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THE GOVERNMENT
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No. 87/CP

Hanoi, August 5, 1997

 

DECREE

ISSUING THE REGULATION ON THE MANAGEMENT AND USE OF OFFICIAL DEVELOPMENT AID

THE GOVERNMENT

Pursuant to the Law on Organization of the Government of September 30, 1992;
Pursuant to the Ordinance on the conclusion and implementation of international agreements by the Socialist Republic of Vietnam of October 17, 1989;
At the proposals of the Minister of Planning and Investment, the Minister of Finance, the Minister of Justice,
the Governor of the State Bank of Vietnam and the Minister-Chairman of the Office of the Government,

DECREES:

Article 1.- To issue together with this Decree the Regulation on the Management and Use of Official Development Aid (ODA for short).

Article 2.- This Decree takes effect 15 after its signing and replaces Decree No. 20-CP of March 15, 1994. The earlier provisions which are contrary to this Decree are now annulled.

The management of non-government aid shall continue to comply with the Regulation on the aid relations with non-governmental organizations issued together with Decree No. 80-CT of March 28, 1991 of the Chairman of the Council of Ministers (now the Prime Minister).

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Article 4.- 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 and the Heads of the concerned agencies shall have to implement this Decree.

 

 

ON BEHALF OF THE GOVERNMENT
THE PRIME MINISTER




Vo Van Kiet

 

REGULATION

ON THE MANAGEMENT AND USE OF OFFICIAL DEVELOPMENT AID
(issued together with Decree No. 87-CP of August 5, 1997 of the Government)

Chapter I

GENERAL PROVISIONS

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1. Assistance for the balance of payment;

2. Assistance for programs;

3. Technical assistance;

4. Assistance for projects.

Article 2.- ODA shall include non-refundable ODA and preferential ODA loan with a non-refundable component accounting for at least 25% of the loan value.

Article 3.- ODA, as an important source of the State budget, shall be used with priority given to socio-economic development objectives.

1. Non-refundable ODA shall be used with priority given to programs and projects in the following fields:

a/ Health, population and family planning;

b/ Education and training;

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d/ Environmental and ecological protection;

e/ Development program and project studies (master plans and overall planning...);

f/ Support for the budget;

g/ Support for scientific and technological research;

h/ Enhancement of the State management acity;

i/ Other fields to be decided by the Prime Minister.

2. The preferential ODA loans shall be used with priority given to programs and projects in socio-economic infrastructure construction and upgrading in the following fields:

a/ Energy;

b/ Transport and communications, information and communication;

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d/ Infrastructure of industrial zones;

e/ Social welfare (public welfare facilities; health; education and training; water supply and drainage, environmental protection...);

f/ Other fields to be decided by the Prime Minister.

3. A number of specific programs and projects may be funded partly with non-refundable ODA and partly with preferential ODA loans.

Chapter II

MOBILIZATION, NEGOTIATION, CONCLUSION, APPROVAL AND RATIFICATION OF ODA INTERNATIONAL AGREEMENTS

Article 4.- The mobilization of ODA must be based on the socio-economic development strategy, the public investment program, the overall planning on ODA attraction and use, five-year and annual plans and the State’s demand for external sources of aid capital in each period of development.

The list of programs and projects which are expected to use ODA capital, after being approved by the Prime Minister, shall be made public and serve as a basis for ODA mobilization in each period and each year.

Article 5.- The basis for negotiating and concluding ODA international agreements shall be the documents on programs and projects (feasibility study reports for investment projects using ODA capital or pre-feasibility study reports for a number of special cases) already approved by the competent levels as stipulated in Article 6 of this Regulation.

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1. The Prime Minister shall approve:

a/ Annual lists of programs and projects which use ODA capital, including relevant supplements and amendments thereto.

b/ Credit programs which use ODA capital.

c/ Programs and projects using non-refundable ODA capital and each capitalized at 500,000 USD or more.

d/ ODA funded programs and projects related to the institutional structure, policies, laws, culture, information, defense and security (irrespective of their sizes of capital).

e/ ODA funded investment programs and projects each with total investment capital equivalent to that of a group A project as stipulated in the Decree issuing the Regulation on the Management of Investment and Construction.

