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THE PRIME MINISTER OF GOVERNMENT
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
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No. 95/1998/QD-TTg

Hanoi, May 18, 1998

 

DECISION

ON HANDLING THE SECOND-PHASE DEBT SETTLEMENT

THE PRIME MINISTER

Pursuant to the Law on Organization of the Government of September 30, 1992;
At the proposal of the Central Steering Board for General Debt Settlement,

DECIDES:

A. GENERAL PROVISIONS:

Article 1.- Creditors and debtors, whose debts have been declared and certified or have been compared for certification in accordance with the stipulations of the Steering Board for General Debt Settlement are subject to the implementation of this Decision.

Article 2.- Directors of enterprises having debts to be recovered shall have to seek ways and means to recover such debts.

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Article 4.- Organizations and/or individuals that have provided guaranty for enterprises to borrow capital or buy materials and goods on credit shall have to pay debts for them, if the latter are unable to pay their debts. Enterprises having their debts discharged shall have to acknowledge and pay them to the guaranteeing organizations or individuals.

B. DETAILED PROVISIONS:

I. DEBTS TO THE STATE BUDGET

Article 5.- Debts owed to the State budget by operating State enterprises shall be classified and dealt with as follows:

1. Debts being the capital depreciation money which should have been remitted into budget as prescribed but was not actually remitted:

- If an enterprise has used the capital depreciation money for investment in capital construction, this sum shall be credited as budget revenue from the capital depreciation and debited as budget allocation to the enterprise for investment in capital construction; such enterprise shall have to acknowledge as having received capital from the State and remit the proceeds from the use of such capital in accordance with the current regulations;

- If an enterprise has used the capital depreciation money to supplement its working capital, this sum shall be credited as budget revenue from the capital depreciation and debited as allocation of working capital to the enterprise; the enterprise shall have to acknowledge as having received capital from the State and remit the proceeds from the use of this capital in accordance with the current regulations.

2. Debts related to payable taxes, price differences and profits:

If an enterprise has used taxes, price differences and profits payable to budget for investment in capital construction, such sums shall be credited as budget revenue from payable taxes, price differences and profits and debited as budget allocation to enterprise to invest in capital construction; the enterprise shall have to acknowledge as having received capital from the State and remit the proceeds from the use of this capital in accordance with the current regulations.

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4. In cases where a State enterprise is assigned to sell import goods under the Government's protocol but has not yet collected the money or not yet fully remitted the money to the budget, it shall be handled as follows:

- If the enterprise has used the sale money for investment in capital construction or procurement of immovables, the sum shall be credited as budget revenue from the sale of goods according to the protocol and debited as capital allocation to the enterprise for investment in capital construction; the enterprise shall have to acknowledge as having received capital from the State and remit the money gained from the use of this capital in accordance with the current regulations;

- If the enterprise has used the goods sale money to supplement its working capital, the sum shall be credited as budget revenue and debited as working capital allocation to the enterprise; the enterprise shall have to acknowledge as having received capital from the State and remit the money gained from the use of such capital in accordance with the current regulations;

- In cases where the enterprise has sold goods but not yet collected the money therefrom, after thoroughly considering the regulations provided for at that time and if the enterprise is not at fault, the debt-settlement board of the province or city directly under the Central Government or the economic branch-managing ministry shall report to the Central Steering Board for General Debt Settlement and the Ministry of Finance so that the latter submit to the Prime Minister for consideration and debt cancellation on a case-by-case basis.

- In cases where the goods imported according to a protocol fail to meet the market's requirements, thus forcing the price cut from the selling prices registered with the State, such enterprise shall be allowed to pay its debt with the actually collected sum of money and the outstanding sum shall be written off.

5. With regard to the enterprise's borrowings from the State budget, it shall have to pay debts to the State budget, and if being unable to pay the debts, the enterprise shall have to report it to the Ministry of Finance for solution.

6. For capital constructions projects mentioned in Points 1, 2 and 4 of this Article, when they are dealt with, there must be a report on the asset inventory and the account settlement shall be conducted in accordance with the regulations of the State.

Article 6.- Debts owed by the State budget to operating State enterprises shall be classified and dealt with as follows:

1. Any amount of budget subsidy or additional allocation according to the prescribed regime, which have not yet been allocated, must be paid to the enterprise by the budget level owing that sum from the source it has to find. If it is unable to find a source, such budget level shall report to the Ministry of Finance for consideration and settlement.

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3. With regard to the debts arising due to the late repayment to the enterprise of the investment in the capital construction, which has already been completed, and/or in the property that has been put into use:

- If the investment lies in the plan assigned to the enterprise by the State but the repayment thereof has not been made, the debts shall be paid with the capital depreciation money and/or investment development fund; if not enough, the deficit shall be offset to the enterprise by the budget;

- If it is outside the State's plan and such property has been used by the enterprise, such enterprise shall have to use the money from the capital depreciation of the already used property and/or investment development fund to make the payment. In case of a deficit, the enterprise shall get support from the budget for debt payment. The enterprise shall have to acknowledge the budget support amount as State capital allocated to it and remit money gained from the use of this capital in accordance with the current regulations;

For some cases where the investment is deemed necessary and reasonable but the enterprise is at present insolvent, the provincial/municipal debt- settlement board (for locally-run enterprises), the ministers and the heads of the ministerial-level agencies (for centrally-run enterprises) shall report to the Steering Board for General Debt Settlement and the Ministry of Finance for further report to the Prime Minister for consideration and allocation of budget capital on a case-by-case basis.

