THE
GOVERNMENT
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No.
106/2004/ND-CP
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Hanoi,
April 1, 2004
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DECREE
ON THE STATE'S DEVELOPMENT INVESTMENT CREDITS
THE GOVERNMENT
Pursuant to the Law on Organization
of the Government of December 25, 2001;
Pursuant to the Domestic Investment Promotion Law (amended) of May 20, 1998;
Pursuant to the State Budget Law of December 16, 2002;
At the proposal of the Minister of Finance,
DECREES:
Chapter I
GENERAL PROVISIONS
Article 1.- Purpose
of the State's development investment credits
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Article 2.-
Regulation scope
This Decree prescribes the
State's development investment credit policies, including:
1. Investment loans and loans
provided to projects under the Government's agreements.
2. Post-investment interest-rate
support.
3. Investment credit
underwriting.
Article 3.-
Principles of the State's development investment credits
1. To support investment
projects being capable of directly recovering capital in some key branches and
domains and large economic programs with socio-economic efficiency, ensuring
the repayment of loan capital.
2. A project may concurrently
enjoy support in forms of partial investment loan and post-investment interest
rate support; or concurrently provided with partial investment loans and
investment credit underwriting.
3. The total support level in
forms prescribed in Clause 2 of this Article for a project shall not exceed 85%
of the investment capital of such project.
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5. Investors must use loan
capital for the right purposes; and repay loan principals and interests
according to the signed credit contracts.
Article 4.-
To assign the Development Assistance Fund to organize the implementation of the
State's development investment credit policies.
Article 5.-
The State's development investment credit plans
1. The State's development
investment credit plans constitute a part of the State's development investment
plan, aiming to realize socio-economic development strategic objectives in each
period.
The State's development
investment credit plans shall be announced annually, covering the following
principal targets:
a/ The State's total development
investment credit, including investment loans, loans provided to projects under
the Government's agreements, post-investment interest rate support and
investment credit underwriting.
b/ The capital sources for
realization of the State's total development investment credit.
c/ The State budget's total
interest-rate difference offsetting amount.
2. The Development Assistance Fund
shall have to report to the Ministry of Planning and Investment and the
Ministry of Finance on the tentative plan on the State's development investment
credit in the plan year. The Ministry of Planning and Investment and the
Ministry of Finance shall base themselves on the State's development investment
credit demands and the State budget's balance capability to submit to the Prime
Minister for assignment of the State's development investment credit plan to
the Development Assistance Fund before December of the year preceding the plan
year.
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4. In cases where the State's
development investment credit demands in a year exceed the planned level or
exceed the planned interest-rate difference offsetting level, the Development
Assistance Fund shall report such to the Ministry of Planning and Investment
and the Ministry of Finance for submission to the Prime Minister for decision.
Article 6.-
Interpretation of terms
In this Decree, the terms below
are construed as follows:
1. The lending term means the
period from the time of the first-time withdrawal of capital to the time of full
repayment of loan debts under the credit contract.
2. The grace period means the
period during which a loan's principal shall not be repaid, counting from the
time of the first-time withdrawal of capital to the time the repayment of loan
principal begins, which, however, shall not exceed the project execution
duration.
3. The debt repayment term means
the period from the time of the first-time repayment to the time of full
repayment of loan debts under the credit contract.
4. The debt-repayment time limit
means the period of time prescribed for each time of debt repayment in the debt
repayment term.
5. Investment lending mean that
the Development Assistance Fund lends capital to investors for investment in
projects.
6. Post-investment interest-rate
support means the Development Assistance Fund gives a partial interest-rate
support for investors to borrow capital from credit institutions for investment
in projects after such projects have been completed and put to use and loan
debts have been repaid.
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8. Projects provided with loan
capital under the Government's agreements mean foreign projects lent with
investment capital by the Vietnamese Government (or authorized agencies) under
the agreements signed between the Vietnamese Government and the governments of
the countries having the loan projects (or authorized agencies).