2. On the basis of the annual lists of ODA-using programs and projects, including supplements and amendments thereto, which are already approved by the Prime Minister, the Ministers and the Presidents of the Peoples Committees of the provinces and cities directly under the Central Government shall approve:

a/ ODA-using programs and projects each with the total investment capital less than that of a Group A project as stipulated in the Decree issuing the Regulation on the Management of Investment and Construction.

b/ Non-refundable ODA-using programs and projects each with a capital of under 500,000 USD.

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3. In cases where an adjustment made to increase the total capital of an ODA-funded program or project stated in Clause 2 of this Article has made the adjusted capital exceed the level stipulated in Clause 2 of this Article or any adjustment that alters or extends the objective of the program or project, the approving agency should report it to the Prime Minister for consideration and decision.

Article 7.- Negotiation of ODA international agreements:

1. The Prime Minister shall appoint an agency to assume the main responsibility for negotiating on behalf of the Government ODA international agreements with foreign parties.

If an ODA international agreement is to be negotiated and concluded in the name of the State of the Socialist Republic of Vietnam, the Prime Minister shall submit to the State President the nomination of an agency to assume the main responsibility for negotiating on behalf of the State President such international agreement.

2. The agency that assumes the main responsibility for negotiating an ODA international agreement shall propose to the Prime Minister to request the Ministries, branches and localities to nominate their representatives to participate in the negotiation according to the tasks and powers stipulated in this Regulation.

3. In the course of negotiation, if the draft international agreement has any change as compared with the already approved documents of ODA-funded programs and projects, the level that has approved these documents shall decide on what contents to be changed accordingly. For ODA-funded programs and projects which are approved by the Prime Minister, the agency assuming the main responsibility for the negotiation shall, before submitting the aforesaid changes to the Prime Minister for consideration, seek written opinions of the Ministry of Planning and Investment and the concerned agencies on such changes.

Article 8.- Upon the completion of the negotiation, the agency in charge of negotiation shall submit to the Prime Minister the negotiation results and the contents of the written agreements to be concluded with the foreign party and at the same time recommend a person to sign on behalf of the Government the ODA international agreement with the foreign party. The document submitted to the Government must be attached with the written opinions of the Ministry of Planning and Investment, the Ministry of Finance and the Ministry of Justice.

Article 9.- In cases where the ODA international agreement must be signed in the name of the State of the Socialist Republic of Vietnam, the Prime Minister shall submit it to the State President for consideration and decision after the agency in charge of the negotiation have followed the provisions in Article 7 and Article 8 of this Regulation.

Article 10.- The signing, submission of the originals of ODA international agreements to the Government for approval shall comply with Clause 3, Article 6, Article 7 and Article 8 of Decree No. 182-HDBT of May 28, 1992 of the Council of Ministers (now the Government) detailing the implementation of the Ordinance on the Conclusion and Implementation of International Agreements by the Socialist Republic of Vietnam.

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Chapter III

STATE MANAGEMENT OF ODA

Article 12.- The Government shall exercise uniform State management of the ODA, including the determination of policies and orientations for attracting and mobilizing foreign parties to provide ODA for Vietnam; decide the conclusion of ODA international agreements; allocate the use of ODA through the State budget; and organize the supervision of the process of ODA use and evaluation of the results of ODA use.

Article 13.- The Ministry of Planning and Investment shall be the sole agency in coordinating and managing ODA and have the following tasks:

1. Taking responsibility together with the concerned agencies for elaborating the strategy and plan on mobilizing ODA of each foreign party in conformity with the socio-economic development strategy, the public investment program, the overall planning for attracting and using ODA; guiding the other ministries, branches and localities in formulating programs and projects with priority in the use of ODA capital and coordinating with the concerned agencies in summing them up into a list of programs and projects which are given priority tin the use of ODA capital in each period and each year and submit the list to the Prime Minister for consideration and approval to serve as a basis for ODA mobilization.

