relocated and stop their production.

The list of specific groups of plants is mentioned in the Appendix to this Decision.

Article 3.- Applying measures to remove difficulties for plants after their classification

1. For Group 1-plants:

a/ Forgiving debt amounts payable into the State budget but not yet paid regarding added value tax arising in 2001 thru 2003 on sugar products and products using byproducts, discarded materials recovered from sugar production. The forgiven debt amounts shall not exceed the plants' arising loss amounts accumulated up to December 31, 2003.

b/ For plants being joint-stock companies which borrow credit capital for investment in the construction of plants or plants being State enterprises which borrow capital of domestic credit institutions to contribute legal capital to sugar- manufacturing or - processing joint ventures, apart from the remission of the above-mentioned budget remittance amounts, they shall be entitled to the current interest rates of the State's development investment credits as from January 1, 2004 for domestic loans (the Development Assistance Fund, commercial banks) at different interest rates in each period with balance by December 31, 2003.

The State budget shall offset the difference between the commercial interest rates and the interest rates already adjusted for the lending credit institutions under each guidance of the Finance Ministry.

2. For Group 2-plants: Upon the equitization, sale, business contracting or lease of enterprises, apart from the measures to settle the existing problems and provide financial support according to the State's current regulations, they shall be entitled to the application of the following support measures:

a/ Applying the current interest rates of the State's development investment credit as from January 1, 2004 for domestic loans (the Development Assistance Fund, commercial banks) at different interest rates in each period with balance by December 31, 2003, including loans as compulsory debt acknowledgement arising after January 1, 2004 of the investment projects on construction of plants.

For foreign-currency loan debts borrowed from foreign sources (ODA, commercial loans) for import of equipment, capital construction investment, development of raw materials zones of sugar plants, they shall be permitted to be converted into corresponding domestic-currency loans as from January 1, 2004; the exchange rate shall comply with the guidance of the Finance Ministry. The readjustment of lending interest rates after conversion into corresponding domestic-currency for each foreign-currency loan source of sugar plants on the principle of not exceeding the current interest rates of the State's development investment credit.

To re-determine the capital-borrowing terms for loans after the adjustment of interest rates and conversion of foreign-currency loans into domestic-currency loans, the maximum duration shall be 15 years as from January 1, 2004; where the borrowing terms in the signed credit contracts exceed 15 years, the durations in the signed credit contracts shall apply.

The State budget shall offset the differences between the commercial interest rate and the interest rates already adjusted for the lending credit institutions under the Finance Ministry's guidance.

b/ Remitting loan interest debts for domestic loans, underwriting and re-underwriting charge debts arising from foreign loans (in foreign currencies, borrowings for import of equipment with deferred payment) underwritten by domestic credit institutions for sugar plants by December 31, 2003. The Finance Ministry shall guide the accounting and handling of the above forgiven debts according to the financial regimes and the enterprise income tax law for credit institutions.

c/ Remitting State budget remittances payable but not yet paid regarding added value tax having arisen in 2001 thru 2003 for sugar products and products using byproducts, discarded materials recovered from sugar production. The forgiven debt amounts shall not exceed the plants' loss amounts accumulated up to December 31, 2003.

d/ Offsetting the differences between exchange rates of foreign currencies borrowed for import of equipment (including loans borrowed for import of equipment with deferred payment) having arisen by December 31, 2003 but not yet handled. The Finance Ministry shall base itself on the concrete data of each sugar plant for settlement.

e) Losses suffered by plants upon their equitization or experimental sale, business contracting or lease shall be handled according to the Government's regulations for State enterprises subject to equitization and ownership conversion. For enterprises which have already completed the ownership conversion and registered their business under the Enterprise Law, the loss amounts having arisen from the time of determining the value of enterprises to the time of conversion into joint-stock companies, they shall be entitled to decrease adjustment of State capital at the enterprises.

f/ For capital construction volumes under projects on investment in sugar plants, which have been completed and the settlement thereof have been already approved by competent authorities strictly according to the current regulations of the State, but capital has not yet been borrowed for payment to contractors, the Development Assistance Fund shall provide loans at the current interest rates of the State's development investment credit. The capital-lending terms shall comply with the provisions at Point a, Clause 2, Article 3 of this Decision.

3. For Group 3-plants:

a/ The Ministry of Agriculture and Rural Development shall decide on the relocation of the sugar plants of Quang Binh and Quang Nam to new places suitable to the plannings on development of sugar and sugarcane industry and the raw material zones. The plant relocation must be based on investment projects on relocation of plants, financial schemes, reorganization of enterprises, already approved by competent authorities.

