Vietnam legal Document pageVietnam legal Document page
Ministry of finance Socialist Republic of Vietnam
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No 75TC/KBNN html----*html----
Hanoi, September 14, 1994
I. General provisions
1. Bond of the government is a kind of loan certificate of the government, issued by the Ministry of finance in some forms as follows:
- Treasury bill: refers to the short term (within 1 year) bond, mobilizing capital to cover temporally shortage of state budget in the current fiscal year.
- The debit balance of immature treasury bills by the end of fiscal year (31 December) shall be carried forward as a loan to cover the shortage of state budget and be paid in the next fiscal year.
- Treasury bond: refers to the long-term (over 1 year) bond, mobilizing capital to cover the shortage of state budget and meet the demand of development approved in budgetary plan.
- Construction bond: refers to long terms bond, mobilizing capital to each concrete profit in accordance with the State investment plan. There are two types of construction bond:
+ Bonds, mobilizing capital to the prefect under central authority, the solvency of which shall be guaranteed by the ministry of finance (central budget).
+ Bonds, mobilizing capital to the project under local authority, the solvency of which shall be guaranteed by the provincial or city people's committee (local budget).
2. Bonds of the government divide into two types registered bond and bearer one:
- Registered bond refers to the bond having the name of establishment, organization or individual (the buyer) noted in bond certificate or registered at the bond issuing body.
- Bearer bond refers to the bond not having the buyer's name noted in bond certificate or registered at the bond issuing body.
3. Bonds of the Government shall be issued in the form of bond certificate or bond registration.
- Bond certificate shall be printed in a sole way throughout the country and in a form, generally established by the Ministry of finance (State Treasury Department) and shall include 2 different kinds:
+ Stamped bond: is the bond with an interest withdrawing stamp, enabling the bond holder to withdraw interest periodically.
+ Non-stamped bond: is the bond without the above mentioned stamp, the interest shall be paid one time when the bond become nature.
- Bond registration is an issuing form, in which the buyer's name shall be registered at the issuing body and the buyer shall be granted with a certificate of bond ownership.
4. Bonds of the government may have, subject to each concrete issue series, various face value whether or not printed in bond or bond certificate, but shall be noted by issuing body in bond certificate (or the certificate of bond ownership) at the request the buyer.
5. Bonds of the government shall be collected and settled in Vietnamese currency (VND). In case the payment for bonds is in gold or in a convertible foreign currency, the bond issuing body shall receive this payment and convert it into Vietnamese currency to make out the receipt. The converting of gold and the foreign currency into VND at the moment of bond issue shall be carried out in the following way:
- In respect to gold: The calculation is on the basic of purchase price, publicized at the moment by the State-run gold and Precious stone company available in the territory of the city and province.
- In respect to foreign currency: The calculation is on the basic of purchase exchange, publicized at the moment by the Vietcombank branch or a state run commercial bank available in the territory of the city and province. In case the value of the convert ed gold and foreign currency is not in coincidence with the face value of the purchased bonds, the matter may be settled in two ways as follows: the buyer may pay the shortage money to get bonds of higher face value or may receive back the surplus given b y the bond issuing body in VND.
6. Bond interest rate.
Bond interest rate, publicized by the Ministry of finance (after having consulted with the State Bank of Vietnam) for each issue series, guarantees that the buyers shall enjoy the initial interest rate plus (+) cost variation index.
Basics for determination of interest rate are:
+ Inflation rate and price fluctuation index, publicized by genera Department of Statistics in each period of time.
+ The term of bonds: Long-term bond shall have higher interest rate compared to the short-term one.
+ Capital mobilizing demand and bond mobilizing capacity.
Mode of interest rate determination is:
+ fixed rate for full term of issue
+ Rate, applied to each year of the term of issue: Interest rate of the year shall be determined and publicized subject to the fluctuation of market prices, the estimated average inflation index as well as the capital mobilizing demand of the year.
+ Guiding rate for an action to select the issue interest rate.
This is a maximum interest rate of bond for the tendering participants to bid. The guiding rate shall be publicized in the notice of imitation to Auction.
7. Objects to purchase bonds of the Government include:
- Vietnamese, overseas Vietnamese, legally living and working in Vietnam foreigners (including foreign tourists and those who are in a short-term mission in Vietnam).