Chapter II
THE STATE’S DEVELOPMENT
INVESTMENT CREDITS
A.
DEVELOPMENT INVESTMENT LOANS
Article 7.-
Forms of the State's development investment loans
1. Investment loans;
2. Loans provided to projects
under the Government's agreements.
Section I.
INVESTMENT LOANS
Article 8.-
Objects entitled to investment loans
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The preference duration for
projects is prescribed in Section I of the list of projects and programs entitled
to investment loans enclosed with this Decree till December 31, 2005.
2. The list of projects and
programs is detailed according to each object and preference application
duration, which shall be submitted to the Government for decision by the Ministry
of Finance in coordination with the concerned ministries and agencies.
Article 9.-
Conditions for being entitled to investment loans
1. Being the objects defined in
Article 8 of this Decree;
2. Having completed the
investment procedures according to the State's regulations;
3. Investors being organizations
or individuals that have full civil act capacity;
4. For investment projects on
production expansion or renewal of technologies or equipment, investors must
have the financial capability to ensure their solvency;
5. Having profitable
production/business plans;
6. Having financial plans and
debt-repayment plans evaluated, and having loans approved, by the Development
Assistance Fund, before investment decisions are made.
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Article
10.- Investment loan capital levels
1. The loan capital level for
each project shall be decided by the Development Assistance Fund, which,
however, shall not exceed 70% of the total investment capital of such project.
For the remaining capital amount, the investor must determine its sources and
specific financial conditions, ensuring the project's feasibility.
2. In the course of capital
disbursement, the Development Assistance Fund shall comply with the capital
source structure determined in Clause 1 of this Article.
Article
11.- Investment lending term
1. The lending term shall be
determined according to the capital recovery capability, which is compatible
with the project's production/business characteristics and the investor's debt
repayment capability, but shall not exceed 12 years.
2. For some particular projects
such as afforestation projects with long capital recovery duration, the lending
term shall not exceed 15 years.
Article 12.-
Investment loan interest rate
1. The investment loan interest
rate shall be determined as equal to 70% of the average medium- and long-term
loan interest rate of State-run commercial banks. The Finance Minister shall
stipulate the investment loan interest rate in each period.
2. When the market interest rate
fluctuation range is between 15% and more, the Finance Minister shall decide to
adjust the lending interest rate. The number of such adjustments shall not
exceed 2 a year.
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4. Overdue debt interest rate
shall be equal to 150% of the undue-debt lending interest rate inscribed in the
credit contract.
5. In the grace period,
investors shall not have to pay loan principals but have to pay loan interests.
Section II.
LOANS PROVIDED TO PROJECTS UNDER THE GOVERNMENT'S AGREEMENTS
Article
13.- Projects entitled to loans provided under the Government's agreements
Projects invested with the
Vietnamese Government's aid source for the countries having signed agreements.
Article
14.- Conditions for being entitled to project loans provided under the
Government's agreements
1. The capital-borrowing
projects under the Government's agreements must procure Vietnam-made products
or equipment and employ Vietnamese specialists or laborers for project
execution.
2. Other borrowing conditions
shall comply with the specific provisions of the agreements signed between the
Vietnamese Government (or authorized person) and the governments (or authorized
persons) of the loan capital-receiving countries.
Article
15.- Capital disbursement
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Section III.
LOAN SECURITY, LOAN DEBT REPAYMENT AND HANDLING OF RISKS
Article
16.- Security assets applicable to investment loans and investment credit
underwriting
1. Investors that borrow
investment capital or get investment credit underwriting may use assets formed
from loan capital for loan security.
2. While the debts have not yet
fully been repaid, investors must not transfer, sell, mortgage or pledge such
assets to borrow capital from other places. Where investors or capital-borrowing
units cannot repay debts, or are dissolved or go bankrupt, the Development
Assistance Fund may handle assets formed from loan capital like the mortgaged
assets as prescribed by law for credit institutions in order to recover loan
debts.