2. Taking responsibility together with the concerned agencies for preparing and organizing ODA mobilization activities in conformity with the overall planning for attracting and using ODA, the plan for mobilizing ODA of each foreign party, the list of programs and projects which are given priority in the use of ODA capital as already approved by the Prime Minister.

3. Being responsible for preparing the contents and negotiating and concluding framework ODA international agreements with foreign parties.

4. Being responsible for coordinating various sources of ODA for concrete programs and projects in accordance with the list of programs and projects which are given priority in the use of ODA capital, the framework ODA international agreements already concluded with foreign parties as well as the characters and nature of each type of financial aid so as to ensure the most effective use thereof.

Being responsible for coordinating with the Ministry of Finance in determining a list of programs and projects to be allocated ODA from the State budget and a list of programs and projects under the ODA relending regime and submitting them to the Prime Minister for approval.

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6. Coordinating the sources of capital; guiding the formation of programs and projects; officially notifying the international organizations of the approval of the competent levels defined in Article 6 and providing support for the implementation of programs and projects that use non-refundable ODA of international organizations in the United Nations system.

Coordinating with the concerned agencies in urging and assisting the preparation of the contents of and participation in the negotiation of ODA-using programs and projects with foreign parties.

7. Being responsible for coordinating with the Ministry of Finance in making a plan to give priority to the timely allocation of sufficient reciprocal capital in the annual State budget plans for ODA-funded programs and projects which are eligible for using the capital allocated from the State budget as committed in the already concluded ODA international agreements and the decisions to approve investment programs and projects which use ODA capital.

8. Being responsible for overseeing and supervising the project implementation, settling relevant matters under its competence and propose to the Prime Minister for consideration and decision the measures to deal with those matters which are beyond its competence or relate to the policies and mechanism...and arise in the course of implementation of ODA-funded programs and projects.

9. Being responsible for making wrap-up reports on the implementation of ODA-funded programs and projects as stipulated in Article 28 of this Regulation.

Article 14.- The Ministry of Finance shall have the following tasks:

1. Coordinating with the concerned agencies in preparing ODA-funded programs and projects, the contents to be negotiated; being responsible, by mandate of the State President or the Prime Minister, for holding negotiations on specific international agreements on ODA loans, except for those ODA international agreements stated in Clause 1, Article 15 of this Regulation.

2. Acting as the official representative of the "borrower", i.e. the State or the Government of the Socialist Republic of Vietnam, in specific international agreements on ODA loans of the State or the Government, including the cases where the State President or the Prime Minister mandates another agency to assume the main responsibility for negotiating these international agreements, except those ODA international agreements stated in Clause 1, Article 15 of this Regulation.

3. Being responsible for the financial management of ODA-using programs and projects:

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b/ Basing itself on current provisions of law and ODA international agreements already concluded with foreign parties, issuing concrete procedures for capital withdrawal and management of capital withdrawal with regard to ODA programs and projects on the principle: The Ministry of Finance shall approve the annual capital withdrawal plans of the management boards of the ODA-using programs and projects in conformity with the contents and timetable defined in the approved program and project documents and the already concluded ODA international agreements and conduct periodical supervisions of the quarterly and annual capital withdrawals by these programs and projects.

c/ Arranging the reciprocal capital in the annual State budget plans as stated in Clause 7, Article 13 of this Regulation and allocating it sufficiently and on schedule to the programs and projects eligible for State budget capital allocations.

d/ Re-lending and retrieving loans of the Budget from the projects which are permitted to borrow ODA.

e/ Overseeing the financial management in the use of ODA capital, applying the State budget cost-accounting accountancy for this source of capital. Summing up data on capital withdrawal, settlement and loan payment of ODA using programs and projects, notifying them to the concerned agencies and report them to the Prime Minister.

f/ Arranging the State Budget capital for paying due ODA loans to foreign parties.

Article 15.- The State Bank of Vietnam shall have the following tasks:

1. Coordinating with the concerned agencies in preparing ODA-funded programs and projects, the contents to be negotiated; being responsible, by mandate of the State President or the Prime Minister, for holding negotiations on concrete ODA international agreements (loan treaties, loan agreements and technical assistance agreements) with international financial organizations: The World Bank, the International Monetary Fund and the Asian Development Bank.

