Circular 110/2000/TT-BTC

CIRCULAR No. 110/2000/TT-BTC OF NOVEMBER 14, 2000 GUIDING THE MANAGEMENT AND USE OF STATE ENTERPRISES� CAPITAL FOR INVESTMENT AND CONSTRUCTION

Pursuant to the State Enterprises Law;

Pursuant to the Government�s Decree No.52/1999/ND-CP of July 8, 1999 promulgating the Regulation on Investment and Construction Management;

Pursuant to Decree No.12/2000/ND-CP of May 5, 2000 amending and supplementing a number of articles of the Regulation on Investment and Construction Management issued together with the Government�s Decree No.52/1999/ND-CP of July 8, 1999;

Pursuant to the Government�s Decree No.59/CP of October 3, 1996 promulgating the Regulation on financial management and business cost-accounting for State enterprises;

Pursuant to the Government�s Decree No.27/1999/ND-CP of April 20, 1999 amending and supplementing the Regulation on financial management and business cost-accounting for State enterprises, issued together with the Government�s Decree No.59/CP of October 3, 1996;

After consulting with the Construction Ministry, the Finance Ministry hereby guides the management and use of State enterprises� capital for investment and construction as follows:

I. GENERAL PROVISIONS

1. Subject to this Circular are projects using development investment capital of State enterprises (abbreviated to SEs), including those operating in the field of production and business and public utility under the State Enterprises Law.

2. Projects using the SEs� development investment capital are projects that use part of the capital supported by the State budget, capital of the State budget origin, capital accumulated by enterprises themselves, commercial credit capital for development investment, development investment funds, financial reserve funds (to offset property losses), welfare funds (for investment in welfare projects), capital for fixed asset depreciation and the State�s revenues left to enterprises for investment.

3. For projects on fixed asset repair, the management and payment of expenses therefor shall comply with the SEs� current financial management regime. Where the SEs use their own development investment capital for investment in the repair of fixed assets, they shall have to comply with the provisions of this Circular.

4. Projects using the SEs� development investment capital shall have to strictly observe the investment and construction procedures and be included the enterprises� annual capital construction investment plans. The SEs may organize payment by themselves or select capital-paying organizations to assist them in managing the payment of development investment capital.

The SEs shall strictly observe the accounting and statistical regime and settle the investment capital according to current regulations.

5. Investors of projects using the SEs� development investment capital shall have to organize the management and implementation of investment projects, take self-responsibility for projects� capital preservation and investment efficiency on the basis of strict compliance with the current regimes and policies on investment and construction management as well as the Bidding Regulation.

6. The agencies managing the SEs� finance shall perform the function of State finance management and supervise the use of capital, ensuring the safety and efficiency for projects invested with the SEs� development investment capital. The State Treasury, the Development Assistance Fund, the commercial banks and State credit institutions (hereinafter referred collectively to as the capital-paying organizations) shall have to assist the SEs in inspecting and strictly controlling various stages of the capital-paying process, ensuring the timely and adequate supply for the projects strictly according to the prescribed regime and the project execution tempo, and at the same time detect for prompt prevention the use of capital for the wrong purposes or in contravention of the prescribed regime, which cause wastage or loss of the SEs� capital.

7. The ministries, ministerial-level agencies, agencies attached to the Government, State corporations, associations and mass organizations (referred collectively to as ministries) as well as the People�s Committees of the provinces and centrally-run cities (referred collectively to as the provincial People�s Committees) shall have to manage and use investment capital according to the State�s regulations on investment and construction management as well as the provisions of this Circular.

II. SPECIFIC PROVISIONS

1. The SEs� development investment capital shall be used for investment and construction for the following purposes:

- Investment projects for new construction, renovation and upgrading of the already invested projects.

- Investment projects for the procurement of properties, including equipment and machinery not requiring installation, and new science and technology products.

The SEs shall have to manage and use capital according to the current relevant regulations when using the development investment capital for the following purposes:

- Buying shares, contributing stock capital, contributing capital to joint-ventures or other forms of investment.

