Circular No. 93/2003/TT-BTC guiding the implementation of the financial management for Vietnam Environment Protection Fund

No. Hi4 {QS .. 10"2003) OfflGIAL GAZET'fE CIRCULAR No. 93/2003/TT-BTC OF OCTOBER 6, 2003 GUIDING THE IMPLEMENTATION OF THE FINANCIAL MANAGEMENT REGIME FOR VIETNAM ENVIRONMENT PROTECTION FUND Pursuant to the Prime Minister's Decision No.82/ 2002/0D-TTg ut- June 26, 2002 on the establishment, organization and operation of Vietnam Environment Protection Fund, the Finance Ministry hereby guides the financial management regime applicable to Vietnam Environment Protection Fund as follows: I. GENERAL PROVISlONS expenditures and is exempt from payment of taxes and State buciqot remittances for activities in the field of onvi ron montal protection. 3. Vietnam Fnvironment Protection Fund is an independent cost-accounting unit, is entitled to use incomes to cover its expenditures in the course of operation and is distributed differences between financial revenues and expenditures strictly according to the provisions of this Circular, 4, The Management Board and the director of Vietnam Environ men! Protection Fund are responsible before the Prime Minister for the safety management of the Fund's capita! and assets, use capital for the right purposes and with efficiency. 5. The Finance Ministry sha!I perform the function of State management over the finance, guide, examine and approve the annual settlement of financial revenues and expenditures of Vietnam Environment Protection Fund. II. PROVISIONS ON CAPITAL AND ASSETS 1, :\ctive capital of Vietnam Environ1.· .. mt Protection Fund includes: ·1. "1. The cha.rter capital which includes: "VND 200 billion allocated by the State budget. Supplements from the Charter Capita\ Supplementatton Fund. Where there appear a need to change the charter 1. This Circular applies to Vietnam Environment capital level, tho chairman of the Management Board Protection Fund. ol Vietnam Environment Protection Fund stiall propose the Minister of Natural Resources and 2, Vietnam Environmflnt Protection Fund is F.:nvironrnenl, the Minister of Finance, the Minister of provided with chartor capital by the Stato budget. It F1lannin~J and Investment to submit it to the Prime hos the responsibility to preserve the capital and off sot Mi11istr1r tor clocision. OfFICIAL GAZtTTE No. ·164 (08-10-2003) 1 .2. Pecuniary compensations for envimnmental damage, paid by organizations and individuals into the Stato budnot according to law provisions. 1.3. SO% of tho annual environmental protection charges. Tt10 collection, remittance and deduction of this funding soui·ce shall be effected by Vietnam Environment Protection Fund according to the Government's regulations on charges and fees. 1.4. 10'% of the annual State budget funding reserved for activities of State management over the environmental protection. This funding source is determined in the annual State budget plan and allocated to Vietnam Environment Protection Fund. 1.5. Aid, financial assistance and voluntary contributions of organizations and individuals inside and outside the country. 1.6. Capital entrusted by domestic and/or foreign organizations for loans or capital allocation under entrustment contracts. 1.7. Retrieved debt principals of lent amounts. 1.8. Other capita! as provided for by law. n,e capital amounts prescribed frorn Points 1.2 th ru 1 .5 above shall be called the annual supplementary capital of Vietnam Environment Protection Fund. 2. The active capital of Vietnam Environment Protection Fund must be used for the right purposes, efficiently, safely and for the following objectives: • Providing loans with preferential interest rates to environrrwntal protection projects according to the following mechanism: + The lent capital amount must not exceed 10% of the total expr:mditurn of n program or investm£mt project on environmental protection. + The interest rate shall trn prescribed by the Fund's Management Board tor each subject group, but must not exceed SO% of tho interest rate on cornmercial loans. Tho Finance Ministry shall prescribe the interest rate coiling for use as basis by the Management Board to determine the interest rate for commercial loans in each period. +Fora project, the capital loan interest rate shall be determined at the time of signing the capital• borrowing contract and kept unchanged throughout the lending term. + In cases where capital-borrowing project s breach the capital-borrowing contracts, repaying debts not on time, the projects owners must be subject to overdue debt interest rate being equal to 200% of the in-term lending interest rate. Providing capital-borrowing interest rate support and financial assistance for environmental protection activities according to regulations. Investment