2. After the aforesaid ODA international agreements come into effect, except for loan agreements with the International Monetary Fund, the State Bank of Vietnam shall hand over the capital and all relevant information on the implementation process to the Ministry of Finance for uniform management.

3. Being responsible for coordinating with the Ministry of Finance in designating and mandating appropriate commercial banks to: effect the re-lending of ODA capital as stated in Point d, Clause 3, Article 14 of this Regulation, retrieve debts to the State budget according to the mandates or agreements the commercial banks have signed with the Ministry of Finance.

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Article 16.- The Ministry of Foreign Affairs shall have the following tasks:

1. Coordinating with the concerned agencies in elaborating and implementing the policies and orientations for the mobilization of various sources of ODA as well as the cooperation policy on the basis of the general foreign policy.

2. Being responsible for completing the external relation procedures related to the mandate to negotiate, the mandate to sign, notifying the approval and ratification of the already concluded ODA international agreements.

3. Notifying the concerned Vietnamese agencies of the effective time of the already concluded ODA international agreements.

Article 17.- The Ministry of Justice shall have the following tasks:

1. Giving opinions on the legal matters in draft ODA international agreements before they are submitted to the Prime Minister for approval.

2. Giving opinions on the differences between ODA international agreements and Vietnamese laws; overseeing the handling of these differences in the course of implementation of ODA international agreements.

3. Providing legal advices on ODA international agreements after they are concluded or other legal matters at the request of the agency mandated to negotiate ODA international agreements.

Article 18.- The Office of the Government shall have the following tasks:

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2. Taking part in the State management of ODA, in evaluating and making proposals on the policy, mechanism... regarding ODA-using programs and projects before they are submitted to the Prime Minister.

Article 19.- The Ministry of Science, Technology and Environment shall have the following tasks:

1. Evaluating the reports on the assessment of environmental impacts of ODA-using programs and projects which are required to make such reports.

2. Being responsible for coordinating with the concerned agencies in overseeing and supervising the observance of the environmental protection legislation by units that execute ODA-funded programs and projects.

Article 20.- The Ministry of Trade shall have the following tasks:

1. Approving the list of machinery, equipment, supplies and goods to be imported by the programs and projects that use ODA loans and creating every favorable condition for the import.

2. Coordinating with the concerned agencies in determining the composition of imported goods and supplies; determining authorized importers for the cases where foreign parties provide ODA capital in the form of goods and supplies imported into Vietnam.

Article 21.- The Ministries, the ministerial-level agencies, the agencies attached to the Government, the People’s Committees of the provinces and cities directly under the Central Government and the central offices of mass organizations shall have the following tasks:

1. Directing the formulation of programs and projects calling for ODA in their respective ministries, branches and localities and send them to the Ministry of Planning and Investment and the concerned agencies for inclusion in the national plan and list of programs and projects which are given priority in the use of ODA capital in each period and each year throughout the country.

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3. The Ministers and the Presidents of the Peoples Committees of the provinces and cities directly under the Central Government shall approve the documents of ODA-using programs and projects according to their competence defined in Clause 2, Article 6 of this Regulation. Within 7 days from the date of its signing, the approval decision (original) should be sent to the Ministry of Planning and Investment and its copies to the Ministry of Finance, the Ministry which manages relevant branch and the People’s Committee of the locality where the program or project is to be implemented.

After the document of an ODA-using program or project is approved by the competent level, setting up a board of management of the program or project or assigning the unit as its investor to perform the tasks stated in Article 25 of this Regulation.

4. Being responsible for giving priority to allocating sufficient reciprocal capital of the branch or locality or other sources of capital, including capital contributed by the people in line with the contents of the approved documents of ODA-using programs and projects so as to implement the programs and projects on schedule.

Basing themselves on the approved program and project documents and concluded ODA international agreements, directing the boards of management of ODA-using programs and projects in formulating annual plans on the withdrawal of foreign capital and send them to the Ministry of Finance for approval.

5. Directing the boards of management of ODA-using programs and projects or participating together with other branches and localities (for inter-regional projects) in clearing the project sites and creating every favorable condition for projects to be implemented as scheduled.

