THE
MINISTRY OF FINANCE
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No:
36/2006/QD-BTC
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Hanoi,
July 07, 2006
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DECISION
PROMULGATING THE REGULATION ON MANAGEMENT AND SUPERVISION OF
THE USE OF CAPITAL FROM INTERNATIONAL BONDS ISSUED BY THE GOVERNMENT IN 2005
THE MINISTER OF FINANCE
Pursuant to the Government's Decree No.
77/2003/ND-CP of July 1, 2003, defining the functions, tasks, powers and organizational
structure of the Ministry of Finance;
Pursuant to the Government's Decree No. 134/2005/ND-CP of November 1, 2005,
promulgating the Regulation on management of foreign loans and payment of
foreign debts;
At the proposal of the director of the External Finance Department,
DECIDES:
Article 1.- To
promulgate together with this Decision the Regulation on management and
supervision of the use of capital from international bonds issued by the
Government in 2005.
Article 2.- This
Decision takes effect 15 days after its publication in "CONG BAO."
Article 3.- The director
of the External Finance Department and heads of concerned units shall have to
implement this Decision.
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FOR THE
MINISTER OF FINANCE
VICE MINISTER
Tran Van Ta
REGULATION
ON MANAGEMENT AND SUPERVISION OF THE USE OF CAPITAL FROM
INTERNATIONAL BONDS ISSUED BY THE GOVERNMENT IN 2005
(Promulgated together with the Finance Minister’s Decision No.
36/2006/QD-BTC of July 7, 2006)
I. GENERAL PROVISIONS
Article 1.- Regulation
scope
This Regulation provides for management and
supervision of the use of capital from international bonds issued in 2005 for
modernization and upgrading of seagoing shipbuilding industry of the Vietnam
Shipbuilding Industry Corporation (VINASHIN) under the Prime Minister's
Decision No. 914/QD-TTg of September 1, 2005, on issuance of Government bonds
to international capital market in 2005, the Government's Resolution No.
11/2005/NQ-CP on its September 2005 regular meeting and Resolution No.
12/2005/NQ-CP of October 24, 2005, on the issuance levels of international
bonds.
Article 2.-
Interpretation of terms
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International bond capital source means a fund
gained from the issuance of Government bonds to international capital market in
the October 2005 issue, which has a face value of USD 750 million.
Issuance-underwriting bank is the Credit Suisse
First Boston Bank (now the Credit Suisse Bank, called CSFB for short), which
shall provide issuance guarantee for the Finance Ministry under the bond sale
and purchase contract signed between the two parties on October 27, 2005.
Fiscal agent is the Bank of New York, which acts
as the Finance Ministry's agent to pay bonds under the fiscal agency contract signed
between it and the Finance Ministry on November 3, 2005.
Authorized company is the VINASHIN's
Shipbuilding Industry Financial Company, which is authorized to perform the
tasks specified in Article 6 of this Regulation by VINASHIN, which shall take full
responsibility for the company's activities.
Re-lending contract is contract No.
01/2005/BTC-VINASHIN on re-lending the Government's international bond capital,
signed between the Finance Ministry and VINASHIN on November 3, 2005.
Article 3.- International
bond capital shall be invested with priority in investment projects, production
and/or business schemes for modernization and enhancement of the capacity of
Vietnam's shipbuilding industry under the Prime Minister's Decision No.
914/QD-TTg of September 1, 2005, covering also the addition of capital for
VINASHIN's projects, which are expected to use the state budget capital, loan
capital of the Development Assistance Fund, self-procured capital or loan
capital provided by domestic or foreign financial and credit institutions, but
have not yet been arranged to receive such capital.
VINASHIN shall have to use this source of
capital properly and efficiently, ensuring the whole system's financial balance
for full and timely payment of debts, and must not use this capital to offset
its losses or risks.
