Joint Circular No. 22/2003/TTLT-BTC-BKHCN-BNV dated March 24, 2003 of the Ministry of Finance, the Ministry of Science and Technology and the Ministry of Finance guiding the financial management mechanism applicable to public scientific and technological organizations operating with revenues

JOINT CIRCULAR

GUIDING THE FINANCIAL MANAGEMENT MECHANISM APPLICABLE TO PUBLIC SCIENTIFIC AND TECHNOLOGICAL ORGANIZATIONS OPERATING WITH REVENUES

In furtherance of the Government’s Decree No. 10/2002/ND-CP of January 16, 2002 on the financial regime applicable to non-business units with revenues, the Finance Ministry issued on March 21, 2002 Circular No. 25/2002/TT-BTC.

In order to make it suitable to particular characteristics of the specialized scientific and technological field, the Ministry of Finance, the Ministry of Science and Technology and the Ministry of the Interior hereby jointly provide additional guidance on the financial management regime applicable to the public non-business units operating with revenues in the scientific and technological field, as follows:

I. SUBJECTS

Subject to this Circular are the public scientific and technological organizations operating with revenues and having their activities partially financed by the State budget or fully self-financed (hereinafter referred collectively to as the scientific and technological organizations with revenues), including:

- Research and development institutes;

- Research and development centers;

- Laboratories;

- Research and experimentation stations;

- Organizations providing scientific and technological services (expertise, testing, recognition, certification; application and transfer of scientific and technological advances; consultancy, information, training in sciences and technologies, etc.).

The above-mentioned non-business units shall be subject to Decree No. 10/2002/ND-CP when they fully meet the following conditions:

* Having establishment decisions made in writing by competent agencies;

* Having the legal person status and own seals;

* Having accounts at the treasury or banks;

* Having financial and accounting apparatuses;

* Having lawful revenue sources.

The competent agencies shall have to create favorable conditions for the non-business scientific and technological organizations to implement the Government’s Decree No. 10/2002/ND-CP of January 16, 2002.

The cost-estimating units attached to the scientific and technological organizations with revenues, such as training centers, reviews, etc., are subject to the Government’s Decree No. 10/2002/ND-CP of January 16, 2002, this Circular and circulars guiding operation fields (education and training, culture and information, etc.).

For the scientific and technological organizations with revenues having many attached units with independent cost-accounting, the competent agencies shall assign stable estimates to grade-I or grade-II cost-estimating units, so as to give autonomy to their attached cost-estimating units.

For the scientific and technological organizations without non-business revenues and not subject to this Circular, their regular activity funding shall be allocated from the State budget and financially managed according to the current mechanism.

II. NON-BUSINESS REVENUE SOURCES IN THE PUBLIC SCIENTIFIC AND TECHNOLOGICAL ORGANIZATIONS

The scientific and technological organizations with revenues have the following non-business revenue sources:

1. Assorted collected fees and charges left to the units for use according to the provisions of the Fee and Charge Ordinance and the State’s guiding documents.

2. Revenues from scientific research and technological development contracts, technology transfer contracts with organizations and individuals at home and abroad;

3. Revenues from scientific and technological, standardization, measurement and quality control service activities, including:

- Technical consultancy, guidance and evaluation, technology transfer, standardization of measuring devices, testing of product and goods samples and works, guidance for formulation of the managerial standard system.

- Training, consultancy and supply of information on sciences and technologies, industrial property, measurement and quality control standards.

- Other service activities.

Collection levels of the above-said revenues shall be agreed upon in contracts between the units’ heads and the service-requesting parties on the principle that the scientific and technological organizations with revenues ensure the offset of expenses and some amount for accumulation.

4. Revenues from production activities or joining other organizations of various economic sectors in the production of products.

5. Revenues from attached units to support common activities: The attached cost-estimating units may deduct part of their non-business revenues to support the superior cost-estimating units for carrying out common activities. The deduction percentage shall be decided by the heads of the subordinate units.

6. Other revenues prescribed by law, such as: interests on bank deposits being production or service provision revenues, etc.

In addition to the above-said non-business revenues, the scientific and technological organizations with revenues may mobilize lawful capital from organizations and individuals at home and abroad to serve production and/or service provision activities according to the current provisions of law.

III. CONTENTS OF EXPENDITURES ON REGULAR ACTIVITIES

The scientific and technological organizations with revenues are entitled to use the sources allocated from the State budget and their non-business revenues to cover expenses for their regular activities according to the following contents:

1. Payments to officials, employees and contractual laborers: Payment of wages, remunerations, bonuses, wage-based allowances, collective welfare, contributions or deductions as social insurance or medical insurance premiums, and trade union fee according to the current regime.