Article
17.- Loan debt repayment
1. Investors shall have to pay
loan capital to lending organizations strictly according to the signed credit
contracts.
2. In the grace period,
investors shall not have to pay loan principals but have to pay loan interests.
3. If after 10 working days as
from the debt repayment deadline, investors fail to repay loan debts of such
term and are not allowed for debt rescheduling or debt extension, the
Development Assistance Fund shall convert the late-paid debt principals and interests
into overdue debts and the investors must bear overdue interest rates according
to the provisions of Clause 4, Article 12 of this Decree.
Article
18.- Adjustment of grade period, debt repayment term and debt repayment
level in each time limit
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Article
19.- Risks and handling thereof
1. Investors shall be considered
for debt extension, freezing or remission, or loan-interest exemption or
reduction due to such force majeure reasons as natural disasters, fires or
unexpected accidents causing property damage, or due to the State's policy
changes.
2. Cases of ownership
transformation or handling of financial difficulties of enterprises using the
State's development investment credits shall comply with the Government's
regulations as for commercial banks' debts.
Article
20.- Deduction for, and setting up of, risk reserve fund
Annually, the Development
Assistance Fund may set up the risk reserve fund to handle risks when investors
cannot repay debts under credit contracts. The deduction for, and setting up
of, the risk reserve fund shall be effected as follows:
1. The maximum deduction level
equal to 0.2% of the investment loan average debt balance and investment credit
underwriting obligation shall be annually made for the risk reserve fund. The
Ministry of Finance shall guide the deduction for, and setting up of, the risk
reserve fund.
2. The annual deduction for the
risk reserve fund shall be accounted into expenses for operational activities
of the Development Assistance Fund.
Article
21.- Competence to handle risks
1. The general director of the
Development Assistance Fund shall decide to adjust grace period as well as debt
repayment term, time limit and level in each time limit.
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3. The handling of risks of loan
projects under the Government's agreements shall be decided by the Prime
Minister.
4. In cases where the
Development Assistance Fund's risk reserve fund is not enough to offset, the
general director of the Development Assistance Fund shall report such to the
Finance Minister for further report to the Prime Minister for consideration and
decision.
B.
POST-INVESTMENT INTEREST-RATE SUPPORT
Article
22.- Objects entitled to post-investment interest-rate support include:
1. Projects which are entitled
to investment loans under this Decree's provisions but have been partially
provided or have not yet been provided with the State's development investment
credit capital.
2. Projects which are on the
list of production/business lines in domains and geographical areas eligible
for investment preferences under the Government's current regulations guiding
the implementation of the Domestic Investment Promotion Law (amended) but not
entitled to investment loans or investment credit underwriting of the
Development Assistance Fund.
Article
23.- Conditions for enjoying post-investment interest-rate support
1. Projects entitled to
post-investment interest-rate support prescribed in Article 22 of this Decree.
2. Investment projects which
have been completed and put to use, and the loan capital therefor has been
repaid.
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Investors shall be entitled to
post-investment interest-rate support only for the loan capital from credit
institutions for investment in fixed assets and within the total fixed asset investment
capital of the projects. The time for calculation of post-investment
interest-rate support shall be the time the capital is actually borrowed in the
project duration.
Article
25.- Post-investment interest-rate support levels
1. For Vietnam dong loans, a
project's post-investment interest-rate support level shall be determined as
equal to the actually paid debt principal, multiplied (x) by 50% of the
interest rate of the State's development investment credit and multiplied (x)
by actual loan term (converted into years) of the actually paid debt principal.
2. For foreign currency loans, a
project's post-investment interest-rate support level shall be determined as
equal to the foreign-currency debt principal actually paid in the year,
multiplied (x) 35% of the interest rate of the foreign currency loan under the
credit institution's loan contract, and multiplied (x) by the actual loan term
(converted into years) of the actually paid debt principal.