in, procurement of fixed assets in service of the operation of Vietnam Environment Protection Fund, which must not exceed 7% of the Fund's charter capital. All activities of investment and procurement of fixed assets of Vietnam Environment Protection Fund :;;iia'.! cornpiy with the provisions prescribed for the State enterprises. Annually, Vietnam Environment Protection Fund must draw up the plan for investment and procurement of fixed assets and submit it to the Management Board for consideration and approval, then proceed with the investment and procurement within the scope of the approved plan. Purchase of Government bonds from sources of lfm1porarily idle capital not originatinQ from the State budget on the basis of tile consents of the capital­ supp!yin9 organizations and/or individuals, 3. Tho Hnancu Minii;try shall at'l'anwe and allocatri OFFICIAL GAZETTF charter capital, State budget capital for Vifltnam the causos nml /1andle as follows: Envimnment fJrotection Fund accorclinq to H10 State bud got estimates, the provisions of 1/10 State Budget Law and documents guiding the irnplomentation thereof. Tho environmental damaoes and the annually collected environmental protection charges shall tJe allocated to Vietnam Environment Protection Fund according to the State's current regulations. 4. Annually, Vietnam Environment Protection Fund must balance capital sources and capital demands tor environmental protection activities and plan mobilized capital sources. Vietnam Environment Protection Fund may open accounts at the State Treasury and commercial banks according to regulations. 5. Inventory and re-evaluation of assets 5.1. Vietnam Environment Protection Fund must inventory and reevaluate assets in the following cases: Inventorying and reevaluating assets under decisions of competent State agencies. Recovering mortgaged assets when investors arn unable to repay ~heir debts. Liquidation, sale of assets. 5.2. The inventory and reevaluation of assets must strictly comply with the current regulations applicable to the State enterprises. The positive or negative ditterences due to reevalurition of assets (exclud"1ng ttle recovery of mortgaged assets, assets formed from borrowed capital of the Fund when investors are unablo to repay their debts) shall bo accounted as increasn or dee rease of ccipital of Vietnam Envi101 u nent fJrotection Fund as proscr·ibed for the State enterprises. 6. For cases nf los c, of its asso ts, Vietnam ~nvironment Protection fund must clearly deterrnine 6.1. II ai,tmts aro lost due to tho faults of collectives and/or individuals, tho Joss--causing collectives and/or individuals rn us! pay compensations therefor according to law provisions. 6-2. 11 assets t·1ave already been insured according to law, they shall be handled according to the insurance contracts. 7. The deduction for setting up and use of depreciation of fixed assets of Vietnam Environment Protection Fund shall comply with the Finance Ministry's guidance for enterprises. 8. Vietnam Environment Protection Fund may lease. assets under its management according to the principles of efficiency, capital preservation and development as provided for by the Civil Code and other laws. 9. Vietnam Environment Protection Fund may liquidate or sell assets with inferior or deteriorating quality, irreparably damaged assets, technically obsolete assets which have no use demands or are used without efficiency. v,;h·,m l!quidal'lng assets, Vietnam Envlronment Protection Fund must revalue the assets and organizfl auct"1ons according to the provisions of law. The difference between proceeds from asset liquidation or sale and the remaining values of assets on accounting books plus the liquidation or sale expenses (if any) shall be accounted into incomes of Vietnam Environment Protection Fund. m. PROVIS~ONS ON DEOUCTlON FOH SETTING UP OF RISK RESERVE FUND ·1. Vietnam [nvironrnont Pmtoction Fund may malw deductions /or sotting up of ri~k reserve fund OFFICIAL GAZETTE No. 164 (08-1 0·2003) to offset losses incurred due to objective causer; in the course of providfnq loans for environment protection projects. 2. The level of doduction for setting up the risk reserve fund shall be annually decided by the Management Board, bLJt must be at least equal to 0.2% of the annual loan debit balance of the Fund. The deduction shall be made once a year at the end of the fiscal year. 3. The risk reserve fund shall be used to offset risks incurred by projects due to force majeure causes such as losses due to natural calamities, fires, after using the insurance agencies' indemnities (if any) to subtract the losses; 4, At year-end, if the rlsk reserve fund is not used up, the remainder shaU be transferred to the following year's risk reserve fund. In cases where the risk reserve fund balance is not enough to offset the losses arising in the year, the Management Board of Vietnam Environment Protection Fund shall report such to the Ministry of Natural Resources and Environment and the Finance Ministry for submission to the Pr:me Minister for consideration and decision. 