The Ministry of Agriculture and Rural Development shall direct those two sugar plants to elaborate investment projects on relocation, support policies, plans on handling of debts of the plants and raw-materials zones. On such bases, the Ministry of Agriculture and Rural Development shall report to the Prime Minister for consideration and decision.

b/ To stop the sugar production and processing by Viet Tri sugar, liquor and beer company (now the beverage company VIGER), applying the following financial and labor solutions:

- Liquidating, selling assets according to the current financial regulations for State enterprises.

- For losses, receivable bad debts having arisen before the time of stopping sugar production, the sources of expenses for reform of enterprises shall be used to handle them. For amounts borrowed from banks for investment in sugar production and processing by the enterprises, which remain outstanding, the debt-handling plans shall comply with the scheme on handling of outstanding debts of commercial banks, already approved by the Prime Minister.

For amounts borrowed from the Development Assistance Fund by enterprises, the Development Assistance Fund is assigned to work out plans on handling of debts for investment in construction of plants and their raw-materials zones and submit them to the Prime Minister for consideration and decision.

- The mechanism to support redundant laborers upon production stoppage shall comply with the provisions in the Government's Decree No. 41/2002/ND-CP of April 11, 2002 on laborers.

c/ Other State enterprises conducting sugar production and having to stop their production for reorganization, change of production and business lines shall also be entitled to financial handling and policies for redundant laborers of the enterprises under the provisions at Point b of this Clause.

Article 4.- On solutions to development of raw-materials zones

1. The People's Committees of the provinces where exist sugar plants must concentrate efforts on directing the development of sugarcane raw-materials zones along the direction of fully planting the planned areas, quickly expanding the areas under high-yield sugarcane of new strains and high sugar contents; stepping up intensive farming, particularly with the application of method of irrigated farming to raise productivity. From 2006, the average sugarcane productivity must reach over 60 tons/ha, and sugar content reaches over 10 CCS for provinces in coastal Central Vietnam, the Central Highlands and the North, and over 90 tons/ha and over 8 CCS for southern provinces, ensuring adequate sugarcane raw materials for plants to reach their designed capacity.

To direct plants to elaborate investment projects on development of sugarcane strains, investment in infrastructural development (irrigation, traffic) of raw-materials zones and submit them to competent authorities for approval.

2. Projects on development of raw-materials zones, after being approved by competent authorities for borrowing the State's development investment credit capital, shall be guided and specifically handled by the Development Assistance Fund. If borrowing commercial credit capital for investment and development of raw material zones, they shall be entitled to the post-investment interest rate support mechanism according to current regulations. The State budget shall provide support for import and multiplication of new strains; investment in water reservoirs; major irrigation works (canals of grades 1 and 2) and traffic in the raw-materials zones. The People's Committees of provinces shall work out plans on the use of local budget sources for investment in the infrastructure outside the plants and outside the raw-materials zones.

3. The plants must work out plans and solutions to development of sugarcane raw-materials zones and sign contracts on sugarcane consumption with sugarcane growers under the Prime Minister's Decision No. 80/2002/QD-TTg of June 24, 2002 on consumption of agricultural products under contracts. The plants shall sign sugarcane consumption contracts with sugarcane growers entitled to the preferential policies prescribed in the Decision on encouragement of consumption of agricultural products under contracts.

Article 5.- Directing the implementation

1. The Ministry of Agriculture and Rural Development shall assume the prime responsibility for, and coordinate with the concerned ministries and provincial People's Committees in, revising and re-assessing the general planning on sugarcane and sugar programs; for the immediate future maintain the production level of one million tons of sugar; the expansion and raising of the capacity of the plants must be considered on the case-by-case basis.

- Guiding localities in solutions to support peasants in crop restructuring, employment in raw-materials zones where the plants must stop their production or be relocated.

- Coordinating with the concerned ministries and branches as well as Vietnam Sugarcane and Sugar Association in promulgating regulations on coordination among plants nationwide in the production and consumption of raw materials sugarcane and sugar, overcoming the situation of competing in purchase and sale, devalorizing the market prices, thus causing damage to plants and sugarcane growers.

2. The Finance Ministry shall assume the prime responsibility for, and coordinate with the Ministry of Agriculture and Rural Development, the Ministry of Planning and Investment, Vietnam State Bank and provincial People's Committees in, guiding the handling of financial difficulties and relevant contents for sugar plants under this Decision.

3. The People's Committees of the provinces where exist sugar plants and the Ministry of Agriculture and Rural Development shall direct and guide sugar plants in working out reorganization schemes and approve schemes on reorgani-zation and ownership conversion of sugar plants in accordance with the contents of this Decision, which must be completed before June 30, 2004.