Article 4.- The Finance
Ministry authorizes the Bank for Investment and Development of Vietnam (BIDV)
to act as the servicing bank (hereinafter called the servicing bank), which
shall open an account for the Finance Ministry and VINASHIN to receive
international bond capital, supervise the disbursement of capital for proper
purposes under the overall plan elaborated by the authorized company according
to the provisions of Article 7, Clause 2 of this Regulation, and monitor
mortgaged assets under the Finance Ministry's authorization contract.
II. SPECIFIC PROVISIONS
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1. Re-lending value shall be equal to the face
value of the 2005 international bond issuance drive, which is USD 750 million
(seven hundred and fifty million US dollars).
2. Re-lending currency shall be US dollar (USD).
3. Re-lending interest rate shall be equal to
the bond interest rate (coupon) which is 6.875%/year of the bonds' face value.
Bond interests shall be paid once every 6 months on their maturity dates, which
shall be January 15 and July 15 every year. The first interest payment shall be
on January 15, 2006.
4. Debt-acknowledgement time: VINASHIN
acknowledges its debts as from November 3, 2005.
5. Re-lending term shall be equal to the bond
term. Bond principals shall be paid in lump sum on the bonds' maturity date,
which is January 15, 2016.
6. Charges: Annually, VINASHIN shall bear
expenses payable to the fiscal agent according to the Finance Ministry's
official notice for each term which shall coincide the bond interest-payment
term. VINASHIN shall not have to pay domestic re-lending charges to the Finance
Ministry.
7. Debt payment: Bond principals and interests
and arising charges shall be paid by VINASHIN directly to the fiscal agent on
the basis of the Finance Ministry's written notices, enclosed with vouchers
supplied by the fiscal agent.
8. VINASHIN shall pay debts in US dollar (USD).
In case of foreign currency shortage, it can pay debts in Vietnam dong based on
a specific agreement with the Finance Ministry according to the provisions of
Article 11 of this Regulation. The applicable exchange rate shall be the USD
selling rate announced by the Bank for Foreign Trade of Vietnam at the time of
money transfer.
9. Bond money transfer procedures: Right after
receiving money, the Finance Ministry shall transfer the whole sum into the
VINASHIN's account for the latter's use and VINASHIN shall have to make written
certification of the full reception of this sum; such written certification
shall be sent to the Finance Ministry within one day after the money arrives in
the account.
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VINASHIN shall assign the authorized company to
do the following jobs on its behalf:
1. To receive and manage the whole source of
international bond capital.
2. To disburse capital, retrieve debts from
owners of investment projects or business schemes defined in Article 3 of this
Regulation.
3. To carry out professional operations to
preserve and develop temporarily- idle capital sources according to the
provisions of this Regulation and its decentralization.
4. To supervise the use of loans and take
responsibility before law for supervising the spending from the international
bond capital source according to this Regulation and relevant provisions of
law.
5. To pay due debts to the Finance Ministry.
6. To open and keep accounting books so as to
oversee and account all economic operations related to the reception, use and
repayment of international bond capital according to the provisions of this
Regulation and relevant provisions of law; to make and keep financial
statements on the use and payment of international bond principals, interests
and charges.
VINASHIN shall sign an authorization contract
with the authorized company, clearly defining rights and obligations of the
concerned parties on the basis of the provisions of this Regulation and
provisions on decentralization and authorization of the management of its
international bond capital source and shall fully be responsible for its
authorization under the provisions of law.
Article 7.- Use of the
international bond capital source
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- Being included in branch plannings,
socio-economic plannings or construction plannings already approved by
competent authorities. In case a project has not yet been included in a
planning, a written agreement of the authority competent to approve such
planning is required.
- Having feasibility study reports and
investment decisions approved by competent authorities in accordance with the
provisions of law and legal documents on investment and capital construction.
- In special cases, if technical designs and
total cost estimates of group-A projects have not yet been approved, investment
decisions must clearly state the capital level of each project item,
accompanied by the design and cost estimate approved for such item.