2. Expenditures on administrative management: Electricity and water charges, expenses for gasoline and oil, environmental hygiene, office supplies procurement, public services, information and communications, propagation, working-trip allowances, conference expenses, telephone and facsimile charges, etc.

3. Expenditures on professional operations in direct service of the units’ activities according to their assigned functions and tasks.

4. Expenditures on regular scientific and technological research according to the units’ functions.

5. Expenditures on regular professional trainings and fosterings to raise the qualifications of the units’ officials, and employees (excluding expenses for retraining according to the norms assigned by the State).

6. Rents: Expenses for renting transport means, houses, land, assorted equipment, hiring domestic and foreign experts, employing laborers and other rentals.

7. Expenditures on performance of contracts on scientific research and technology transfer, as well as production and service provision contracts of the units, including: wages, remunerations, raw materials and materials, fixed asset depreciation, commissions, payment of taxes (if any) according to the provisions of law.

8. Regular expenditures related to the collection of fees and charges according to the current regulations.

9. Expenditures on procurements and regular repairs: Procurement of replacement tools, regular repair of fixed assets in service of professional work and maintenance of infrastructural works.

10. Expenditures on international cooperation: Outbound and inbound delegations.

11. Other expenditures: Payment of principals and interests of capital borrowed from the credit institutions at home and abroad (if any); use of non-business revenues for social charity contributions, expenses for environmental hygiene, security and order, etc.

Irregular expenditures shall comply with the Government’s Decree No. 10/2002/ND-CP of February 16, 2002 and the Finance Ministry’s Circular No. 25/2002/TT-BTC of March 21, 2002.

IV. THE PUBLIC SCIENTIFIC AND TECHNOLOGICAL ORGANIZATIONS WITH REVENUES SHALL ENJOY THE FINANCIAL AUTONOMY AND THE RIGHT TO SELF-DECISION AND TAKE SELF-RESPONSIBILITY AS FOLLOWS

1. Regarding the use of funding sources allocated from the State budget and non-business revenues:

1.1. For the scientific and technological organizations with revenues which can cover the whole regular expenses by themselves:

Their attached units shall be assigned stable estimates for 3 years by the competent agencies as follows:

a/ Assignment of estimates of collected fees and charges belonging to the State budget, including:

- Total collected fee and charge amount.

- Fee and charge amounts left to the units for use according to the competent State agencies’ regulations on each kind of fee or charge.

- Fee and charge amounts to be remitted into the State budget.

For fees and charges left and remitted into the State budget according to the prescribed percentages, the agencies competent to assign estimates shall adjust them to suit the units’ activities.

The managing agencies shall not assign production or service provision revenue estimates to the scientific and technological organizations with revenues, but such units shall work out revenue collection plans for administration in the whole year. Particularly for non-business units with only production or service provision revenue sources and having no fee and charge revenue sources, the competent agencies shall assign production or service provision revenue estimates, which shall serve as basis for administering revenues and expenditures.

b/ Assignment of expenditure estimates:

To assign the aggregate estimates of expenditures on regular activities from the collected fee and charge sources left to the units for use according to the regulations of the competent agencies.

For irregular expenditures from the State budget: funding for the scientific research projects of the State-, ministerial- or branch-level; the national target programs; funding for placing orders according to the State’s regimes; funding for payroll streamlining; funding for use as reciprocal capital of foreign-invested projects; aid or borrowed capital and capital construction funding; funding for procurement and overhaul of fixed assets and other irregular expenditures, etc., the managing ministries (for centrally-run non-business units with revenues), the local managing bodies (for locally-run non-business units with revenues) shall assign estimates to non-business units according to the current regulations.

c/ In cases where units collect fees and charges in excess of the stable assigned estimates, they shall be entitled to use the whole excessive amount of the portion left to them to supplement their wage funds and operation funding according to the regulations;

In cases where the unit collect fees and charges less than the fee and charge collection estimates (the portion left), the unit shall have to reduce their expenses correspondingly.

The non-business units assigned by the competent agencies production and/or service provision revenues, when over-collecting such revenues, shall be entitled to use the whole over-collected amount to increase income and consolidate material foundations; and when under-collecting revenues, shall have to reduce their expenses correspondingly.

1.2. The scientific and technological organizations with revenues, which can cover by themselves part of their regular activity expenditure, shall be assigned stable estimates for 3 years by competent agencies as follows:

1.2.1. Assignment of estimates of collected fees and charges belonging to the State budget, including:

- Total fee and charge amount to be collected.

- Fee and charge amount to be left to the units for use according to the regulations of the competent agencies.

- Fee and charge amount to be remitted into the State budget.