3. The Development Assistance
Fund shall provide post-investment interest-rate support to project owners once
or twice a year.
C.
INVESTMENT CREDIT UNDERWRITING
Article
26.- Objects entitled to underwriting
1. Projects which are entitled to
investment loans under this Decree's provisions but have been partially
provided or not yet provided with the State's development investment credit
capital.
2. Projects which are on the
list of production/business lines in domains and geographical areas eligible
for investment preferences under the Government's current regulations guiding
the implementation of the Domestic Investment Promotion Law (amended) but not
entitled to investment loans or investment credit underwriting of the
Development Assistance Fund.
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1. Being objects eligible for
investment loan underwriting prescribed in Article 26 of this Decree.
2. Conditions for projects to
enjoy underwriting shall comply with the provisions of Clauses 2, 3, 4, 5 and
7, Article 9 of this Decree.
3. Having their financial plans
or debt-repayment plans evaluated by the Development Assistance Fund.
Article
28.- Underwriting term
The underwriting duration shall
be determined in conformity with the capital loan term as agreed upon by the
investor and the lending credit institution.
Article
29.- Underwriting levels
1. The underwriting level for a
project shall not exceed 70% of the project's approved total investment capital
for fixed assets.
2. The total underwriting amount
granted by the Development Assistance Fund to projects in a year shall not
exceed the total investment loan capital in that year.
Article
30.- Underwriting charges
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Article
31.- Financial responsibilities when investors are incapable of repaying
debts
In cases where investors are
unable to repay their loan debts strictly according to the signed credit
contracts:
1. The Development Assistance
Fund shall have to pay debts to credit institutions on behalf of the investors
for the loan capital amounts it has provided the underwriting.
2. The investors shall have to
acknowledge compulsory debts with the Development Assistance Fund for the
amounts the latter has paid on their behalf at the fining interest rate equal
to 150% of the current loan interest rate of the concerned credit institutions.
3. When finding sources for debt
repayment, the investors must repay debts for the acknowledged compulsory debts
(including debt interests) to the Development Assistance Fund.
Article
32.- Handling of risks in underwriting
In cases where the investors
entitled to underwriting are incapable of repaying compulsory debts to the
Development Assistance Fund, they shall be handled according to the provisions
of Articles 19 and 21 of this Decree.
Chapter III
THE STATE’S DEVELOPMENT
INVESTMENT CREDIT CAPITAL SOURCES
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1. The State budget capital:
a/ The Development Assistance
Fund's charter capital.
b/ The State budget capital
additionally allocated annually for application of forms of the State’s
development investment credits.
c/ Capital of projects and
programs assigned by the Government to the Development Assistance Fund for
execution.
d/ The Vietnamese Government's
capital lent to foreign projects under the Government's agreements.
2. Capital mobilized by the
Development Assistance Fund:
a/ Capital from issuance of
Government bonds.
b/ Capital borrowed from
domestic and foreign economic organizations.
c/ Other mobilized sources under
law provisions.
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Chapter IV
THE DEVELOPMENT
ASSISTANCE FUND
Article
34.- Tasks of the Development Assistance Fund
1. To mobilize capital, receive
and manage the State's capital sources reserved for the State's development
investment credits according to regulations.
2. To carry out the State's
development investment credit activities according to the provisions of this
Decree.
3. To undertake to allocate and
provide loans from different capital sources entrusted by localities or
domestic and foreign organizations; to perform other tasks assigned by the
Prime Minister.
4. To organize the payment to
customers that have direct relations and participate in the payment system
according to law provisions.
5. To send quarterly or
extraordinary reports when requested to the Prime Minister, the Ministry of
Finance and the Ministry of Planning and Investment.