6. Being responsible for inspecting and supervising the receipt and use of ODA and reporting to the Ministry of Planning and Investment and the concerned agencies on the economic, social and environmental effects of ODA-using programs and projects in the fields, branches and localities under their charge.

Chapter IV

IMPLEMENTATION OF ODA-FUNDED PROGRAMS AND PROJECTS

Article 22.- The management and use of ODA capital for capital construction projects shall have to comply with this Regulation and the State’s current management regimes regarding investment and construction; where an already concluded ODA international agreement contains different provisions, such provisions shall be complied with.

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1. The financial management of ODA-funded programs and projects shall have to comply with the Regulation on the management of borrowings and repayment of foreign debts.

2. All programs and projects which use ODA capital shall have to be provided with domestic reciprocal capital for their implementation. The source of domestic reciprocal capital and the mechanism on its use shall be mentioned in the decision to approve the ODA-using program or project document issued by the competent level stated in Article 6 and according to the responsibilities of the Ministries, branches and localities defined in this Regulation.

The programs and projects which use ODA loans re-lent by the Government must have presentations on the preparation of sufficient reciprocal capital for their implementation before they are allowed to sign re-lending contracts .

Article 24.- Tax regulations applicable to ODA-using programs and projects:

1. With regard to indirect taxes: import duty, special consumption tax and turnover tax:

a/ For ODA-using programs and projects with the reciprocal capital being wholly or partly allocated from the State budget, the program and project owners shall have to, when projecting the total investment capital, fully calculate and include various indirect taxes into the reciprocal capital. The State budget shall ensure sufficient reciprocal capital for paying indirect taxes or the credits and debits shall be made through the State budget.

Supplies, goods, machinery, equipment and means of transport imported from the source of non-refundable ODA capital shall be exempted from import duty and special consumption tax (if any) in accordance with the Law on Import and Export Duties and the Law on Special Consumption Tax.

b/ For programs and projects using ODA capital re-lent from the State budget, the program and project owners shall have to calculate and ensure by themselves the payment of indirect taxes.

c/ Machinery, equipment and means of transport brought into Vietnam by foreign contractors to serve the construction of works under ODA-using programs and projects shall be exempted from import duty and have to be re-exported upon the completion of such works; they can be sold on the Vietnamese market if it is so approved by the Ministry of Trade and import tax, turnover tax or special consumption tax (if any) and other taxes thereon must be paid as prescribed by current law.

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a/ Contractors who participate in ODA-using programs and projects and earn profits shall have to pay profit tax in accordance with the profit tax legislation.

b/ Individuals working for contractors, boards of management of ODA-using programs and projects and earning high incomes shall have to pay income tax in accordance with the Ordinance on Income Tax on High Income Earners.

For foreign organizations, individuals and contractors who register their business in the countries that have signed double taxation avoidance agreements with Vietnam, when participating in the implementation of ODA-using programs and projects, they shall pay profit tax and personal income tax in accordance with such agreements.

3. In special cases, tax exemption and reduction shall be decided by the Prime Minister.

4. For ODA-funded programs and projects subject to tax-handling decisions issued by the Ministry of Finance prior to the date of issue of this Regulation, they shall be allowed to execute these decisions until their completion.

Article 25.- Responsibilities of the ODA-funded program and project preparation boards and boards of management:

1. The unit tasked to prepare an ODA funded program or project or the board of preparation of an ODA funded program or project shall have the following responsibilities:

a/ To elaborate, under the direction of the higher level agency stated in Article 21 of this Regulation, the program document, make the feasibility (or pre-feasibility) study report for the ODA-using program and submit them to the competent levels for approval.

The feasibility study report on the program or project that uses ODA capital must clearly state: The mechanism for the use of capital, various capital sources of the project, including the domestic reciprocal capital (capital allocated from the State and local budgets, capital mobilized by the project owner and capital contributed by the people); the possibility of capital retrieval and ability of debt payment with regard to projects using relent ODA loans; the project implementation plan; environmental impact factors; and the site clearance plan.