4. With regard to the debts to be paid by the local budget, when transferring the enterprise's property to non-business units, the State management agencies in the locality and the local administration shall have to channel budget capital to pay debts to such enterprise.

II. BANK-RELATED DEBTS

Article 7.- With regard to the debts already put into the debt payment network by banks:

To allow the cancellation of the outstanding debts of State enterprises, enterprises of mass organizations which have dissolved or ceased operation for dissolution, disintegrated cooperatives and/or individual borrowers who have died or have been missing, after the confiscation of all their assets (if any); and the debts of enterprises, production households, that have been frozen by decisions of the Government. The foreign debts shall be offset as follows:

1. To use sources of capital borrowed by commercial banks from the State Bank to write off debts.

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- The risk reserve fund (if any);

- The gradual inclusion into the annual expenses of commercial bank(s);

- Deducting part of the profits to be remitted to the State budget according to the annual plan.

If such offsetting sources are not enough, the State Bank shall discuss with the Ministry of Finance before reporting it to the Prime Minister for solution.

Article 8.- If the amounts of interest on debt loans from banks, which have been already put into the banks' debt payment networks and being followed up in the off-balance-sheet account, have been checked and certified by the debt-settlement boards of different levels, they shall be written off for the enterprise.

Article 9.- Operating State enterprises (category 10) that owe bank-loan debts already put into the debt payment network but suffer from business losses should be classified into two following categories:

1. Enterprises that suffer from perpetual and irretrievable losses and should terminate their operations according to the Law on Bankruptcy of Enterprises, for which the discharge of debts shall comply with the Law on Bankruptcy of Enterprises.

2. Enterprises that have re-organized production and tend towards development for which the debts shall be dealt with as follows:

- For enterprises owing loan debts to commercial banks, that have already frozen, such loan debts shall be transformed into State budget capital allocations within the debt balance of commercial banks at the State Bank at the time of handling;

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Sources to make up for the commercial banks' capital deficit brought about by debts that have been turned into capital allocations to enterprises shall be dealt with according to the provisions of Article 7 of this Decision.

3. With regard to enterprises owing debts to commercial banks due to subjective causes, liabilities of individuals and/or organizations must be clearly determined for handling according to law.

Article 10.- With regard to the debts of the local financial agencies that have borrowed from the State Bank or commercial banks under the direction of the Ministry of Finance, for the payment of wages and social insurance, they shall be deducted from the commercial banks' amounts payable to the State budget.

Article 11.- With regard to the debts arising from the commercial banks' loans which have already been put into the debt payment networks but not yet been settled due to the banks' subjective causes, the persons who have caused consequences shall be dealt with according to law. The unrecoverable debts shall be gradually deducted from the after-tax profits of the related commercial banks.

Article 12.- Bank-guaranteed debts:

1. With regard to the debts guaranteed by commercial banks for enterprises to borrow capital, if the guaranteed enterprises are insolvent, the guaranteeing banks shall have to pay such debts instead.

2. For the debts guaranteed by commercial banks for enterprises to borrow capital under the Government's policies, and already paid by the banks instead, the amounts of debt paid by the banks shall be offset as stipulated in Point 2, Article 7 of this Decision.

3. For the debts which are the Vietnam Bank for Foreign Trade's foreign borrowings for enterprises or guaranteed to be paid to foreign party(ies) within a period of time set by the State, and which cannot be paid by the involved enterprises now, the State Bank and the Ministry of Finance shall sum up them and report it to the Prime Minister for consideration and decision.

III. DEBTS TO THE NATIONAL RESERVES

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Article 14.- For the debts in paddy owed to the national reserves, which must be recompensed by decisions of the law enforcement agencies (courts, economic arbitration), the judgment enforcing agencies shall have to apply coercive measures to recover them. In cases where the debtors have no assets for the execution of judgments, which is certified by the judgment enforcing agencies, the debts shall be forgiven.

Article 15.- For the debts in paddy owed to the national reserves by units which have terminated their operations, been dissolved or bankrupt, if such is certified by the agencies that have decided the establishment of the involved units, the debts shall be written off.

Article 16.- For the debts in paddy or in advances for the purchase of national reserve paddy, if the debtors have been arrested or have escaped, the debts shall be transferred to the concerned People's Committees of the provinces or cities directly under the Central Government for dealing with according to law.

Article 17.- To allow the cancellation of debts in paddy borrowed from the National Reserve Fund by the People's Committees of the provinces and cities directly under the Central Government following the 1989 storm and flood to support people and restore public works.

Article 18.- With regard to the debts owed by dead debtors, after the confiscation of all the debtors' property, the remaining debts shall be written off.

