Decision No. 601/QD-TTg dated April 17, 2013 of the Prime Minister on establishing medium and small enterprise development fund

 THE PRIME MINISTER

Decision No. 601/QD-TTg dated April 17, 2013 of the Prime Minister on establishing medium and small enterprise development fund

Pursuant to the Law on Government organization dated December 25, 2001;

Pursuant to the Decree No. 56/2009/ND-CP of June 30, 2009, on assistance to the development of small- and medium-sized enterprises;

At the proposal of the Minister of Planning and Investment,

DECIDES:

Article 1.To establish the Medium and Small Enterprise Development Fund (hereinafter called Fund) to support medium and small enterprises that have feasible business plans encouraged by the State and conformable with the purposes of the Fund in order to improve the competitiveness of enterprise and contribute to the increase of incomes and employment creation.

Article 2.Fund’s legal status

1. The Fund is a state financial institution affiliated to the Ministry of Planning and Investment. The Fund has a separate the Balance sheet, charter capital, seal, and legal status, is allowed to open accounts at State Treasuries or commercial banks

2. Name: Medium and Small Enterprise Development Fund. English name Medium and Small Enterprise Development Fund (SMEDF)

3. The head office of the fund is situated in Hanoi. The Minister of Planning and Investment shall consider and decide the establishment of its representative offices in some central-affiliated cities and provinces.

Article 3.Fund’ s subjects and operation scopes

1. The subjects of the Fund are medium and small enterprises, as prescribed by law, that directly engage in investment, production, and business belonging to the list prioritized industries of the Fund made by the Ministry of Planning and Investment in each stage.

2. The Fund shall support the operation of medium and small enterprises nationwide.

Article 4.Fund’s tasks and entitlements

1. Tasks:

a) Receive, manage, and use financial resources and entrusted capital sources at home and overseas as prescribed by Vietnam’s law to create a capital sources supporting the development of medium and small enterprises.

b) Provide financial support for medium and small enterprises using the methods in Article 6 of this Decision.

c) Formulate annual operation plans, development strategies, long-term operation plans, and criteria for selecting prioritized subjects of the Fund, then submit them to the Ministry of Planning and Investment for decision.

2. Entitlements

a) Organize a managerial apparatus in accordance with its Charter; issue regulations within its competence to serve its operation.

b) Carry out periodic and irregular inspections at the banks entrusted by the Fund according to entrustment contracts (hereinafter referred to as entrusted banks); cooperate with entrusted banks and inspect the funded business plans, repay debts of clients and settle complaints against organizations and individuals that violate credit contracts as prescribed by law.

c) Request entrusted banks to suspend the support and withdraw the capital when organizations and individuals violate credit contracts or regulation of the State; and file lawsuits as prescribed by law.

d) Send idle cash of the Fund to commercial banks for preserving and development capital of the fund (safety must be ensured).

dd) Carry out technical support of Vietnamese and overseas organizations and individuals to improve the capability of the Fund.

Article 5.Fund’s capital sources

1. The charter capital of the Fund provided by the State budget is 2,000 billion VND. The State budget shall provide charter capital for the Fund for 3 years from the day on which the Decision or establish is made. 500 billion VND shall be provided in the first 2 years; 1,000 billion VND shall be provided in the third year.

The increase of the charter capital shall be decided by the Prime Minister at the request of the Ministry of Planning and Investment after reaching an agreement with the Ministry of Finance.

2. Additional capital from the operation of the fund.

3. Capital from: voluntary contributions and entrusted money from Vietnamese and overseas organization that aim to serve the development of medium and small enterprises.

4. Other raised capital as prescribed by law.

Article 6.Fund’s financial support

1. The Fund shall authorize the Vietnam Development Bank or capable commercial banks to give loans to medium and small enterprises that wish to take loans and satisfy the conditions in Article 7 of this Decision.

2. Principle: entrusted banks shall make appraisals and decide to give loans to business plans, and take responsibility for such plans.

3. The entrusted banks may establish loan loss reserve to handle risks of giving loans to medium and small enterprises as prescribed.

4. The stipulations about entrusted loan are written in the entrustment contract as prescribed by the State bank.

Article 7.Fund’s conditions for loan supply

The Fund shall give loans to medium and small enterprises that satisfy all conditions below:

1. The business plans belong to the List of prioritized sectors of the Fund.

2. Owners of such medium and small enterprises are capable of civil acts.

3. The equity capital for the business plan reaches at least 20%, and the capital is adequate to execute such business plans.

4. The debt is likely to be paid before the deadline in the signed credit contract.

5. The regulations on loan guarantee are complied with.

6. The medium and small enterprises that have taken loans from the Fund for their business plans shall not take preferential loans from other credit institutions of the State.