2. Elaboration of capital-use plans
VINASHIN shall have to elaborate an overall plan
to allocate international bond capital for investment projects and/or schemes
on a case-by-case basis and with yearly phases. Such plan (including the
adjustment and supplementation plan) must be handed immediately to the Finance
Ministry and the servicing bank to serve as a basis for supervision of the use
of capital.
The authorized company shall, basing itself on
the overall plan on allocation of the bond capital, elaborate annual specific
capital-use plans, divided by quarters, (including the plan on capital
withdrawal for projects and the plan on the use of idle capital). These plans
must be approved by VINASHIN and sent to the Finance Ministry and the servicing
bank for supervision of implementation.
Based on the approved annual plans on the use of
bond capital, the authorized company shall elaborate quarterly capital-use
plans and a cumulative sum-up on the use of capital from the beginning of the
year, which shall be sent to VINASHIN for approval, and to the Finance Ministry
and the servicing bank as well.
A quarterly plan must be sent before the 15th of
the last month of the preceding quarter while an annual plan must be sent
before November 15 of the preceding year.
VINASHIN may request project owners to
immediately acknowledge debts under the overall plan on allocation of
international bond capital but the withdrawal of capital for advancement or
payment to projects shall comply with the provisions of Clause 3 of this
Article. The debt-acknowledgement interest rate shall not exceed the interest
rate applicable by domestic commercial banks to loans of the same term.
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- The withdrawal of capital from the
international bond capital source for advancement or payment shall comply with
the regulations on advancement and payment of capital construction investment
capital and accord with the overall capital allocation plan already approved by
VINASHIN.
- The withdrawal of capital shall be effected
only after the competent authority issues a decision approving an investment
project or an investment decision, and shall be made for various bidding
packages of the project, except for common expenses of such project, which
shall not be apportioned into bidding packages.
- The capital advancement levels and time limits
for repayment of advanced capital for bidding packages shall comply with the
provisions of law and the yearly capital plan for the concerned project.
- A newly arising volume must be approved by a
competent authority (if subject to bidding), or its additional cost estimate
must be approved by a competent authority (if not subject to bidding) before
any payment is made.
- When wishing to withdraw capital, a project
owner shall send a written request therefor to the authorized company,
concurrently producing the following vouchers:
i/ For common expenses of the project:
1. Regarding compensation and ground clearance:
The competent authority's decision approving the compensation and
ground-clearance scheme;
2. Regarding the project management expenses and
other expenses: Invoices and vouchers compliant with the investment decision.
ii/ For bidding packages executed by project
owners themselves:
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2. The work's cost estimate approved by the
competent authority; in special cases where such cost estimate has not yet been
approved but some supplies, equipment or structures of large value require
advance reserves or processing or some expenses are needed for production
preparation in order to ensure construction progress, such must be approved in
writing by the authority competent to approve the cost estimate.
3. Economic contracts and/or vouchers and
invoices compatible with the approved cost estimate of the work or the written
approval by the competent authority.
iii/ for other bidding packages
1. The decision approving the
contractor-selection results. Where the investment decision, the decision
approving the survey blueprint and formulation of the investment project or the
decision approving the bidding plan has identified the executing unit, such
decisions may be used as substitutes.
2. The economic contract.
3. The written record on pre-acceptance test of
lawfully completed volumes, with regard to payment for construction and
installation or consultancy bidding packages.
4. The hand-over written record and warehousing
bill, with regard to payment for bidding packages on procurement of domestic
equipment, which has not yet been installed.
5. The pre-acceptance test written record, with
regard to payment for bidding packages on procurement of domestic equipment,
which need to be installed.
6. The set of valid vouchers, with regard to
payment for bidding packages on importation of equipment.
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* With regard to the swap of investment capital
sources: Apart from the above-prescribed vouchers, project owners must supply
to authorized company with documents evidencing that they have used other
capital sources to pay contractors.