Article 19.- The paddy price to be used for the payment of debts to the National Reserve Fund shall be the price for calculation of agricultural tax at the time of borrowing.

Article 20.- Debts of the National Reserves shall be written off, transferred to the local administration, or dealt with by reducing the amount of capital for the National Reserves. The Ministry of Finance shall sum up the situation and issue decision on the reduction of capital for the National Reserves.

IV. OTHER DEBTS OF OPERATING STATE ENTERPRISES

Article 21.- In cases where an enterprise imports goods under the State's instructions for distribution according to the State's plan but fails to collect money therefrom for the payment of debts, the Ministry of Finance shall sum up the situation and report to the Prime Minister for deciding the settlement so that the enterprise can have funds for debt payment.

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Article 23.- Enterprises that borrow capital and pays debts or purchase goods on credit by themselves shall have to find by themselves fund for the payment of their debts in accordance with law. In case of insolvency, such enterprises shall have to report to the concerned President of the People's Committee of the provinces or cities directly under the Central Government (if they are locally-run enterprises); the concerned ministries or branches (if they are centrally-run enterprises) for consideration and further report to the Ministry of Finance for summing up the situation and reporting to the Prime Minister for solution.

Article 24.- In cases where enterprises undertake the borrowing of foreign capital for the import of goods under the State's instructions or the State's plans, if the difference between the exchange rate at the time of borrowing capital for goods import and that at the time of paying debts arises, thus making enterprises unable to pay their debts, the Ministry of Finance shall examine and consider the allocation of fund to make up for the exchange rate difference so that the enterprises can have source to pay their debts.

Article 25.- If an enterprise that borrows foreign capital with guaranty by a competent agency fails to pay its debt, the guaranteeing agency shall have to pay such foreign debt for the enterprise; if the guaranteeing agency is unable to pay the debt, it shall have to report it to the Ministry of Finance which shall further report to the Prime Minister for solution.

V. DEBTS OF OPERATING STATE ENTERPRISES RELATED TO ENTERPRISES WHICH HAVE ALREADY CEASED OPERATION

Article 26.- In cases where an operating enterprise has debts to be recovered and/or debts to be paid but the objects from which the debts shall be received and/or to which the debts shall be paid no longer exist, the debts shall be accounted for in the enterprise's business results. If the amount of to-be-recovered debts is too large and unrecoverable, the People's Committee of the province or city directly under the Central Government, the branch-managing ministry shall report it to the Ministry of Finance for sum-up and further report to the Prime Minister for consideration and partial capital support so that the enterprise can pay its debts and maintain its normal operation.

Article 27.- With regard to State enterprises that have already ceased operation and/or dissolved but have debts to be paid to foreign parties and to other State enterprises that also owe foreign debts, the budget of the level to which an enterprise belongs to shall have to arrange capital for such enterprise to pay its debts. If the budget of the managing level cannot be balanced, such shall be reported to the Ministry of Finance which shall make a sum-up and further report to the Prime Minister for consideration and support.

Article 28.- With regard to State enterprises that have re-organized their production but are unable to pay their big debts, the People's Committee of the provinces or cities directly under the Central Government or the branch- managing ministries shall report the situation and propose financial handling measures to the Ministry of Finance which shall further report it to the Prime Minister for consideration and decision.

VI. DEBTS OF NON-BUSINESS UNITS DOING BUSINESS FOR LIFE IMPROVEMENT

Article 29.- Non-business units doing business for life improvement which are operating and have debts to be paid shall have to pay their debts.

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VII. ORGANIZATION OF IMPLEMENTATION

Article 30.- Creditors, debtors, guarantors and heirs shall have to discharge their debts in accordance with this Decision. Agencies deciding or authorized to decide the establishment of enterprises shall take responsibility before the Government for handling the payment of debts.

In cases where the creditors and debtors fail to reach agreement on debt payment and handling, the agencies that decide the establishment of enterprises shall discuss the settlement with the agencies managing the State's capital and property at enterprises or the financial agencies.

The Presidents of the People's Committees of the provinces and cities directly under the Central Government and the Ministry of Finance, the State Bank of Vietnam and the branch managing ministries shall provide direction and propose handling measures; problems shall be reported to the Prime Minister for decision.

Article 31.- To consolidate the debt-settlement boards of different levels which shall meet regularly to consider and promptly handle the discharge of debts as prescribed. The handling of debt payment must be decided collectively by the debt-settlement boards.

The debt-settlement boards of different levels shall consider a number of serious cases with criminal signs and propose the competent agencies the prosecution and investigation.

Article 32.- 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 cities directly under the Central Government shall have to direct creditors and debtors under their management responsibilities to promptly and definitely settle the debt payment in the second phase in accordance with the above regulations. Cases not provided for in this Decision shall be dealt with in accordance with the current regulations.

Article 33.- This Decision takes effect 15 days after its signing.

Article 34.- The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government and the presidents of the People's Committees of the provinces and cities directly under the Central Government, the Central Steering Board on the General Discharge of Debts and the debt-settlement boards of different levels shall have to implement this Decision.

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THE PRIME MINISTER OF GOVERNMENT
PRIME MINISTER




Phan Van Khai