For fees and charges to be left and remitted into the State budget according to the prescribed percentages, the competent agencies shall annually assign collection estimates, which have been readjusted to suit the units’ activities.

The managing agencies shall not assign production and/or service provision revenue amounts to be collected to the STOWR, but such units shall work out revenue collection plans for administration throughout the year. Particularly for non-business units with only production and/or service provision revenue sources and having no fee and charge revenue sources, the competent agencies shall assign production and/or service provision revenue estimates, which shall serve as basis for administering revenues and expenditures.

1.2.2. Assignment of expenditure estimates:

a/ Regular activity expenditures:

- To assign the aggregate expenditures on regular activities from the collected fee and charge sources left to the units for use according to the regulations of the competent State agencies.

- Regular activity expenditures from sources of State budget allocation for the first year of the stable period shall be annually increased in percentages decided by competent agencies.

b/ For irregular expenditures from the State budget: funding for the scientific research projects of the State-, ministerial- or branch-level; the national target programs; funding for placing orders according to the State’s regimes; funding for payroll streamlining; funding for use as reciprocal capital of foreign-invested projects; capital construction funding; funding for procurement and overhaul of fixed assets and other irregular expenditures, etc., the managing ministries (for centrally-run non-business units with revenues), the local managing bodies (for locally-run non-business units with revenues) shall assign estimates to non-business units according to the current regulations.

1.2.3. In cases where the units save their regular expenditures or increase the collected fee and charge portion left to the units as compared to the assigned estimates, they shall be entitled to use the whole saved funding and the increased collection amount to supplement their wage funds and operation funding.

In case of under-collection as compared to the assigned estimates, the units shall have to reduce their expenditures correspondingly.

The non-business units assigned by the competent agencies the production and/or service provision revenues, when such revenues are over-collected, shall be entitled to use the whole over-collected amount to increase income and consolidate material foundation; and when the revenues are under-collected, shall have to reduce their expenditures correspondingly.

After a stable funding period of three years, the non-business units with revenues shall make and submit sum-up reports to the competent agencies for consideration and decision on stable assignment of funding for the subsequent period.

2. Payrolls to serve as basis for drafting wage fund expenditure estimates for stable implementation in three years are the payrolls assigned by competent agencies up to December 31 of the preceding year.

In the course of operation, the heads of the non-business units with revenues may decide on labor employment plans as follows:

2.1. Rearrangement of officials and employees (including those having already signed labor contracts within the assigned payroll limits) to raise efficiency and quality of the units’ activities. Persons to be streamlined from payrolls shall be entitled to the policies and regimes according to current provisions;

2.2. For the non-business units with revenues, which can themselves ensure the whole regular expenditures, their heads shall base themselves on their work requirements and financial capabilities to sign labor contracts according to the provisions of the labor legislation. Persons entitled to enter into labor contracts with indefinite terms must fully satisfy the criteria for structured professional titles according to the regulations of the branch- or field-managing agencies and shall be classified into the administrative and non-business salary table prescribed in the Government’s Decree No. 25/ND-CP of May 23, 1993 and enjoy the rights and have the obligations provided for by law;

2.3. For the scientific and technological organizations with revenues which can cover by themselves part of their regular expenditures, their heads shall base themselves on their work requirements and financial capabilities to sign labor contracts according to the provisions of the labor legislation and within the payroll limits set by the competent agencies. Persons entitled to enter into labor contracts with indefinite terms must fully satisfy the criteria for structured professional titles according to the regulations of the branch- or field-managing agencies and shall be classified into the administrative and non-business salary table prescribed in the Government’s Decree No. 25/ND-CP of May 23, 1993 and enjoy the rights and have the obligations provided for by law;

2.4. The heads of the scientific and technological organizations with revenues may terminate labor contracts signed between such scientific and technological organizations with revenues and laborers. The order and procedures for terminating labor contracts shall comply with the provisions of the labor legislation.

2.5. Realization of the regime of democracy and transparency as prescribed by law.

3. Wage funds and incomes:

Wages funds and incomes of the scientific and technological organizations with revenues shall come from the following two sources:

3.1. The State budget sources for payment of wages, remunerations and wage-based allowances of officials, and employees on payrolls and contractual laborers (for the scientific and technological organizations with revenues which can cover by themselves part of regular expenditures) shall comply with the provisions of the Government’s Decree No. 25/ND-CP of May 23, 1993 and the current guiding documents on wages and wage-based allowances.