4. With regard to the swap of investment loan
capital sources: Where project owners have been executing investment projects
with other loan capital sources (including sources of loan capital provided by
financial and credit institutions and other loan capital sources) in accordance
with the objectives mentioned in Article 3 of this Regulation, which, however,
are less favorable compared to the international bond capital source, VINASHIN
may use the international bond capital source to lend project owners for the
latter's swap in order to raise the investment efficiency, provided that such
is approved by creditors and the pre-paid expenses do not exceed expenses for
lending international bond capital.
5. Use of temporarily idle capital sources
In order to raise the efficiency of the capital
use, VINASHIN may, through the authorized company, invest temporarily idle
capital sources, including (i) the international bond capital source available
pending debt acknowledgement by project owners; (ii) capital sources available
after project owners have acknowledged debts but have not yet withdrawn
capital; (iii) receivables from projects invested with the international bond
capital and approved business schemes, which have not yet come due.
The use of idle capital sources must ensure
safety, efficiency and not affect the Finance Ministry's plan on the payment of
debts when they come due as well as on the capital withdrawal schedule of approved
investment projects and business schemes. Priority shall be given to loans for
export ship-building projects and satisfaction of member units' demand for
working capital; loans for support of other programs and targets of VINASHIN in
each period under the Prime Minister's direction.
The authorized company shall carry out
professional operations of capital preservation and development within the
scope of its operation license granted by the State Bank, under authorization
and decentralization by VINASHIN, including the borrowing of capital from
domestic and foreign organizations and individuals to make up for temporary
cash deficit for capital disbursement and withdrawal or for debt payment to the
Finance Ministry.
Pending the withdrawal of capital for projects,
VINASHIN may use temporarily idle capital according to legal provisions and
this Regulation. The authorized company shall report to VINASHIN on the whole
income from temporary investment of debts already acknowledged by project
owners, after subtracting relevant business expenses, and shall distribute it
to project owners based on the effective balance of the idle capital sum in
each accounting period of such project owners. Project owners must not account
this revenue as incomes from financial activities but have to reduce it
directly into lending expenses to calculate the capitalized expenses of
projects or investment schemes in accordance with the provisions of law.
The authorized company must open a separate book
to monitor capital sources awaiting payment by project owners, which are
independent from its other assets as well as assets it keeps for other
organizations and individuals in order to account all economic operations
related to debt acknowledgement, withdrawal of capital for payment and
temporary trading of loans already acknowledged as debts by project owners,
which shall serve as a basis for the Finance Ministry to inspect and supervise
the capital withdrawal process.
Article 8.- Payment of
bond principals, interests and charges
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2. Three days before the bonds' maturity date,
VINASHIN shall temporarily calculate the payable bond interest amount and
transfer such amount into its account opened at BIDV.
3. After receiving money-claim vouchers,
including vouchers for payment of principals, interests and arising charges,
vouchers relating to charges, supplied by the fiscal agent (Bank of New York),
the Finance Ministry shall examine the accuracy of such vouchers and send all
copies thereof together with a payment request to VINASHIN.
4. Based on the Finance Ministry's payment
request, VINASHIN shall pay principals, interests and charges directly into the
fiscal agent's account for repayment to bondholders.
5. In case the Finance Ministry advances money
to pay debts for VINASHIN or VINASHIN pays debts in Vietnam dong, the Finance
Ministry shall pay directly to the fiscal agent for repayment to bondholders.
Article 9.- Payment and
compensation security
VINASHIN shall apply the following measures to
secure the settlement of its international bond liabilities:
1. It shall reach agreement with project owners
and decide on re-lending interest rates applicable to project owners so as to
secure the annual payment of bond interests and charges, offsetting relevant
expenses and ensuring the provision.
2. It may apportion the initial bond-issuance
expenses to project owners that use the international bond capital source in
the form of authorized collection and spending.
3. It shall request project owners to use the
international bond capital source to purchase insurance for assets formed from
the use of international bond capital in accordance with the provisions of law.
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5. At least 6 months before the deadline for
payment of bond principals, VINASHIN shall elaborate and send to the Finance
Ministry a scheme to mobilize money sources for debt payment and shall monthly
report to the latter on the implementation of this scheme and any amendments
and/or supplements thereto.