Article
35.- The Development Assistance Fund's financial mechanism
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2. The State budget shall offset
interest-rate differences and provide post-investment interest-rate support and
operation charges to the Development Assistance Fund according to the State's
annual actually-implemented development investment credits.
Chapter V
RESPONSIBILITIES OF
STATE MANAGEMENT AGENCIES
Article
36.- The Ministry of Finance
1. To perform the State
management over finance for the State's development investment credit
activities and the Development Assistance Fund.
2. The Finance Minister shall,
on the Prime Minister's behalf, direct the Development Assistance Fund's
activities and decide on capital mobilization interest rates of the Development
Assistance Fund; decide and adjust lending interest rates according to the
provisions of Clauses 1 and 2, Article 12 of this Decree; and handle the
State's development investment credit risks according to his/her competence.
3. To assume the prime
responsibility for, and coordinate with the concerned ministries in, submitting
to the Government for decision the list of objects entitled to investment loans
and preference application duration in each period.
4. To coordinate with the
Ministry of Planning and Investment in apportioning annual State budget capital
to the Development Assistance Fund for application of forms of the State's
development investment credits.
5. To examine and supervise the
Development Assistance Fund in capital borrowing, acknowledgment of debts and
repayment of mobilized capital debts; use the State's development investment
credit capital to provide investment loans and post-investment interest-rate
supports, and repay debts for investment credit underwriting; disburse
loancapital provided under agreements signed between the Vietnamese Government
and foreign countries.
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Article
37.- The Ministry of Planning and Investment
1. To include the State's annual
plan on development investment credit in the general socio-economic development
plan and submit it to the Prime Minister for notification of the State's annual
development investment credit plan.
2. To assume the prime
responsibility for, and coordinate with the Ministry of Finance in, making
State budget estimates for interest-rate difference offsetting and providing
post-investment interest-rate support for the State's annual development
investment credit activities according to regulations.
3. To assume the prime
responsibility for submitting to the Prime Minister for assignment, the State's
annual development investment credit plan and make interest-rate offsetting
estimates for the Development Assistance Fund.
4. To coordinate with the
Ministry of Finance in examining the Development Assistance Fund's activities
in borrowing capital, acknowledging debts and repaying mobilized-capital debts,
using the State's development investment credit capital to provide loans or
post-investment interest-rate supports, repaying underwritten debts and
disbursing capital under agreements signed between the Vietnamese Government
and foreign countries.
5. To widely publicize and
update information on plannings, strategies and orientations for development of
branches, regions and products as well as the State's investment and export
promotion policies.
Article 38.-
The State Bank of Vietnam
1. To perform the function of
State management over currencies, foreign exchange and credit related to the
State's development investment credits;
2. To guide the Development
Assistance Fund to participate in the payment system according to the
provisions of Clause 4, Article 34 of this Decree;
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Article
39.- Ministries, ministerial-level agencies, Government-attached agencies
and People's Committees of provinces and centrally-run cities
1. To widely publicize
development plannings, plans and orientations, econo-technical processes,
regulations, standards and norms of different branches, domains, products and
territorial areas, as well as other necessary information in each period for
use as basis for evaluation of projects entitled to the State investment
support.
2. To direct and examine,
according to their respective functions and tasks, investment made by investors
strictly according to the State's regulations on investment, ensuring tempo and
loan capital repayment under commitments in the credit contracts.
3. To coordinate with the
Development Assistance Fund in settling consequences of suspended projects or
projects incapable of repaying loan debts, which fall under their respective
responsibilities according to law provisions.
Chapter VI
REPORTING, INSPECTION,
EXAMINATION AND HANDLING OF VIOLATIONS
Article
40.- Inspection, examination and reporting
1. All the State's development
investment credit activities under this Decree are subject to inspection or
examination by competent State agencies according to law provisions.
2. In each specific case, the
inspection or examination may be conducted in a stage or all stages of
construction investment, production, business and loan capital repayment
process.
