Decree No. 37/2013/ND-CP dated April 22, 2013 of the Government amending and supplementing a number of articles of Decree No. 138/2007/ND-CP of August 28, 2007, on organization and operation of local development investment funds

THE GOVERNMENT

Decree No. 37/2013/ND-CP of April 22, 2013, amending and supplementing a number of articles of Decree No. 138/2007/ND-CP of August 28, 2007, on organization and operation of local development investment funds

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

Pursuant to the November 26, 2003 Law on Organization of People’s Councils and Peoples’ Committees;

Pursuant to the December 16, 2002 Law on the State Budget;

Pursuant to the November 29, 2005 Law on Enterprises;

Pursuant to the June 16, 2010 Law on Credit Institutions;

At the proposal of the Minister of Finance,

The Government promulgates the Decree amending and supplementing a number of articles of Decree No. 138/2007/ND-CP of August 28, 2007, on organization and operation of local development investment funds (below referred to as Decree No. 138/2007/ND-CP).

Article 1. To amend and supplement a number of articles of Decree No. 138/2007/ND-CP as follows:

1. To amend Article 5 as follows:

“Article 5. Responsibilities of state management agencies

1. The Ministry of Finance shall:

a/ Assume the prime responsibility for, and coordinate with ministries and sectors in, submitting to the Government for promulgation mechanisms and policies on organization and operation of local development investment funds;

b/ Promulgate the model charter on organization and operation of local development investment funds;

c/ Promulgate accounting, financial management and reporting regimes applicable to local development investment funds.

2. The State Bank of Vietnam shall:

a/ Perform the state management of monetary and banking operations related to lending activities of local development investment funds;

b/ Coordinate with the Ministry of Finance in formulating policies on, and monitoring and evaluating, lending and investment activities of local development investment funds.

3. A provincial-level People’s Council shall:

a/ Approve schemes on establishment of local development investment funds;

b/ Approve plans on allocation or supplementation of charter capital to local development investment funds from the provincial budget at the proposal of the provincial-level People’s Committee;

c/ Consider and approve a list of socio-economic infrastructure sectors prioritized for development investment in the locality according to Clauses 2 and 4, Article 1 of this Decree;

d/ Perform other tasks as prescribed by law.

4. A provincial-level People’s Committee shall:

a/ Formulate schemes on establishment of local development investment funds for submission to the provincial-level People’s Council for approval according to Decree No. 138/2007/ND-CP and this Decree;

b/ Decide on the establishment of local development investment funds after their establishment schemes are approved by the provincial-level People’s Council;

c/ To submit to the provincial-level People’s Council for approval plans on allocation or supplementation of charter capital to local development investment funds; to arrange funding sources for allocation or supplementation of charter capital to local development investment funds under plans approved by the provincial-level People’s Council;

d/ To approve the operation charters of local development investment funds and amendments and supplementations to such charters at the proposal of the chairmen of the Management Boards of local development investment funds;

dd/ To approve the organizational apparatuses of local development investment funds at the proposal of the chairmen of the Management Boards of local development investment funds;

e/ To promulgate a list of socio-economic infrastructure sectors prioritized for development investment in the locality according to Clauses 2 and 4, Article 1 of this Decree;

g/ To decide on the minimum lending interest rate to be offered by local development investment funds in each period according to Clause 5, Article 1 of this Decree;

h/ To approve the investment of a local development investment fund in a project, which exceeds 10% of the fund’s equity capital;

i/ To approve a loan provided by a local development investment fund to a project, which exceeds 15% of the fund’s equity capital or has a term exceeding 15 years;

k/ To approve the capital contribution of a local development investment fund to an enterprise, which exceeds 10% of the fund’s equity capital;

l/ To decide on the number of members of the Management Board of a local development investment fund;

m/ To comprehensively manage, examine and supervise the operation and financial status of local development investment funds;

n/ To perform other tasks as prescribed by law.

2. To amend and supplement Article 6 as follows:

“Article 6. Entities eligible for direct investment

1. Eligible for direct investment from local development investment funds are investment projects on the list of socio-economic infrastructure sectors prioritized for development investment in the locality promulgated by the provincial-level People’s Committee under Clause 2 of this Article.

2. Based on the local socio-economic development strategy and socio-economic infrastructure sectors specified in Appendix I to this Decree, annually or periodically, the provincial-level People’s Committee shall promulgate a list of socio-economic infrastructure sectors prioritized for development investment in the locality after obtaining approval from the provincial-level People’s Council.

3. Based on the list of socio-economic infrastructure sectors prioritized for development investment in the locality prescribed in Clause 2 of this Article, local development investment funds shall select, appraise and decide to make direct investment in specific projects that meet the investment conditions prescribed in Decree No. 138/2007/ND-CP and this Decree.”