- Investing in joint-ventures with foreign countries.

2. The SEs� development investment capital shall be created from the following sources:

2.1. The SEs� own capital, including:

+ The development investment fund;

+ The fixed asset depreciation capital;

+ The capital of the State budget origin;

+ The capital initially allocated by the State budget;

+ The welfare fund (used for investment in welfare projects);

+ The State�s revenues left to enterprises for investment.

The financial reserve fund shall be used only to offset losses, damage or price reduction of the SEs� properties due to objective or subjective causes.

For corporations set up under the Prime Minister�s Decision No. 91/TTg and Decision No.90/TTg of March 7, 1994 (hereinafter called corporations 91/TTg and corporations 90/TTg for short), the general directors shall, as authorized by the Managing Boards, decide the partly mobilization of the development investment capital of independent cost-accounting member enterprises to meet the corporations� demand for concentrated investment under the current financial management regime.

2.2. The development investment capital mobilized by the SEs, including:

- The investment capital supported by the State budget: The SEs� investment projects using the State budget-supported development investment capital shall comply with the provisions of the State Budget Law and the Regulation on Investment and Construction Management issued together with the Government�s Decree No.52/1999/ND-CP of July 8, 1999 and Decree No.12/2000/ND-CP of May 5, 2000 amending and supplementing a number of articles of the Regulation on Investment and Construction Management.

- The State�s development investment credit capital and State-guaranteed credit capital: The SEs� projects using these development investment capital sources shall comply with the provisions of the Government�s Decree No.43/1999/ND-CP of June 24, 1999 on the State�s development investment credit and the State�s Regulation on Investment and Construction Management.

- The commercial credit capital: The SEs� projects using the commercial credit capital source shall have to comply with the State�s current regulations and the capital-lending credit institutions� guidance on the use of such capital on the basis of the capital-lending contracts.

- The capital mobilized from other sources, such as the issuance of enterprise bonds, joint-venture, cooperation...: The SEs� investment projects using these capital sources shall have to comply with the State�s current regulations.

3. The competence to decide investment and investment execution for projects using the SEs� development investment capital is stipulated as follows:

3.1. For group-A projects using all above capital sources (mentioned in Part II.2), the competence to decide investment and investment execution shall apply as provided for projects using the State budget capital in the Investment and Construction Management Regulation issued together with the Government�s Decree No.52/1999/ND-CP of July 8, 1999 and Decree No.12/2000/ND-CP of May 5, 2000.

3.2. For group B- or C- projects using the SEs� own capital (mentioned at Point 2.1, Part II.2), the SEs shall base themselves on the branch development planning or plans already approved by the competent authorities to decide the investment; for projects which use land, the land locations and areas must be approved by the competent People�s Committees of the localities where the land exist and the SEs must fill in the procedures for land allotment or land lease according to the provisions of the land legislation. The competence to decide investment for group B- or -C projects using the SEs� own capital is defined as follows:

- For the SEs being member enterprises of corporations 91/TTg or 90/TTg, the Managing Boards� approval is required;

- For independent SEs with Managing Boards, the investment must be approved by the Managing Boards.

- For independent SEs without Managing Boards, the investment must be approved by the enterprise general directors (or directors).

- For investment projects of the public utility SEs, the agencies deciding their establishment shall decide the investment or authorize the enterprises to decide it.

Enterprises shall take self-responsibility for the projects� investment execution process on the basis of strict compliance with the State�s current regimes and policies on investment and construction management as well as the Bidding Regulation.

4. Elaboration and submission of reports on the SEs� investment capital plans:

4.1. On the basis of the execution tempo of projects being invested, projects having gone through the investment preparation stage and the SEs� plans for mobilization and use of investment capital sources, the member SEs, independent SEs or corporations shall elaborate their annual investment capital plans.

For the SEs being member enterprises of corporations 91/TTg or 90/TTg or the SEs with Managing Boards, their plans on the use of investment capital must be approved by the Managing Boards. For independent SEs without Managing Boards, their investment capital plans shall be approved by the general directors (or directors).