Article 8.Loan’s level, loan’s term and loan’s rate

1. The maximum loan given to each business plan is 70% of its total investment (not including working capital), and shall not exceed 30 billion VND.

2. The loan term depends on the ability to recoup capital, the solvency of the debtor, and the specific conditions of each business plan, but shall not exceed 07 years. In special cases in which long-term projects demand longer period, the Minister of Planning and Investment shall decide the loan period, but such period shall not exceed 10 years.

3. Loan interest

Depending on the credit market, the Ministry of Finance shall decide the loan interest of the Fund in each stage, but it shall not exceed 90% of commercial loan interests. The loan interests are uniformly applicable to all medium and small enterprises being prioritized subjects of the Fund.

The commercial loan interests are determined based on the average loan interests in 05 years of state-owned commercial banks in Hanoi.

Article 9.Debt classification and establishment of loan loss reserve funds

Debt classification and establishment of loan loss reserve funds shall comply with current laws.

Article 10.Fund’s management machine

Fund’s management machine includes the Management Board, the Control Board, and the Administration Board. Their tasks and entitlements are specified in the Fund’s Charter

Article 11.The Management Board

1. Fund’s the Management Board owns 06 members: The President of the Management Board is a senior official from The Ministry of Planning and Investment; 05 members are senior officials from the Ministry of Finance, the State bank of Vietnam, The Department of Enterprise Development – The Ministry of Planning and Investment, the Director of the Fund and the Director of the Medium and Small Enterprise Association of Vietnam

2. The Minister of Planning and Investment shall designate the President of the Management Board of the Fund.

3. Members of the Management Board shall work full-time during its 5-year tenure, and are entitled to special treatment as prescribed by the State.

Article 12.The Control Board

The Control Board of the Fund consists of 03 members, including a President and 02 members, appointed and dismissed by the Management Board. Members of the Control Board must not be spouses, parents, children, brothers or sisters of members of the Management Board, the Director, and Deputy Directors of the Fund. Members of the Control Board must be proficient in finance, accounting, banking, and law, and shall work full-time during its 5-year tenure.

Article 13.The Administration Board

1. The Administration Board includes the Director, Deputy Directors, the Chief Accountants, and specialized Departments

2. Fund’s Director is the legal representative of the Fund, designated and dismissed by the Minister of Planning and Investment at the request of the Management Board

3. Fund’s Director shall request the Minister of Planning and Investment to decide the appointment and dismissal of the Deputy Directors, Chief Accountant, and Department Managers of the Funds. Deputy Directors shall assist the Director in performing the tasks.

4. The Minister of Planning and Investment shall decide the organizational structure of the Fund. The functions and tasks of specialized Departments and representative offices of the Fund shall be decided by the Director after an approval of the Management Board is granted.

Article 14.Financial principles for Fund’s operations

1. Non-profit

2. Reimbursing costs and preserving capital

3. Open and transparent

4. Frugal and efficient

5. The Fund is exempt from taxes and payments to the State budget as prescribed by law.

Article 15.Responsibilities of Ministries, local governments, and Associations

1. The Ministry of Planning and Investment being the state authority in charge of the Fund’s operation shall:

a) Cooperate with the Ministry of Finance, the Ministry of Internal Affairs, the Ministry of Justice, the State bank, and relevant agencies in issuing the Fund’s Charter in accordance with this Decision and current regulations of the State.

b) Cooperate with relevant agencies and local governments in making the List of prioritized sectors of the Fund; the criteria for selecting prioritized subjects of the Fund.

c) Issue Decisions to establish the Management Board, appoint and dismiss personnel of the Fund.

d) Approve the quarterly and annual financial statements and capital plans of the Fund as prescribed by law.

dd) Provide guidance, inspect and supervise the compliance with the regulations on the organization and operation of the Fund; ensure the proper purposes of the Fund.

2. The Ministry of Finance being the state authority in charge of the Fund’s finance shall:

a) Cooperate with the Ministry of Planning and Investment and relevant agencies in providing a financial management mechanism and mange the finance of the Fund.

b) Announce the loan interests of the fund in each stage.

c) Provide guidance on the establishment of loan loss reserve fund (if any)

d) Provide guidance, inspect and supervise the financial activities of the Fund.

3. Responsibilities of the State bank:

Perform the state management function in terms of finance and banking relating to the Fund’s operation

4. Ministries, local governments, and Associations shall cooperate with the Ministry of Planning and Investment in providing guidance and enable medium and small enterprises to access the support of the Fund.

Article 16.Implementation provisions

1. This Decision takes effect on the signing date.

2. Ministers, Heads of ministerial agencies, Heads of Governmental agencies, the President of the provincial People’s Committee, the President of the Management Board and the Director of the Medium and Small Enterprise Development Fund are responsible for the implementation of this Decision.

The Prime Minister

Nguyen Tan Dung