3. To amend and supplement Point a, Clause 1 of Article 9 as follows:

“a/ Investment in the forms of business cooperation contract (BCC), build-operate-transfer (BOT) contract, build-transfer (BT) contract, build-transfer-operate (BTO) contract and other forms of direct investment as prescribed by the investment law.”

4. To amend and supplement Article 11 as follows:

“Article 11. Entities eligible for loans

1. Eligible for loans from local development investment funds are investment projects in the list of local socio-economic infrastructure sectors prioritized for development investment in the locality promulgated by the provincial-level People’s Committee under Clause 2 of this Article.

2. Based on the local socio-economic development strategy and socio-economic infrastructure sectors specified in Appendix I to this Decree, annually or periodically, the provincial-level People’s Committee shall promulgate a list of socio-economic infrastructure sectors prioritized for development investment in the locality after obtaining approval from the provincial-level People’s Council.

3. Based on the list of socio-economic infrastructure sectors prioritized for development investment in the locality prescribed in Clause 2 of this Article, the local development investment fund shall select, appraise and decide to provide loans to specific projects that meet the investment conditions prescribed in Decree No. 138/2007/ND-CP and this Decree.”

5. To amend and supplement Article 15 as follows:

“Article 15. Lending interest rates

1. The lending interest rates offered by a local development investment fund shall be determined on the principle of not being lower than the average interest rate on capital mobilization from different sources, fully covering managing expenses and other expenses related to lending activities of the fund and assuring the preservation and development of the fund’s equity capital.

2. Annually or periodically, the director general or director of a local development investment fund shall, based on the interest-rate determination principles specified in Clause 1 of this Article, calculate and submit the minimum lending interest rate to the fund’s Management Board for approval and reporting to the provincial-level People’s Committee for decision and promulgation.

3. A local development investment fund may decide on the specific lending interest rate applicable to each specific project, which must not be lower than the minimum lending interest rate decided by the provincial-level People’s Committee under Clause 2 of this Article.

4. In case the provincial-level People’s Committee decides to provide loans to a socio-economic infrastructure development investment project at an interest rate lower than the minimum lending interest rate specified in Clause 2 of this Article, the provincial-level People’s Committee shall cover the difference between the minimum lending interest rate and the lending interest rate offered to such project.

5. In case the provincial-level People’s Committee decides to implement a program on post-investment interest rate support for a specific project, the following conditions must be met:

a/ Eligible for post-investment interest rate support is the investor of the project on the list of socio-economic infrastructure sectors prioritized for development investment in the locality specified in Clauses 2 and 4, Article 1 of this Decree;

b/ The provincial-level People’s Committee issues a decision on provision of post-investment interest rate support for the project, clearly specifying the support recipient; method and time of providing support and support levels; tasks and powers of the local development investment fund in appraising the project and disbursing the support amount; and obligations and responsibilities of the support recipient and other related parties;

c/ The provincial-level People’s Committee allocates adequate funds for the local development investment fund to provide post-investment interest rate support as prescribed at Point b of this Clause, assuring that the operating fund of the local development investment fund is not affected.

6. For projects funded with assistance capital of international donors that apply lending interest rates other than those provided in this Decree, the agreements signed with such donors prevail.”

6. To amend and supplement Article 17 as follows:

“Article 17. Provisions on syndicated lending

1. A local development investment fund may act as the focal point in syndicated lending or, together with other local development investment funds, credit institutions and other institutions, provide syndicated loans to projects.

2. When a local development investment fund provides a syndicated loan to a project in a province or city other than the locality where it operates, the following conditions must be met:

a/ The project is in the list of socio-economic infrastructure sectors prioritized for development investment in the locality specified in Clause 4, Article 1 of this Decree;

b/ The project supports interregional socio-economic development, covering also the locality where the fund operates;

c/ The syndicated lending is approved by the chairperson of the provincial-level People’s Committee of the locality where the fund operates.

3. The provision of a syndicated loan must be expressed in a contract with the conditions and terms as specified in Decree No. 138/2007/ND-CP and this Decree.

4. The interest rate on a syndicated loan is decided by the local development investment funds jointly providing such loan, which must be stated in a contract and must not be lower than the lowest among the minimum interest rates offered by such funds as prescribed in Clause 5, Article 1 of this Decree.”

7. To amend and supplement Article 21 as follows:

“Article 21. Forms of capital contributions

A local development investment fund may contribute capital to establish joint-stock companies and limited liability companies under the Enterprise Law so as to make direct investment in socio-economic infrastructure works or projects in the list of socio-economic infrastructure sectors promulgated by the provincial-level People’s Committee according to Clause 2, Article 1 of this Decree.”