- Vietnamese business enterprises of all fields and sectors of economy, including commercial banks, credit organizations, financial companies, insurance companies, Insurance funds, Investment funds etc.
- Associations and mass organizations shall be entitled to spend their legal funds of all kinds purchasing bonds of the government.
- Business enterprises with foreign investment capital, operating in compliance with the lawn foreign Investment in Vietnam and the ordinance on Banking, shall have to submit to the Ministry of finance (State treasury Department) an application for bond p urchasing, enclosed with a copy of operational licence. Then the letter shall consider and approve the possible sale of Bonds.
8. The buyers shall have a right to select suitable types of bonds with unlimited quality to purchase. Bonds can be sold or bought freely, transferred, inherited or used as a fawn, a mortgage in credit relations.
for registered bonds, the ownership transfer shall be undertaken with no charge at the bond issuing state treasury.
Using bond as a substitute for bank note in circulation and tax payment is forbidden.
9. Printing, distribution and custody of Bond of the government: The Ministry of finance (State Treasury Department) shall be responsible for bond printing and custody as well as for distrusting them to the state treasury branches and sale agents. The del ivery, receipt, transport, custody and management of bond of the Government shall be taken in the same way as for each and other valuable notes.
- All units, individuals who are assigned to issue, settle and manage bond of the government must answer for bond safety, be responsible for physical compensation for any damage or loss caused by them selves in compliance with the valid at present rules a nd, subject to the seriousness of the delinquency, may be punished.
- The bond bolder is responsible for keeping bond in the same way as for money.
+ for the lost registered bond: If the bond owner prove his ownership and the lost bond is not settled in an abusive way, be will receive back bond principal and interest from the state treasury when the bond becomes mature.
+ Being torn, amended, erased, damaged etc., Bond is considered invaluable and unpayable. Any action of making spurious bonds will be finished at Banks in accordance with the laws.
+ The bond owner may preserve his bond Banks or state treasuries, having paid some fee for bond custody as stipulated in point 4, term B, part III of this circular.
II. Detailed provisions
A. The bond issue
1. The issuing of bond of the government is undertaken in series, 7 days prior to each issue, the Ministry of finance (State Treasury Department) shall publicize the contents relevant to this series over the mass media such as: Total volume, term, interes t rate, face value, time and location of the issue, rights of the purchaser and other regulations concerning this issue and the settlement of bond principal and interest.
2. Ministries, branches, people's committees of the provinces and cities intending to issue their construction bonds must satisfy the following conditions:
- Having perfect, listed in the state investment plan.
- Having investment project, approved by the competent administrative body-The ministry in charge (for the project under central authority) or the people's committees at the city or provincial level (for the project under local under central authority) or the people's committees at the city or provincial level (for the project under local authority).
- Having bond issuing alternative, approved by the Ministry of finance, ensuring the reimbursement of invested capital to repay bond principal and interest in due course.
- Having application for bond issue made in generally established form of the Ministry of finance (State Treasury Department) to the submitted to the Ministry of finance.
- Having a body to be in charge for capital management and utilization as well as the reimbursement and repayment of loan, approved by the Ministry of finance.
The above mentioned documents must be submitted to the Ministry of finance (State Treasury Department) 45 days before the tentative date of issue for being considered and making decision on the issuing of construction bond.
3. Mode of the bond issue
3.1. for the treasury bill:
a) To organize an auction (a tender for sale) in compliance with the regulations on bond tender set forth by the Ministry for finance, the Ministry shall, after consulting the central State Bank, decide on: the total issued value, the term, the ceiling in terest rate and the issuing moment of bills. The winning tenderers shall deliver the treasury bills directly to the buyers and enjoy some reduction rate stimulated by the State Bank governor.
b) The branches of State Treasury in the cities, provinces, districts are entitled to rental sale of the treasury bills directly to the buyers.
3.2. for the treasury bond and the construction bond.
a) Direct issue through the system of State Treasuries: the branches of State treasury in the cities, provinces and district shall directly conduct the issuing of the treasury bonds and construction ones, complying the regulations of the Ministry of finan ce and the detailed guidances given by the State Treasury Department as well.
b) Issue through bond sale Agents:
- Bond sale Agents, including commercial banks, financial companies, Insurance companies, credit organizations under central or provincial authority, shall enjoy some commission on bond issue as stipulated by the Ministry of finance in point 1, part B, it em III of this circular.