4.2. After their investment capital plans have been approved by the competent authorities, the SEs shall notify such to the bodies managing finance of enterprises so that the latter have basis for monitoring, inspection and supervision, and at the same time report the already approved investment capital plans to the corporations (if any), the ministries or the provincial People�s Committees (for projects falling under their management competence).

4.3. The ministries, the provincial People�s Committees and the Managing Boards of corporations 91/TTg shall synthesize them into their annual investment capital plans to be addressed to the Finance Ministry and the Ministry of Planning and Investment.

5. Conditions for payment of the SEs� investment capital:

5.1. For investment projects:

- Investment preparation: There must be documents issued by the competent authorities according to the responsibility division prescribed in the Regulation on Investment and Construction Management, permitting the preparation for investment; and the corresponding cost estimates therefor.

- Preparation for project execution: There must be investment reports or feasibility study reports and investment decisions issued by the competent authorities according to the responsibility division prescribed in the Regulation on Investment and Construction Management; and the cost estimates therefor.

- Execution of investment projects: There must be technical designs and total cost estimates, which have already been approved by the competent authorities. For group A- or B- projects with technical designs and total cost estimates not yet approved, the investment decision must specify the capital level of each project item with the already approved design and cost estimate for its construction in the year.

5.2. For projects that have been included in the enterprises� investment capital plans correspondingly to the project execution tempo in the plan year, there must be decisions to set up the project management boards (for cases where project management boards must be set up) and to appoint the heads of the management boards, chief accountants or persons in charge of accountancy to assist the SEs in managing the projects according to regulations.

5.3. For projects for which bidders have been appointed or biddings have been organized for consultant selection, equipment procurement, construction and installation under the Bidding Regulation, there must be decisions approving the bidding results, issued by the competent authorities and economic contracts between the SEs and the contractors.

5.4. There must also be the SEs� approval of payment for the construction and installation, equipment procurement or consultancy volumes, irrespective of the form of self-performance or bidding contracts.

Upon each payment of investment capital, contractors shall have to hand over to the SEs the following dossiers:

- For the completed construction and installation volume:

+ The minutes on the pre-acceptance test of the completed construction and installation volume, attached with the written calculation of the pre-acceptance tested volume.

+ The price bills and payment vouchers.

- For equipment volume:

+ The invoices-cum-delivery bills (for domestically procured equipment); or import voucher set (for imported equipment).

+ The warehousing bills (for equipment requiring no installation) or minutes on the pre-acceptance test of the equipment installation volume (for equipment requiring installation).

+ The vouchers on transportation, insurance, taxes and warehousing charges.

+ The price bills and payment vouchers.

- For consultancy volume:

+ The minutes on the pre-acceptance test of the consultancy volume.

+ The payment vouchers.

For other paid jobs outside the jobs performed by hired consultants of the projects, the expenses therefor shall be paid when there are enough grounds to prove that the jobs have been performed.

Basing themselves on the dossiers mentioned at Points 5.1, 5.2. and 5.3 (dossiers sent only once) and the payment-requesting dossiers mentioned at Point 5.4 (dossiers sent for each payment request), the SEs shall agree to make payment when the completed volumes or jobs in such dossiers are compatible with the above-prescribed dossiers as well as the current system of investment and construction management policies.

6. Organization of investment capital payment: The SEs shall, basing themselves on their annual construction investment plans, approved projects and contracts signed with contractors (or self-performance contracts), ensure enough capital sources to make payment on schedule to the contracting units. The investment capital payment by enterprises shall be effected in the following forms:

- The SEs make self-payment: In this case, the SEs shall take self-responsibility for the control of investment capital payment to the contractors and suppliers.

- The SEs make payment through capital-paying organizations: In this case, the SEs shall transfer their development investment capital to the capital-paying organizations in localities where they deploy the execution of the investment projects. The capital-paying organizations shall control and make payment at the SEs� requests.