8. To amend Clause 2, Article 23 as follows:

“2. A local development investment fund may be entrusted to manage the operation of the credit guarantee fund for small- and medium-sized enterprises, housing development fund, land development fund, cooperative development support fund and other local financial funds established by the provincial-level People’s Committee. The entrustment to local development investment funds complies with current law.”

9. To amend and supplement Article 25 as follows:

“Article 25. Investment limits

1. The direct investment of a local development investment fund in projects must not exceed 50% of its equity capital at the time of investment.

2. Loan limits:

a/ The total loan provided by a local development investment fund to a project must not exceed 20% of its equity capital at the time of loan provision and 80% of the project’s total investment capital. In case a local development investment fund concurrently makes the direct investment in and provides a loan to a project, the aggregation of the direct investment and loan must not exceed 30% of the fund’s equity capital at the time of investment and loan provision;

b/ The total loan provided to a client of a local development investment fund must not exceed 25% of the fund’s equity capital.

3. The total amount of capital contributed by a local development investment fund to economic organizations must not exceed 20% of the fund’s equity capital at the time of capital contribution.

4. For projects funded with assistance capital of international donors that apply  loan and direct investment limits other than those prescribed in this Decree, the agreements signed with such donors prevail.”

10. To amend and supplement Clause 1, Article 26 as follows:

“1. Equity capital of a local development investment fund includes:

a/ Its actual charter capital, which is the capital amount allocated by the owner of the fund for its operation under Decree No. 138/2007/ND-CP and this Decree;

b/ Financial provision funds and development investment funds;

c/ Other funding sources of the owner as prescribed by law.”

11. To amend and supplement Article 32 as follows:

“Article 32. Principles of operation of local development investment funds

1. Local development investment funds are local state financial institutions operating after the model of policy bank and on the principles of financial autonomy, not for profit and capital preservation and development.

2. Local development investment funds have limited liability within their equity capital.”

12. To amend and supplement Article 36 as follows:

“Article 36. Composition of Management Boards of local development investment funds

1. The Management Board of a local development investment fund has at most 5 (five) members. The provincial-level People’s Committee shall base itself on practical conditions to decide on the specific number of members of the Management Board, which must be an odd number.

2. The chairman, deputy chairman and other members of the Management Board are appointed, dismissed and removed from office by the provincial-level People’s Committee chairperson.

3. Members of the Management Board must have knowledge and experience of finance, capital investment and corporate governance.

4. The composition, structure, criteria, number of members and term of office of the Management Board are specified in the model organization and operation charter of the local development investment fund.”

13. To amend Clause 2, Article 38 as follows:

“2. The Control Board has at most 3 (three) members who are entitled to allowances and other benefits in accordance with law.”

14. To add the following Clause 4a to Article 39:

“4a. The recruitment of employees by, and planning and appointment of leaders of, a local development investment fund comply with the operation charter of such fund.”

15. To amend Clause 3, Article 40 as follows;

“3. The salary, bonus and business rating regimes applicable to local development investment funds comply with the regulations applicable to wholly state-owned single-member limited liability companies. Local development investment funds shall be rated according to the rating criteria applicable to financial companies.”

Article 2. Organization of implementation

1. Within two (2) years after the effective date of this Decree, local development investment funds shall review and re-organize their apparatuses in accordance with this Decree.

2. For loan provision or direct investment contracts signed before the effective date of this Decree, local development investment funds may continue implementing the signed agreements within the loan and investment limits specified in Decree 138/2007/ND-CP until such contracts expire. In case the loan provision or direct investment levels under such contracts are adjusted, such adjustment must comply with the loan provision or direct investment limits specified in this Decree.

3. Loans provided to and direct investment made in projects after the effective date of this Decree must comply with the loan provision or direct investment limits specified in Decree No. 138/2007/ND-CP and this Decree.

4. Capital raising, lending, direct investment and other activities carried out by Ho Chi Minh City Financial Investment Company according to the function of a local development investment fund comply with Decree No. 138/2007/ND-CP and this Decree.

Article 3. Effect and implementation responsibility

1. This Decree takes effect on June 10, 2013.

2. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees and related organizations and individuals shall implement this Decree.-

On behalf of the Government
Prime Minister
NGUYEN TAN DUNG

Appendix I

LIST OF SOCIO-ECONOMIC INFRASTRUCTURE SECTORS ELIGIBLE FOR DIRECT INVESTMENT OR LOAN PROVISION FROM LOCAL DEVELOPMENT INVESTMENT FUNDS

(To the Government’s Decree No. 37/2013/ND-CP of April 22, 2013)