6. Mortgaged assets and loan security:
VINASHIN shall use all assets formed with
capital sub-lent from the Government's international bond capital source as
mortgage and security for sub-lent money. In case the assets are formed from
different capital sources, the mortgaged assets and loan security shall be
calculated in proportion to the contribution of each capital source. VINASHIN
shall supply the Finance Ministry and the servicing bank with all lists of
projects and assets it has invested with money gained from the issuance of
international bonds and used as mortgage and loan security.
The Finance Ministry shall sign contracts to
authorize the servicing bank to exercise the right to supervision of mortgages
and loan security and shall, in case of necessity, apply sanctions on the
mortgage of assets and loan security according to current law and regulations
of the bank to recover debts.
7. When necessary, the Finance Ministry may
apply sanctions on the mortgage of assets and loan security according to legal
provisions in order to retrieve debts.
8. Priority right to debt payment: The supreme
priority right in relation to the debt payment shall be given to loans from the
Government's international bond capital source. When VINASHIN has several debts
come due at the same time, it shall, first of all, pay the Government's
international bond debts.
9. Where VINASHIN cannot settle its liabilities,
the Finance Ministry shall, at its own discretion, request VINASHIN to pay
compensation in accordance with the provisions of law, and may also request all
servicing banks to blockade VINASHIN's accounts for the payment of debts.
Article 10.- Capital
advancement
1. In extraordinary cases where VINASHIN cannot
arrange enough money to fully pay its due debts, it shall request in writing
the Finance Ministry to advance capital for debt payment. The request must be
sent one month before the debts fall due (in case of interest and charge payment)
or three months (in case of principal payment).
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3. Payment procedures: In case the Finance
Ministry advances capital for VINASHIN, it shall effect the debt payment
directly into the fiscal agent's account. After making payment, the Finance
Ministry shall issue an official written notice on the advanced money amount,
plus the money transfer charge, which shall be officially recorded in the
lending subcontract.
4. The Finance Ministry shall advance capital
for payment for only one interest-payment term and a subsequent advancement of
capital shall be made only when VINASHIN has repaid capital of the previous
advancement.
5. All capital advancement procedures shall
comply with the Regulation on management of the foreign debt
payment-accumulation fund, issued together with the Finance Minister's Decision
No. 10/2006/QD-BTC of February 28, 2006.
Article 11.- Debt
payment in Vietnam dong
1. Advance notice: In case of foreign currency
shortage, VINASHIN may pay debts in Vietnam dong. To do so, it must send an
official written notice thereon to the Finance Ministry one month before a
debt's maturity date (for interest and charge payment) or three months (for
principal payment) so that the latter can effect the conversion of Vietnam dong
into US dollar.
2. Payment procedures: VINASHIN shall transfer
the whole sum of Vietnam dong amount, equivalent to the USD amount which can be
arranged and converted at the exchange rate mentioned in Article 5, Clause 8
above by the Finance Ministry as it has notified, plus the money transfer
charge, into a bank account designated by the Finance Ministry. The Finance
Ministry shall transfer the payable money amount to the fiscal agent according
to the provisions of Article 8, Clause 5 of this Regulation.
3. Settlement of amounts paid in Vietnam dong:
After transferring money to the fiscal agent, the Finance Ministry shall
officially notify VINASHIN of the Vietnam dong amount equivalent to the paid
foreign currency amount (including also the money transfer charge). The
settlement of the transferred money amount shall be conducted right after the
Finance Ministry transfers the payable amount to the fiscal agent.
i/ Where the payable Vietnam dong amount exceeds
that already transferred by VINASHIN to the Finance Ministry, the Finance
Ministry shall officially notify in writing VINASHIN of the deficit and within
two working days the latter shall have to fully pay this amount into the
former's account.
ii/ Where the payableVietnam dong amount is less
than that already transferred by VINASHIN to the Finance Ministry, the Finance
Ministry shall officially notify in writing VINASHIN of the surplus and shall,
within two working days, transfer this amount into VINASHIN's account.