In order to receive and manage the investment capital payment by the SEs for investment projects at the capital-paying organizations, investors shall have to fill in the procedures to open separate accounts for monitoring investment projects at such organizations. The procedures for account opening shall comply with the guidance of the capital-paying organizations. The capital-paying organizations shall have to create favorable conditions for investors to open accounts and use them at the serving units.

The SEs shall base themselves on the investment project execution tempo, their investment capital plans for investment projects, their capital sources� balance at the paying organizations and the demand for capital at the time of payment to transfer investment capital to the paying organizations.

7. The selection of the forms of advancing capital, paying capital and recovering advance investment capital shall be agreed upon by the SEs (investors) and the contractors (for construction and installation, procurement of equipment, consultancy) and effected on the basis of the SEs� annual investment capital mobilization plans and the State�s current policies through contracts.

8. Investment capital settlement: Upon the completion of constructions or investment projects, investors shall have to settle the total investment capital of the projects according to the Finance Ministry�s regulations guiding the investment capital settlement.

The Finance Ministry shall have to verify and approve the investment capital settlements for group-A projects; the authorities competent to decide the SEs� investment shall have to verify and approve the investment capital settlements for group B- and C- projects.

9. Quarterly and annually, investors shall have to report the situation on the use of investment capital by enterprises to the corporations (if any), the ministries, the provincial People�s Committees directly managing them and the agencies managing finance of enterprises. The agencies deciding the establishment of enterprises, the ministries, the provincial People�s Committees, the Managing Boards of corporations 91/TTg shall have to make sum-up reports to the Finance Ministry and the Ministry of Planning and Investment.

III. RESPONSIBILITIES OF THE RELEVANT AGENCIES

1. The ministries, the provincial People�s Committees:

- To guide the management and use of the SEs� development investment capital according to the SE finance management function assigned by the Government.

- To direct the management and control of the process of managing investment capital and organize the summing up of the situation on the use of the SEs� investment capital sources according to current regulations and provisions of this Circular.

2. The Managing Boards of corporations 91/TTg and 90/TTg, the Managing Boards of independent enterprises, the general directors (or directors) of the SEs shall have to manage, preserve and efficiently use capital sources assigned to them by the State; and take self-responsibility for investment decision and the efficiency of investment projects.

- To direct the SEs (investors) in the management and control of the process of managing investment capital and organize the summing up of the situation on the use of the SEs� investment capital sources according to current regulations and provisions of this Circular.

3. Investors:

- To organize the management and execution of investment projects, preserve and efficiently use the projects� investment capital on the basis of strict implementation of the current regimes and policies on investment and construction management as well as Bidding Regulation.

- To provide necessary documents and dossiers to the agencies managing finance of enterprises, the capital-paying organizations and other relevant agencies according to the State�s current regulations.

- To use investment capital for the right purposes, the right subjects, in a thrifty and efficient manner and strictly abide by the current regime on the management of investment and construction capital.

- To abide by the regime on periodical reporting and investment capital settlement according to the provisions of this Circular.

4. Capital-paying organizations:

- To organize the control, payment and accounting of investment capital strictly according to the prescribed regime.

- To certify the already paid capital amount for each project upon the settlement.

- To closely control payment-requesting vouchers, ensuring the supply of capital in strict accordance with the contracts and ratified projects.

- To be answerable to the investors and State�s laws for the management and payment of the SEs� investment capital.

5. The agencies managing finance of enterprises: shall take responsibility for the inspection and implementation of investment decisions and settle the SEs� investment capital.

IV. IMPLEMENTATION PROVISIONS

1. This Circular takes effect after its signing. All the earlier provisions on the management and use of the SEs� capital for investment and construction contrary to this Circular are now annulled.

2. In the course of implementation, if problems arise, the ministries, the provincial People�s Committees, the corporations, the SEs and investors are requested to promptly report them to the Finance Ministry for study, amendment and/or supplement.

For the Finance Minister
Vice Minister
VU VAN NINH