5. Risk handling competence The chairman of the Fund's Management Board shall decide to extend the debt terms, exempt or reduce foan interests and freeze debts at the proposai of the Fund's director. The maximum debt extension duration shall be equal to one third of the capital•· borrowing terrn inscribed in t!,e credit contracts. The Finance➔ Ministry shall assume the prirne rei,ponsibili1y ctlld coordinate with tho Ministry of Natural Resources and Environment in subrnittiny to the Prime Minister for decision the dcAit remissions on the basis nf the proposal of the Fund':, Managemnnt IJoard. IV. LOAN INTEREST RATE SUPPOR1' ·\. 'rhe principles for determining and providing intorest rate support The environmentalal protection project investors rnay only receive the interest rate support for investment capital borrowed at credit institutions within the total investment of the project. The investors shall not be provided with interest rate support for overdue debt amounts. Interest rate support for completed projects, which have been put to use and can repay loan capita( to credit institutions. The interest rate support level shall be decided by the Fund's Management Board but must not exceed the ceiling interest rate announced by the Finance Ministry at the time of signing contracts tor interest rate support. 2. Determination of interest rate support /eve/ The actual The The debt borrowing interest principal % of the duration rate entitled X approved X calculated ,SclfJ1-•/l to interest support in year for the level rate level debt principal support entitled to interest rate support 3. Drawing up plans on interest rate support Annually, basing itself on plans for additional capitals and interest rate support demands of projects, Vietnam Environment Protection Fund ciraws up a plan to provide loan interest rate support for projects of the prescribed subJects. The total loan interest rate support amount must not exceed 20% of the annual supplementary Cupital of Viotnarn Environment Protection Fund, excluding the dwr!or capita) allocated by the State budget. No. 1M (08"10-2003) OFFICIAL GAZETTE The annual interest rate support plans must be approved and reported to the Finance Ministry and the Ministry of Natural Resources and Environrnent tJy the Management Board of Vietnam E'.nvironmont Protection Fund. \J. CA'P\TAL F\NANClNG 1. The financing principles Vietnam Environment Protection Fund shaH effect financing for subjects prescribed in its Organization and Operation Charter. The maximum financing level shalt be equal to 50% of the expenses for performance of tasks. 2. Drawing up financing plans Annually, basing itself on the plans for . . . supplementary capital antJ.financing demands of subjects, Vietnam Environment Protection Fund shall draw up plan on financing for subjects .1;ccording to regulations. The total annual finanCing amount shall not exceed 30% of the annual supplementary capital of \/ietnarn t\"\\!\ml'\mentPTotection Fund. The annuaJ financing.plans must be approved and reported to the Finance Min(stry and the Ministry of Natural Resources and Environment by Vietnam Environment Protection Fund. VI. FINANCIAL REVENUES AND EXPENDITURES 1. Vietnam Environment Protection Fund's incomn means the total amount actually earm:•d in the yom frorn professional operations and other services of the Fund, includinr;: 1 .1. Income ho1r1 proh"i-;sional operations: ,. Loan interests col!ected from projects on borrowing investrmmt capital of Vietnam Environment Protm:tion Fund: Interests on Vietnam Environment Protection Fund's deposits at the State Treasury and commercial banks; Charges on sub-lending entrustment under entrustment contracts; Revenues from professional operations and other services. 1.2. Income from financial activities Interests collected from purchase and sale of Government bonds; Revenues from asset leasing act'1vities; Revenues from other financlat services. 1.3. Income from irregular activities: Collected fine amounts; Revenues from liquidation or sale of assets of Vietnam Environment Protection Fund (after subtracting the remaining value and liquidation or sale expenses); Differences due to revaluation of the mortgaged assets when investors are unable to repay their debts, assets formulated from capital borrowed from the Fund; Recovered debts which were already written off; • Other irregular revenues. 