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1. VINASHIN shall have to conduct accounting in
strict accordance with the State's current bookkeeping regime.
2. VINASHIN shall have to make and send to the
Finance Ministry reports on capital use plans according to the provisions of
Article 7, Clause 2 of this Regulation.
3. Monthly, quarterly and annually, VINASHIN
shall have to send to the Finance Ministry reports on the situation of capital
withdrawal, arrangement and use of international bond capital which is
temporarily idle.
A monthly report must be sent before the 5th of
the subsequent month; a quarterly report, before the last day of the first
month of the subsequent quarter; and an annual report, before January 31 of the
subsequent year.
4. At the end of a fiscal year, VINASHIN shall
select an audit company to audit all annual financial statements made by the
authorized company and submit them to the Finance Ministry within 15 days after
obtaining the audit records.
5. VINASHIN shall be responsible for inspecting
the proper and efficient use of international bond capital by units and
organizations within its system.
6. VINASHIN (including units re-borrowing its
capital from the international bond capital source) shall have to implement the
regime of investment capital accounting and settlement according to current
regulations.
Article 13.-
Responsibilities of VINASHIN
1. To take full responsibility before law for
the use of the Government's international bond capital it has been sub-lent for
the purposes approved by the Government. All acts of using this capital for
improper purposes or failing to perform the obligations committed in the
sub-lending contract shall be handled in accordance with the provisions of law.
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3. Through the authorized company, to open and
keep accounting books and gather appropriate documents and vouchers on the
withdrawal of capital and use of this loan according to the provisions of
Article 7 of this Regulation.
4. To send plans and reports to the Finance
Ministry and the servicing bank on the situation of the use of money and the
fulfillment of bond-related obligations according to the provisions of Article
7, Clause 2; Article 9, Clause 5 and Article 12 of this Regulation.
Article 14.-
Responsibilities of the servicing bank
1. To perform the payment function strictly
according to current regulations.
2. To manage the reception, to transfer
VINASHIN's money for repayment of international bond capital under the Finance Ministry's
authorization, to timely report to the Finance Ministry on the situation of
capital withdrawal, assess the actual situation of the use of capital by
VINASHIN and problems arising in the course of performance of the assigned
tasks.
3. To perform the function of supervising
mortgaged assets and loan security, which are formed from the international
bond capital source, ensuring that such assets shall not be used for purposes
other than those mentioned in Article 9, Clause 6 of this Regulation and strictly
comply with the terms of the authorization contract signed with the Finance
Ministry.
4. To strictly implement the terms of the
"framework agreement on cooperation in management of VINASHIN's capital
relent by the Finance Ministry from the source of capital generated through the
issuance of government bonds to international market," which was signed
between VINASHIN and BIDV on November 3, 2005.
5. To coordinate with the Finance Ministry in
supervising and inspecting the use of international bond capital by VINASHIN.
Article 15.-
Responsibilities of the Finance Ministry
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- The purchase agreement signed between the
Finance Ministry and the issuance-underwriting bank (CSFB);
- The fiscal agent agreement, signed between the
Finance Ministry and the Bank of New York;
- The table on settlement by the Finance
Ministry and the issuance-underwriting bank, of expenses accounted into the sum
of money gained from the issuance of international bonds.
2. To promptly transfer into VINASHIN's account
the money as soon as it arrives in the Finance Ministry's account.
3. To check all sums of interests and charges,
which are accompanied by actual vouchers, supplied by the fiscal agent, and
promptly notify such to VINASHIN to make payment.
4. When it is necessary to advance capital or
pay debts in Vietnam dong, the Finance Ministry shall have to promptly fulfill
its payment obligations (payment of bond principals, interests and charges)
toward the fiscal agent.
5. To regularly and extraordinarily inspect the
use of international bond capital as well as VINASHIN's capability of paying
international bond debts.
Article 16.- Any
amendments and/or supplements to this Regulation to suit the practical
situation shall be decided by the Minister of Finance.