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2. The board of management of an ODA-using program or project shall have the following responsibilities:

a/ To coordinate with the foreign party in formulating and implementing the program or project execution plan so as to ensure the set objectives, the right targets, the timetable and the commitments stated in the concluded ODA international agreements as well as the provisions in the already approved document of the ODA-using program or project.

To draw up annual plans for the annual allocation of reciprocal capital in accordance with the relevant regulations if the approved program or project uses the reciprocal capital from the State budget.

To draw up plans for the annual withdrawals of foreign capital and send them to the Ministry of Finance for consideration and approval on the basis of the contents of the approved program or project document and the concluded ODA international agreements. Each withdrawal of foreign capital in the year shall be effected according to the approved plan and under the guidance and supervision of the Ministry of Finance.

b/ To be responsible or transfer to the investor or the unit in charge of the receipt and operation of the project the responsibility for repaying fully and in time to the State budget all the loans according to the provisions of the re-lending contract signed with the Ministry of Finance or a commercial bank mandated by the Ministry of Finance to effect the relending and the provisions of the Regulation on the management of borrowing and repayment of foreign debts.

c/ To strictly observe the regime of reporting on the implementation situation as stipulated in Article 28 of this Regulation and the financial rules, statistical, accounting and auditing regimes according to current regulations of the State and meet the requests (if any) of the foreign party regarding financial reporting and auditing.

Article 26.- Programs and projects that use ODA capital shall have to be carried out through bidding, except for special cases which shall comply with separate regulations of the Prime Minister.

The bidding for the execution of ODA programs and projects shall be organized according to the Governments Regulation on bidding and relevant guiding documents. If the already concluded ODA international agreement contains bidding and purchase provisions which are at variance with Vietnams current Regulation on bidding, such provisions shall be complied with.

Article 27.- The Government’s ODA management consulting agency shall be the ODA inter-disciplinary Working Board (ODA Working Board for short) which is headed by the Minister of Planning and Investment and is participated by representatives of the Ministry of Finance, the State Bank, the Ministry of Foreign Affairs and the Office of the Government according to the responsibilities already stated in this Regulation.

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Article 28.- Regime of reporting on the implementation of ODA-funded programs and projects:

1. Periodical reports on the implementation of ODA programs and projects shall include quarterly and annual reports. By the reporting time, not later than two weeks after the end of each quarter and not later than one month after the end of each year, the boards of management of ODA-funded programs and projects shall have to report on the implementation situation, the receipt and use of capital, assessment of implementation results and recommendations and send it to the higher-level agency stated in Article 21, the Ministry of Planning and Investment, the Ministry of Finance, the State Bank of Vietnam, the Ministry of Foreign Affairs, the Office of the Government and the General Department of Statistics.

2. Reporting on the completion of ODA-funded programs and projects.

Upon the completion of an ODA-funded program or project, its board of management shall have to send to the higher-level agency stated in Article 21 of this Regulation, the Ministry of Planning and Investment, the Ministry of Finance, the State Bank of Vietnam, the Ministry of Foreign Affairs, the Office of the Government and the General Department of Statistics a written report on the final result of the receipt and use of ODA capital together with financial settlements and evaluations on economic, social, environmental... efficiency.

Not later than 3 months after the completion of an ODA-funded program or project, its board of management shall have to submit the report as stipulated above, if it faces any difficulty in so doing, it shall have to send an official letter clearly stating the reason.

3. The Ministry of Planning and Investment shall, after seeking the consent of the General Department of Statistics and the concerned agencies, issue the reporting forms and regime uniformly applicable to ODA-funded programs and projects in the whole country.

4. The Ministry of Planning and Investment shall be responsible for coordinating with the concerned agencies in making six-month and yearly wrap-up reports to evaluate the implementation and economic and social efficiency of ODA programs and projects in the whole country and submit them to the Prime Minister.

Article 29.- Supervision and inspection of the receipt and use of ODA capital

The Ministers, the heads of the ministerial-level agencies and 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 the functional agencies in overseeing and supervising the performance of the tasks of the branches, levels and units that receive and use ODA capital as stated in this Regulation; inspect acts that show signs of violation of this Regulation.

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