DIRECTIVE

ON MAIN REMEDIES FOR UNSETTLED DEBTS DERIVED FROM INFRASTRUCTURAL DEVELOPMENT

Recently, due to different causes, the unsettled debts derived from infrastructural development in local areas is popular and serious, leading to the consequences as follows: the construction is unfinished, long-lasting and inefficient; the investors have no capital sources to pay for the construction; many construction enterprises and contractors cannot pay salary for their employees, appropriate capitals of each other, many enterprises is dissolved or bankrupt, leading to the increase of bad debt of the bank, etc.

Such reality has been affecting badly the financial security, public debt safety and sustainability of economic development.

The Prime Minister request Ministries, sectors and localities to be identify accurately the bad impact of unsettled debts derived from infrastructural development, focusing on the performance of a number of tasks, remedies for the unsettled debts derived from infrastructural development in local areas as follows:

1. Requirements for settling the debts in local areas:

a) The settlement of unsettled debts derived from infrastructural development is an important content in the restructuring of public investment and the reformulation of disciplines in investment in basic construction; it is also one of the measures for macroscopic financial stability, ensuring the sustainability of economic development.

b) The settlement of unsettled debts derived from infrastructural development shall comply with the regulations in the Directive No. 1792/CT-TTg dated October 15^th 2011 by the Prime Minister on increase of management of investment from the state budget and the Government bonds.

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2. People’s Committees of provinces shall take expeditiously and immediately the following measures for settling the unsettled debts derived from infrastructural development of the completed amount that are calculated until December 12^th 2011

a) Inspect, reckon up and classify the unsettled debts, determined exactly the causes of each unsettled debt (objective or subjective) as the basis for drawing up plans and schedule for settling completely the unsettled debts derived from infrastructural development publicly, fairly, seriously and thoroughly.

b) The settlement of unsettled debts derived from infrastructural development shall be carried out step by step according to the schedule and the appropriate order of priority. Local governments shall build up the project on settling debts derived from infrastructural development using the capital from the local budget and other lawful sources, ensuring that the debts derived from infrastructural development are settled before 2016.

c) From 2013, the settlement of debts derived from infrastructural development shall be prioritized in capital allocation from the local budget and shall be considered the compulsory criterion in the collection, allocation and assignment of the funding from the local budget; ensuring that before May 20th of every year, at least 30% of amount of the debts is settled.

The capital shall be allocated to new projects only when the capital is provided sufficiently for the settlement of debts according to the plans. If a local area has a great amount of unsettled debts derived from infrastructural development, such area shall not be allocated capital for starting a new project until the debts derived from infrastructural development have been settled according to the regulations in this Directive.

d) The Ministries and local governments shall initiatively conduct assessment to determine the effectiveness, the process and the development capacity of each project/work to take measures to minimize the damage to the incomplete construction due to the unsettled debts derived from infrastructural development:

- Regarding the actually effective work that does not requires a big amount of capital to complete, an amount of capital shall be funded concentratedly to complete the work to take the effectiveness.

- Regarding the work capable of in-stage development, then the parts that are capable of developing separately shall be completed and use according to the available capital, the other parts must be suspended.

- Regarding other incomplete work, appropriate remedies (for example transferring the investment form) shall be taken or the work shall be suspended.

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3. In order to prevent new unsettled debts derived from infrastructural development, from 2013, People’s Committees of provinces shall:

a) Strictly comply with the current law provisions in the field of management of investment and construction.

b) Comply with the regulations in the Directive No. 1792/CT-TTg dated October 15^th 2011 by the Prime Minister.

c) Intensify the inspection and supervision of the performance of investment project on infrastructural development; initiatively and promptly take the handling measures to prevent the arising of unsettled debts derived from infrastructural development; determine the responsibilities and take strict disciplinary measures to agencies, organizations, and individuals creating unsettled debts derived from infrastructural development.

4. The Ministry of Planning and Investment shall preside over, cooperate with the Ministry of Finance and relevant agencies in inspecting and adjusting the structure an policies on management of the capital funded by the State budget and the Government bonds to eliminate the inadequacy that causes the unsettled debts derived from infrastructural development; guide the implementation of the tasks and measures specified in this Directive.

5. The Ministry of Finance shall preside over, cooperate with the Ministry of Planning and Investment and functional agencies to initiatively handle the arisen difficulties within their competence or request competent authorities to handle; concurrently collect the result of the settlement of debts derived from infrastructural development of local governments and periodically (biannually or annually) report to the Prime Minister./.

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