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4. Quarterly or extraordinarily,
the Development Assistance Fund shall sum up and report to the Prime Minister
the implementation of development investment credit plans, and at the same time
send reports thereon to the Ministry of Planning and Investment, the Ministry
of Finance and the General Statistics Office.
Article
41.- Handling of violations
1. Organizations and individuals
entitled to the State's development investment credits, that violate the
provisions of this Decree, may, depending on the seriousness of their
violations, be administratively sanctioned; if causing property damage, they
must pay compensations therefor and be handled according to law provisions.
2. Those who decide on
investment contrarily to investment undertakings, thus causing serious
socio-economic or environmental consequences, shall be answerable to law.
3. The Development Assistance
Fund or credit institutions, which violate credit contracts, interest-rate
support contracts, underwriting contracts or insurance contracts, shall be
handled according to law provisions.
Chapter VII
IMPLEMENTATION PROVISIONS
Article
42.- Implementation effect
This Decree takes implementation
effect 15 days after its publication in the Official Gazette. To annul the
Government's Decree No. 43/1999/ND-CP of June 29, 1999 on the State's
development investment credits and other regulations related to the State's
development investment credits which are contrary to this Decree.
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For projects on investment
credit capital loans, investment credit underwriting and post-investment
interest-rate support, for which contracts have been signed with the
Development Assistance Fund before the effective date of this Decree, the
regulations inscribed in the signed credit contracts shall apply.
Article
44.- Implementation guidance responsibilities
The Finance Minister, Vietnam State
Bank Governor and the Management Board of the Development Assistance Fund shall
have to guide the implementation of this Decree according to their respective
functions and competence.
Article
45.- The ministers, the heads of the ministerial-level agencies, the heads
of the agencies attached to the Government, the presidents of the People's
Committees of the provinces and centrally-run cities and the chairman of the
Management Board of the Development Assistance Fund shall have to implement
this Decree.
ON BEHALF OF THE
GOVERNMENT
PRIME MINISTER
Phan Van Khai
LIST
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(Promulgated
together with the Government's Decree No. 106/2004/ND-CP of April 1, 2004)
Ordinal
number
Objects entitled to
investment loans
Project execution areas
I. Investment loan projects
under plannings approved by competent authorities
01
Projects on planting concentrated
paper raw-material forests, pulp and artificial board associated with
processing enterprises
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02
Projects on producing
prototype strains and new strains, using high technologies
Regardless of geographical
areas
03
Projects on clean water supply
in service of daily life
Regardless of geographical
areas
04
Investment projects on
production and processing of industrial salt
Regardless of geographical
areas
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Investment projects on
manufacture of antibiotics
Regardless of geographical
areas
06
Investment projects on
job-training schools
In rural areas
07
Investment projects on
complete textile, printing and dyeing factories
Regardless of geographical
areas
08
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Regardless of geographical
areas
- Projects on aluminum
exploitation and production
09
- Projects on manufacturing passenger
cars of 25 seats or more with the localization rate of at least 40%
- Investment projects on
building train carriages at domestic manufacturing establishments
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- Projects on manufacturing
and assembling train locomotives
- Investment projects on
shipyards
Regardless of geographical
areas
10
Projects on manufacturing
diesel engines of 300 CV or more
Regardless of geographical
areas
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- Projects on manufacturing
heavy and new mechanical products
- Large-scale projects on
casting
Regardless of geographical
areas
12
Projects on building big
hydro-electric power plants in service of population relocation and domestic
equipment manufacture
Geographical areas B and C
13
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Regardless of geographical
areas
14
Reciprocal capital of projects
using ODA capital for re-lending
Regardless of geographical
areas
II. The Government’s special programs
and objectives carried out by mandatory mode:
- Solidification of canals and
ditches
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- Providing loans for
heightening the foundation for construction of dwelling houses for households
in Mekong river delta provinces
- Other programs (including
re-lending of ODA capital)