- Bond sale Agents must satisfy the following requirements:
+ Having the status of juridical person with an operational capital exceeding VND 5 billion.
+ Being an economically effective unit, having a good financial and monetary management.
+ Having submitted to the State Treasury Department or its branches the application for acting as the bond sale agent. Having to make a deposit, equal to 5% the total value of bonds delivered each time of issue.
- The branches of state treasury are entitled to select the agents and sign the contract on bond sale Treasury Department.
- By the end of every working day, the agent must place the receipts from bond sale in the contracting out sate treasury. After the end of each time of issue, the two sides must liquidate the signed contract.
c) Issue in form of a tender: The Ministry of finance shall work out concrete regulations and guidances relating to this mode of issue.
B. Settlement
1. Principal and interest of the Bonds of the Government shall be settled on the following principle:
a) Bond principal will be settled when it is mature.
- Being under special circumstances, the bond owner may ask the sate treasury for bond settlement before the maturity. In this case, after consideration, the state treasury may repay bond principal without interest.
- In case the bond owner does not come to receive the due repayment, he will enjoy an interest rate equal to that of free-term savings deposit; or subject to each concrete series, the Ministry of finance may decide to spend the bond principal purchasing f or him the currently issued series. This purchase is registered at the moment of maturity.
b) Bond interest will be settled in the following modes of payment:
- One time settlement at the moment of issue: This kind of bond is called as the rebate bond. Instead of interest payment, the bond is sold at a price, lower than its face value, the rebate is equivalent to the added up interest.
When it is mature, the bond principal, equal to its face value shall be repaid.
- Periodical settlement: Bond interest shall be paid once for a period of 6 or 12 months subject to each concrete series.
- One time settlement at the moment of maturity. If the bond holder does not come to receive the interest when it is due, the interest shall be reserved and repaid at the request of the bond holder, without adding up to the bond principal.
The Ministry of finance shall have detailed stipulations on the mode of interest payment applied to each concrete issue series.
2. the settlement of Bonds of the government shall be implemented in the following way:
a) for the treasury bill, issued through the State Bank: The Ministry of finance (State Treasury Department) shall transfer to the central State Bank the capital to be repaid for both principal and interest of the mature bills, given directly to the bill holders.
b) for the treasury bills and bonds, directly issued by the state treasuries or the sale agents: The settlement will take place at any treasuries. As regards construction bonds, the payment can only be received from regional or local state treasuries wher e the construction bonds have been issued.
3. The bond owner may send to the state treasury an application for settlement, and attaching to it the bond to request for bond principal and interest to be transferred to an appointed address or bank account. A remittance fee as stipulated in joint 5, i tem B part III of this circular shall be paid by a deduction from the remitted amount.
4. In case that the bond owner a foreigner or an overseas Vietnamese wants to receive bond principal and interest in foreign currency, the conversion of money shall be made in compliance with the state Bank's regulations on foreign exchange trade and Viet nam's foreign exchange controlling regulations as well.
III. Receipts control and the expenses of bond issue and settlement
A. Receipts control and resources of bond repayment.
1. All receipts from the issue of treasury bills and bonds must be collected to the State Treasury Department to be entered into the central budget.
2. The receipts from the sale of construction bonds (at both central and local levels shall be entered into special accounts at the central state treasury Department and its local branches for being controlled and directly allocated to each project in com pliance with the state system of management and allocation of construction investment capital.
3. Resources of bond repayment
- for the treasury bills and bond, Department of State budget shall periodically make necessary procedures for transferring the capital form the central state end get to the central State Bank and branches of State treasury Department to repay the bond ow ners. In case of shortage of budgetary resources, the state treasury is entitled to spend its reserve repaying the bond owners, as an advance given to the state budget in according to the valid at present system.
- for the contraction Bonds: The project owner must periodically transfer the receipts from capital amortization, the profit left after paying lawful taxes and other income resources (to the state treasury Department and its local branches for the central -run projects respectively). In case of shortage, the state treasury shall notify the matter to the Department of State budget or local financial Service for having an advance from Central or local budget to guarantee the payment the advance shall be take n back from the project income later.