2. Vietnam Environment Protection Fund's oxpenditures mean actually spent amounts necessary for the Fund's 011eration, evidenced by valid invoices and vouchers. fhe spending levels and subjects shall comply with law provisions. In case of unavailability of law provisions, ViHlnarn Environment Pro'tnction Fund shall base on tho financial capability OFFICIAL GAZETTE No. '164 (08-10-2003) lo work out tho norms and decide on the spending and be accountable befom law therefor, The spending amounts must be included in tho annual financial p!an arready approved by the Managernent Board, including: 2.1. Expenditures on professional operation: • Expenses for capital mobilization; Expenses for payment services; Entrustment expenses; Exp(jnses for deduction.for setting up of risk reserve fund; Expenses for other Professional opeta.t!ons. 2.2. Payment to laborers working directly at Vietnam Environment Protection F=und: Wages and wage t:1Howances under the wage regimes of the State enterprises; Expenses for social insurance, health insurance, trade union h..1nd.ing .acco1t:JJng Jo :Sbe Sta1e-prescrJbed regimes; Expenses for working shift meals: The per-capita spending level shall not exceed the minimum wage level prescrii:uid by the Stato tor public servants; Expenses for working attires, labor protection means as prescribed; Allowances for Management Board members; part time otfic/aJs; hiring of speda}ists. 2.3. Managorial experises: Expenses for depreciation of fixed assets; Expenses for managerial activities and official du1ie~: + Procurement of working tools, office supplies; + f;xpenses for postal and cornmunication ctiargos: PosliJ{}ff, communication, te)egr,#)h, telex, fmc. chm9rx; paid accordinq to billr; ic;i;uocl by the post offic(:ii,; + Fxp,:10-sos tor t1lectricity, water, health, Office sanitation; + Exponses for petro!"for transport In service of off,ir::ial'> ,md employees on working missions according lo t11e State-prescr1tJed reg/mes. + Working trip allowances for officials and employees on domestic anct overseas working missions, paid accordin.9 to the Finance Ministry's current regulations; + Expenses for propaganda, press briefings, public relations, external relations, conferences, within the approved financial plans. + Expense-s tor inspec1ion, examina1;on according lo the prescrlbeCI regimes; + Expenses for asset maintena:nce under the annual financial plans. + Expenses far watessiana) tmkrkrg and fostering. Deduction for setting up of severance reserve fund. "The deduction levels range from 1 % to 3% of the base wage fund used by Vietnam Environment Protection t:=arrd l-ar saciai itisurance premium payment. The severance reserve fund shall be used to provide severance, job-loss allowances as provided for in . Articles 12 and 13 of the Government's Decree Nc.i. 39/ . . 20031.l\1D-CP ofAprjJ i :J, :?OOS detailing and guiding. the implementation of a number of articles of the labor Code on employment. tf the annual severance and job-loss reserve fund is not used up, the remainder shall be transferred to the following ye&r. In cases where the severance and iob•loss reserve fund is not enough for payment of allowances to laborers ln the fiscal year, the total negativH difference shall be accoun1ed into expenses for management of enterprises fn the period. •· Other managerial expensee as prescribed. 2.4. Expenditures on financi&I activities: F:.xponses for purchase anrJ sale of Government himds; fl.lo. HM (Ofl-1 Q .. WQ3) OFl·IC1AL GAZETTE Expenses tor asset leasing. 2.!:i. lm)gular· expenditures: ·· Expenses for recovery of forgiven debts. .. Expanses tor collection of fines as prescribed. l::xpenses for property insurance and other types of insurance as provided for. Expenses for differences due to revaluation of the mortgaged assets when investors are incapable of repaying their debts, assets formulated from capital borrowed from the Fund; Expenses in support of activities of Party and mass organizations of Vietnam Environment Protection Fund according to the State's regulations (excluding expenses in support of the branch's trade union, localities, social organizations and other bodies). Other expenses as prescr)bed. 3. Vietnam EnvironmentProtectiori Fund must not account into 11s expenditure the following sums: Damage already supported by the Government or compensated by insurance agencies and/or the damage-causing parties; Fines for administrative violations due to subjective causes, fines for violations offinancial regimes; budget amounts already spent for the Environment Department. Investment in capital construction, procurement, upgrading, renovation of fixed assets belonging to the capital sources for investment in capital construction; Expenses for repair, maintenance and equipment of welfare facilities. Budget amounts already spent for the Environmont Department. 