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THE STATE PLANNING      SOCIALIST REPUBLIC Of VIETNAM
    COMMITTEE          Independence-freedom-Happiness
   No.05-UB/KH              htmlhtmlhtml---
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                                   Hanoi 23 May, 1994

CIRCULAR PROVIDING A GUIDANCE fOR IMPLEMENTATION Of THE DECISION Of THE PRIME MINISTER NO.91/TTG DATED 7 MARCH 1994 ON THE ESTABLISHMENT Of THE PILOT BUSINESS GROUPS

• 1. The selection of a pilot unit
  • 1.1 The ministries functioning the state management mainly in the fields of production, business and service, and the People's Committee of Ho Chi Minh City shall be responsible for the selection of pilot units to be for the formation of groups.

    Those ministries, not having functions in the management in respect of production and business shall not be responsible for the implementation of the above mentioned decision though they have their own business enterprises.

    for instance : The ministries of Defense, Interior, health care, Information and Culture, Education and Culture, Education and Training, labour - Invalid and Social Affairs etc.

  • 1.2. The selected pilot Units : The pilot Units should be considered and selected, on the basic of the key principles of the organization and operation of a group stipulated in Article No.2 of the 91 - TTg decision, among the operating at present unions of Enterprises or corporations (hereafter referred to as Corp.) or leading companies, related to each other by being of the same branches or in the same territorial area, occupying important role in national economy, promising a successful pilot unit. Th e other alternative to be considered is to from a group by merging some corporations, independent accounting business, whether they are under the central branches or the local authorities.
• 2. Procedures for the preparation of pilot alternatives.
  • 2.1. Ministries and the People's Committee of Ho Chi Minh city shall send respective list of the proposed pilot units to the state planing committee, the last will draw up a final list to be submitted to the prime Minister in scheduled time.

    With each proposed lost, there should be an enclosed to the government, analyzing the necessity, background and significance of the selection.

  • 2.2. After considering the proposals of the Ministries and the people's committee of Ho Chi Minh city, the state planning committee will submit the list of selected pilot units the Prime Minister for approval.

  • 2.3. Pursuant to the decision of the Prime Minister, the state bodies which have approved units must set up a preparatory committee for the establishment of the proposed group this committee will prepare the file of each group then submit it to the prime Minister for making decision. (As regards Vietnam oil and gas corp. The preparation should be carried out under the direct conduction of the Director general). At least 50% members of the preparatory committee must be the nominees for the posts in managem ent board of the would be group.

    The application file for the establishment of a pilot group consists of the followings :

    • 2.3.1. Technical - economic justification and operation alternatives of the pilot group. The attention should be paid to some points as follows ;
      • - Objective necessities and favorable conditions for the formation of the pilot group.

      • - Proposed organizing system of the pilot group.

      • - Orientation for operation and the out look of the pilot group after being established.

      • - Advantages, disadvantages and the proposed solutions .
    • 2.3.2. Regulations on the organization and operation of the pilot group : Pursuant to the Article No 2 and No 3 of the 91 - TTg Decision, after consulting the example of relevant regulations of a corporation and subject to the specific features of concre te group to draw up suitable regulations. The Regulations on organization and operation of pilot group must include the main contents as bellows :
      • a. Organization principles ;

      • b. The organization of managing mechanism of the group :
        • + Management board

        • + Governing organ

        • + Control and Inspection committee
      • c. Rights and obligation of managing organ:
        • + Right and obligations of the group

        • + Right and obligations of the group - member enterprises.

        • + Right, obligations and working regime of the management board

        • + Right and obligations of the Director general

        • + Right and obligations of the control and Inspection committee
        As regards the organization and operation of financial companies and accounting regime of the pilot group, the ministry of finance shall give instructions

      • 2.3.3. A Business operation summary of the group (for the corporations to be reorganized and developed in to groups) or a report, summarizing the current situations of the group - member enterprises, made in compliance with the 5th annex attached to the c ircular No 04 - UBKH of the state planning committee dated 5 May 1994 giving guidances for the implementation of the 90 - TTg Decision.
        • - The limit to be considered for the establishment of a group depends on the existing capital of corporation directly in charge, the capital of group - member enterprises and the capital to be joint venture, including :
          • + fixed capital and floating capital allocated or originated from the state budget, shelf - reliant capital and capital, that has not been allocated yet to the above mentioned sources.

          • + Loan from investment bank and foreign borrowed fund, that has already been guaranteed by the state (excluding capital distribution in to joint ventures) and transformed to real estates and properties.
        • - Total capital and debt described in the financial report must be endorsed by the Ministry of finance.
      • 2.3.4. A proposed list of key persons of the group's leadership to be Prime Minister for approval :

      • - The management board :
        • + Chairman

        • + Vice - chairman

        • + Members
      • - The Director general
    • 2.3.5. Before being submitted to the Government, all above documents must be referred to an Evaluating committee at ministry or city levels, which is headed by the minister of chairman of the people's committee respectively. The structure of this committ ee should be similar to that stipulated in the thereunder article 2.4.1.
  • 2.4. Evaluation and submission of pilot alternatives
    • 2.4.1. The Head of the state planning committee in the set up an Evaluation committee as stipulated in the Decree No. 388 - HDBT promulgating the regulations on the establishment and disabandment of the state - owned business enterprises. The committee in cludes the representatives of the ministries of finance, Science - Technology and Environment, labour Invalid and social Affairs, the state Bank, the organization and personal committee of the Government, and the ministries functioning technical - economi c branch concerned. All members of the committee must have a rank of vice - minister of higher. Besides that, the committee is entitled to in invite some high qualified scientists who have good experiences in management to participate in it.

    • 2.4.2. The organization and personal committee of the Government shall consider the list of the group's leaders, then in coordination with the state planning committee submit it to the Minister for his decision.
• 3. Implementation of pilot projects
  • 3.1. The heads of Business Establishment Reform steering committee of ministries having pilot projects and the Ho Chi Minh City people's Committee shall be responsible for direct guidance on the experimental implementation.

  • 3.2. Every quarter, the heads of ministries having pilot projects and the Ho Chi Minh City people's committee should report on the implementing situation to the central Business Establishment Reform steering committee and the state planning committee.
• 4. If any problem arise from the implementation, the ministries, branches and localities should immediately report to the State Planning Committee, the last shall supply more detailed guidances.