B. The expenses:
1. The central state budget shall bear all expenses concerning the issue and settlement of treasuring bills and bonds that include:
a) The expenditure on printing bonds and other printed matters: paid in accordance with the contracts signed with printing bodies.
b) The expenditure on bond issue and settlement: equal to 0.5% the issued turnover, including the agent commission equal to 0.25% the total value of the sold bonds.
2. all expenditures on issuing and paying of the constitution bonds shall be paid by the project owner, accounted into the project cost.
The content and norm of expensed are the same as stipulated in the above mentioned point 1.
3. The expenditures on the issue and settlement of treasuring bills through the state bank shall be calculated with the same norm stipulated in the point 1b, and accounted as a kind of bank transaction expenses, which shall be entered into the balance she et of state budget.
4. fees for bond custody and reservation paid by the bond owners, equal to 0.1% the bond value, for the whole term of issue.
5. The expenditure on repayment remittance to the bond owner shall be equal to the cost of mail transfer (in cash) or the bank commission (in account transfer).
6. The state treasuries, bond sale agents shall be liable for drawing the balance-sheet every month, quarter and year and for every issue series to settle with the Ministry of finance (State Treasury Department), the latter shall be responsible for drawin g up a general balance sheet to settle with the Ministry of finance (the State end get) as follows:
- The receipts from bond issue to be collected to the state budget, the payment for bond principal and interest, the budgetary expenditure that has been paid, the advance through state treasury, the advance given by state treasury, the budgetary capital ( central and local budgets) used to guarantee the payment for construction bonds; the money that has been repaid by enterprises and the unpaid debt to the state budget.
- Total number of issued bonds, the number of damaged, torn, lost bonds, the existing number of bonds, the use of different kinds of printed matters.
IV. Rights and obligations of the bodies which are involved in the issue and settlement of bonds of the government
1. The system of State Treasuries shall have the following obligations:
- Every year, in cooperation with the Department of state Budget, to work out a plan for issuing and settling bonds of the government, that will be entered in the budgetary plan to be submitted to the government and the National Assembly for approval.
- To organize the process of printing, keeping in custody and delivering bond of the government to the issuing units in absolute safe way.
- To sell and settle the bonds of the government in a quick, accurate and convenient to the buyer way, complying with the valid at present regulations.
- To conduct the transaction accounting, the reservation and custody of documents on the issue and settlement of bonds of the government, to keep the state assets safe.
- To collect to the central State budget all receipts from bond sale in an adequate and timely way.
- To collect the receipts from the sale of construction bonds to be allocated directly to the projects in compliance with the state system of management and allocation of construction investment capital.
- To be in good coordination with banking bodies to plan and regulate the each flow in order to ensure a timely and convenient settlement of the mature bonds.
- To fulfill the system of periodical and Signal account at the end of each issue series.
2. The central state Bank shall be responsible for:
- Cooperating with the Ministry of finance in organizing the issue, control and settlement of bonds through banking system.
3. Ministries, branches and localities having the projects for issuing construction bond must:
- Draw up annual plans for issuing construction bond to be submitted to the Ministry of finance and the state Planning Committee.
- Approve the technical-economic justifications of investment projects and the plans for issuing construction bonds, make written proposal to the Ministry of finance for consideration and making decision on bond issue.
- The people's committees of provinces and cities (local budget) shall be answer for the guaranty of local construction bonds.
- Cooperation with the Ministry of finance in controlling, supervising the process of Bond issue and settlement as well as the utilization and reimbursement of investment capital.
- Every year, make a general report on the situation of Bond issue and settlement, the projects which are invested by the bond issue resources and submit it to the Ministry of finance.
4. The Agents shall have the following obligations and rights.
- To act as an agent, selling bonds of the government in accordance with the signed contracts.
- To keep a good management and reservation of Bonds as stipulated by the Ministry of finance.
- To be entitled to sell or buy immature bonds of different kinds at the prices mutually agreed with the bond owner.
V. Implementation
- This circular shall go into effect from the signing date any previously issued regulations which are contrary to this circular shall be repealed.
- Ministers, heads of ministry-ranking bodies and governmental offices, Chairman of the people's Committee of provinces and cities under central authority shall be liable to cooperate with the Ministry of finance to implement this circular.
- Head of the Department of State treasuries, Heads of the related units under the Ministry of finance, Director of local financial services shall be responsible for giving guidances and conducting the implementation of this circular.
for Ministry of finance
Minister
HO TE
(Signed)