4. Within tho first 5 years of operation, if Vietnam Fnvirommmt Protection Fund's revenues are not enouqh for offsetting its expenclitur0s, tho Mmiaqemont Bmml shall report such to the Finance Mini:,trv Im consideration and conr:rete handling. VII. DISTRIBUTION OF INCOMES ANO USE OF FUNDS 1 . Income distribution The difference between the annual financial revenue and expenditure, after paying fines for violations of law provisions, shall be distributed as follows: Deducting i 0% into the charter capital­ supplementing fund; Deducting 50% into the development investment fund; Making deductions for commendation and welfare funds. The deduction levels for these two funds shall comply with the regulations applicable to the State enterprises. The remainder, after making deductions for setting up funds, shall be supplemented into the development investment fund. 2. The purposes of using funds 2 .1. The charter capital supplementation fund shall be U~kld to increase the charter capital of Vietnam Environment Protection Fund under decisions of competent authorities. 2.2. The development investment 1und shall be used for investment, procurement of assets, renewal of technologies, equipment, working conditions. 2.3. The reward fund shall be used for: •· Year-end rewards or regular rewards for officials mid mnployees of Vietnam Environment Protection Fund. T11e reward levels shall be decided by its director on tlw basis of labor productivity and achievement of each official or employee working at Vietnam 1-=nvironment F'rotoc\ion Fund. OFFICIAL GAZETn~ No. '164 (OO•·l O 2003) " !rregu/ar rewards tor individuals c1ndlor collectives of Vietnam Environment Protection Fund, who have had innovations in technical improvement or operational process, thus bringing about efficiency. The reward levels shall be decided by the Fund's director. Rewards for individuals and units outside Vietnam Environment Protection Fund, that have had relations wilh, a.nd effective contributions to, the operation of the Fund. The reward levels shall be decided by the chairman ot the Fund's Management Board. 2.4. The welfare fund shall be used for: Investment in construction or repair of, addltion to capital for the construction of, welfare facilities of Vietnam Environment Protection Fund, contribution of construction capital to common welfare works withfn the branch, or with units under contracts. Expenses for sport, cultural activities, public welfare of collectives of officials and employees of Vietnam Environment Protection Fund. Expenses for regular or irregular difficulty allowances to officials, employees of Vietnam Environment Protection Fund. Contributions to the Social Welfare Fund and expenses for other we!fare activities. The director of Vietnam Environment Protection Fund shall coordinate wfth the Fund's trade union executive committee in managing and using this fund. VIII. ACCOUNTING AND STATISTICAL REGIMES AND FINANCIAL PLANS 1. Vietnam Environment Protection Fund may apply the accounting regime of the Development Assistance Fund to account ils activit\m,. :r Annually, VJetnatn Environment Protection Fund shall have t<) draw up ancl r-eport to tho Ministry of Natu rai Hoso1.w:es and Environment and the Hnanco Ministry on lhH followin9 plans: Thu annu;-11 plan on capital including the chatter capital provided by tho State budget, capital allocated by the Statli budyot for prescribed objectivm;; @f)it,1J. lrorn debt rucovory and other mobilized capital. The capital--using plans including tt1e plan on provision of investment loans, the plan on interest rate support, the plan on non-•ref undable assistance. The financial revenue- expenditure plan enclosed with detailed exposition on revenue and expenditure items as well as specific spending norms. 3. Periodically (quarterly, annually), Vietnam Environment Protection Fund shall make and send financial reports to the Ministry of Natural Resources and Environment and the Finance Ministry: The quarterly report to be sent on the 25th of the first month of the subsequent quarter at the latest. The settlement report shall be sent on March 30 of the following year at the latest forthe Finance Ministry to consider, appraise and approve it. 4. Vietnam Env\ronment Protection Fund is subject to financial inspection by the Finance Ministry, includ1 ng: Inspection of regular or irregular accounting reports and sernernent reports. ~ Specialized inspection according to requirements of the work of financial management. IX. IMPLEMENTATION ORGANIZATION Tills Circular takes effect i 5 days after its publica1ian in the Ofliciul Gazette. If any problems arise in the course of implementation, Vietnam Environment Protection Fund s!mll roport thorn to the Finance Ministry for study and solution. For the Finance Minister Vice Minister LF THI BANG TAM