3.2. Basing themselves on financial operation results (non-business revenue sources and saved regular expenditures) and situation of performance of professional tasks, the wage funds and incomes of the scientific and technological organizations with revenues shall be determined according to Point 1, Section IV of the Finance Ministry’s Circular No. 25/2002/TT-BTC of March 21, 2002 guiding the implementation of the Government’s Decree No. 10/2002/ND-CP of January 16, 2002 on financial regime applicable to non-business units with revenues. The units shall formulate the regulations on payment of wages and remunerations, then put them forward for public discussion and unanimity at the conferences of the units’ officials and employees.

Basing themselves on such regulations on payment of wages and remunerations, the units’ heads shall decide on the levels of wage and remuneration payment to officials, employees and contractual laborers according to their monthly work performance results.

3.3. At the year-end, the scientific and technological organizations with revenues which have not yet used up their wage funds for wage payment may put the remainder into the income reserve fund and carry them forward to the subsequent years for further payment.

4. Formulation of internal spending regime:

- Within the units’ financial sources (including source allocated by the State budget and non-business revenue source), the heads of the scientific and technological organizations with revenues shall elaborate internal spending criteria, norms and regimes regarding the managerial and professional expenses, which are higher or lower than the expenditure levels prescribed by the State and suitable to the units’ particular characteristics.

- In the internal spending regimes, the scientific and technological organizations with revenues shall prioritize professional expenses in order to ensure the quantity and quality of scientific research and technological application activities.

- The above-defined spending criteria, regimes and norms shall be publicly discussed within the units. The internal spending regime shall serve as basis for the units’ heads to administer the use and settlement of funding from the State budget and non-business revenue sources of the units, and legal ground for the State Treasury to control expenditures.

5. Allocation of funding from the State budget:

Basing themselves on estimates assigned by the State budget, the financial agencies shall allocate regular expenditure (for the units which can ensure by themselves part of their expenditures) via the State Treasury into Item 134 "Other expenditures" according to each corresponding category or item of the State budget index.

In cases where allocations have already been made according to items of the State budget index, the heads of the units already assigned the autonomy right may readjust spending items in the total allocated regular expenditure funding.

The financial agencies shall allocate irregular expenditure funding according to the current State budget index.

6. Regarding the deduction and use of fixed asset depreciation: the scientific and technological organizations with revenues which conduct production and/or service activities involving the use of fixed assets shall have to make fixed asset depreciation according to the Finance Minister’s Decision No. 166/1999/QD-BTC of December 30, 1999 promulgating the regime of management, use and deduction of fixed asset depreciation and the State’s current guiding documents.

In special cases, the units’ heads may decide on the application of depreciation rates higher than the prescribed rates in order to recover capital in time, which, however, must be suitable to the life and technical innovations of the assets as well as payment capabilities of service beneficiaries.

The whole fixed asset depreciation amount shall be accounted into cost prices of products or services stated in contracts between the scientific and technological organizations with revenues and parties requesting the production or service.

7. For the scientific and technological organizations with revenues wishing to liquidate their assets: They shall set up asset liquidation councils under the Finance Minister’s Decision No. 55/2000/QD-BTC of April 19, 2000 promulgating the Regulation on management of the disposal of the State assets at the administrative and non-business agencies. The proceeds from the liquidation of assets formed from the State budget source or originating from the State budget, after subtracting liquidation expenses (for weighing, measuring, counting, transporting, determining technical parameters, paying overtime work remunerations - if any), shall be channeled into the units’ non-business operation development funds. In case of liquidation of assets formed from the loan capital source, the units may use proceeds from the liquidation after subtracting the liquidation expenses to repay loans. After fully repaying loans, the remainder shall be channeled into the units’ non-business operation development funds.

8. At the year-end, the regular expenditure funding allocated by the State budget and from non-business revenues of the scientific and technological organizations with revenues, if not used up, shall be carried forward to the subsequent year for further payment and settled in such accounting year. On the basis of data comparison between the State Treasury and the units till the end of December 31, the State Treasury shall proceed with procedures for carrying forward the unused funding amount to the subsequent year for the scientific and technological organizations with revenues according to the provisions of the Finance Ministry’s Circular No. 81/2002/TT-BTC of September 16, 2002, and at the same time notify such in writing to the financial agencies of the same level for management.

9. The scientific and technological organizations with revenues shall conduct the cost-accounting and book-keeping according to the Finance Ministry’s Circular No. 121/2002/TT-BTC of December 31, 2002 guiding the accounting work of non-business units with revenues.

V. IMPLEMENTATION PROVISIONS

This Circular takes effect as from January 1, 2003.

Other contents on financial management shall comply with the provisions of the Finance Ministry’s Circular No. 25/2002/TT-BTC of March 21, 2002.

Any problems arising in the course of implementation should be reported by the ministries, ministerial-level agencies, agencies attached to the Government, localities and STOWR to the issuing ministries for appropriate amendments and supplements.