4. The Ministry of Planning and Investment shall have to examine and urge the implementation and assume the prime responsibility for, and coordinate with the concerned ministries and branches as well as People's Committees of the provinces where exist sugar plants in, synthesizing the results of implementation of this Decision and biannually report thereon to the Prime Minister.

5. The Steering Board for Renovation and Development of Enterprises shall coordinate with the Ministry of Agriculture and Rural Development and the provincial People's Committees in directing the deployment and implementation of schemes on reorganization and ownership conversion of plants.

6. The duration for implementation and completion of the reorganization and ownership conversion of sugar plants shall be two years 2004 and 2005.

Article 6.- This Decision takes effect 15 days after its publication in the Official Gazette.

Article 7.- The Minister of Finance, the Minister of Planning and Investment, the Minister of Agriculture and Rural Development, the Vietnam State Bank Governor, the general director of the Development Assistance Fund, the general director of Vietnam Bank for Investment and Development, the general director of Vietnam Bank for Agriculture and Rural Development, the general director of Vietnam Bank for Industry and Commerce, the presidents of the People's Committees of the provinces where exist sugar plants shall have to implement this Decision.

LIST

OF CLASSIFIED SUGAR PLANTS AND COMPANIES TO BE REORGANIZED

(Appendix to Decision No. 28/2004/QD-TTg of March 4, 2004)

I. GROUP 1: PLANTS CONTINUE TO BE MAINTAINED IN STATUS QUO AND ENTITLED TO SUPPORT POLICIES FOR BETTER DEVELOPMENT

1) Lam Son sugarcane and sugar joint-stock company.

2) La Nga sugarcane and sugar joint-stock company.

3) Binh Dinh sugar joint-stock company.

4) Nghe An Tate and Lyle sugarcane and sugar joint-venture company.

5) Vietnam- Taiwan sugarcane and sugar company Ltd.

6) Long An Nagarjuna international company Ltd.

7) Vietnam KCP Industrial company Ltd.

8) Tay Ninh- Bourbon sugarcane and sugar company Ltd.

9) Gia Lai- Bourbon sugarcane and sugar company Ltd.

II. GROUP 2: PLANTS TO BE REORGANIZED, EQUITIZED OR EXPERIMENTALLY SOLD, BUSINESS-CONTRACTED AND LEASED.

1) Son Duong sugar company of Sugarcane and Sugar Corporation I.

2) Nong Cong sugar company of Sugarcane and Sugar Corporation I.

3) Tra Vinh sugarcane and sugar company of Sugarcane and Sugar Corporation I.

4) Tuy Hoa sugarcane and sugar company of Sugarcane and Sugar Corporation II.

5) Dong Xuan sugarcane and sugar company of Sugarcane and Sugar Corporation II.

6) Binh Duong sugar company of Sugarcane and Sugar Corporation II.

7) Hiep Hoa sugar company of Sugarcane and Sugar Corporation II.

8) Quang Phu sugar plant of Quang Ngai sugar company.

9) An Khe sugar plant of Quang Ngai sugar company.

10) Pho Phong sugar plant of Quang Ngai sugar company.

11) Kon Tum sugar plant of Quang Ngai sugar company.

12) Hoa Binh sugarcane and sugar company.

13) Cao Bang sugarcane and sugar company.

14) Tuyen Quang Industrial Development company (sugarcane and sugar company).

15) Son La sugarcane and sugar company.

16) Song Lam sugarcane and sugar company.

17) Song Con- Nghe An sugarcane and sugar company.

18) Dak Nong sugarcane and sugar company.

19) 333 sugarcane and sugar company.

20) Ninh Hoa sugar plant of Khanh Hoa sugar company.

21) Phan Rang sugarcane and sugar company.

22) Tri An sugarcane and sugar company.

23) Tay Ninh sugarcane and sugar company.

24) Tay Ninh non-refined sugar plant of Bien Hoa sugar joint-stock company.

25) Ben Tre sugar company.

26) Vi Thanh sugar enterprise of Can Tho sugarcane and sugar company.

27) Phung Hiep sugar enterprise of Can Tho sugarcane and sugar company.

28) Soc Trang sugarcane and sugar company.

29) Kien Giang sugarcane and sugar company.

30) Thoi Binh sugar plant.

31) Cam Ranh sugar plant of Khanh Hoa sugar company.

32) Binh Thuan sugar company of Sugarcane and Sugar Corporation II.

III. GROUP 3: PLANTS TO BE RELOCATED OR TO STOP THEIR PRODUCTION

1) Quang Nam sugarcane and sugar company of Sugarcane and Sugar Corporation II.

2) Quang Binh sugar company of Sugarcane and Sugar Corporation I

3) VIGER liquor and beer company of Sugarcane and Sugar Corporation I