Thông tư 89/2011/TT-BTC

CIRCULAR

GUIDING METHOD OF DETERMINING THE FLOOR PRICE OF EXPORT RICE

Pursuant to the Price Ordinance No.40/2002/UBTVQH10 dated April 26, 2002;

Pursuant to the Government's Decree No. 170/2003/ND-CP dated December 25, 2003, detailing implementation of a number of Articles of the Price Ordinance;

Pursuant to the Government's Decree No. 75/2008/ND-CP dated June 09, 2008, on amending and supplementing a number of Government's Decree No. 170/2003/ND-CP dated December 25, 2003, detailing implementation of a number of Articles of the Price Ordinance;

Pursuant to the Government’s Decree No. 109/2010/ND-CP dated November 04, 2010, on trading in rice export; Pursuant to the Government’s Decree No. 118/2008/ND-CP dated November 27, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

The Ministry of Finance guides method of determining the floor price of export rice as follows:

Chapter 1.

GENERAL PROVISIONS

Article 1. Scope of adjustment

This Circular guides method of determining the floor price of export rice as the basis for the Vietnam Food Association to determine and announce the floor price of export rice in each period; for traders in rice export to have grounds for conclusion of contracts and registration for contracts of rice export.

Article 2. Subjects of application

This Circular applies to traders as prescribed in the Commercial Law entitled to trade in rice export as prescribed in the Government’s Decree No. 109/2010/ND-CP dated November 04, 2010, on trading in rice export; agencies, organizations which are responsible for management and control of rice export and other relevant organizations and individuals.

Article 3. Principles of determining the floor price of export rice

1. Conformity with supply and demand relations, change of rice and paddy prices on domestic market (the orientated paddy price already announced, level of purchase price of paddy, rice as domestic goods) and rice prices according to each criterion, grade of rice which are used by traders in rice export for transaction on world’s market.

2. Assurance to calculate rightly and sufficiently costs for trading in export rice which are actual, reasonable, conformable with regulations, assurance of business efficiency of traders in rice export.

Article 4. Interpretation of terms

1. The actual, reasonable and valid costs for trading in export rice are necessary costs which a trader must spend for trading in export of rice which meets defined criteria and grades at a defined time and location, determined on the basis of regulations, policies, the economical-technical norms, cost norms promulgated by competent agencies as prescribed by law and in conformity with the ground of market price.

2. The floor price of export rice means amount in VND and converted to foreign currency (type of foreign currency agreed to use as currency for international payment) according to exchange rate of commercial banks through which traders conduct transactions at time of calculating price to announce the floor price of export rice of a ton rice fallen into ship bottom at export port of Vietnam, in association with each criterion and grade of rice calculated under principles, grounds and methods specified in this Circular.

3. The prime cost of export rice means all actual, reasonable, valid expenses which traders have spent for trading in export rice from stage of purchasing raw materials to finishing finished product rice fallen into ship bottom before transporting rice for sale, calculated in VND and converted into foreign currency at the exchange rate listed by commercial banks through which traders conduct transactions for trading in export rice.

4. Orientated paddy price means the price level for the paddy purchase of traders which is identified, announced and guided implementation as prescribed by law.

5. The rice price on world market identified in this Circular means export rice price of countries which have great export quantity as defined by the Vietnam Food Association.

6. Cost method means method to determine the floor price of export rice based on the average original price of export rice according to each criterion and grade of rice and the average tentative profit level of traders exporting rice.

7. Deduction method means method to define the floor price of export rice based on rice price according to each criterion, grade of rice which are used by Vietnamese traders for transactions on market in countries importing rice with great quantity on the world as defined by the Vietnam Food Association deducted all average cost for traders to put goods from the export port to sale locations for customers buying rice at import port and finish transfer of product ownership of export traders to the import customers (including cost for international unloading and transport, cost for transport insurance, goods insurance such as: Harbor charges, customs charges and taxes, quality examination charges, other costs).

Chapter 2.

METHOD TO CALCULATE THE FLOOR PRICE OF EXPORT RICE

SECTION 1. COST METHOD

Article 5. Grounds to calculate price

1. Based on the average original price of export rice of all criteria, grades of rice of traders exporting rice.

2. The tentative average profit level of the rice export trade

3. Rice export policy and policies related to rice export of state in each period.

Article 6. Method of determining the average floor price for export rice of each criterion and grade of rice

1. Article 6. Method of determining the average export rice floor price of each criterion and grade of rice

2. Defining the average original price for export rice of each criterion and grade of rice

a) The average original price for export rice of each criterion and grade of rice in serve as basis for calculating the floor price of export rice is defined according to the following cost elements:

- If the original price of export rice calculated from method of purchasing paddy and hulling, processing the paddy into export rice, it will be defined according to the below table:

- If the original price of export rice calculated from method of purchasing the preliminary-processed raw material rice for processing into export goods, the original price of export rice is also determined cost elements according to above table, but except costs at section A; just include costs at B and C, and added cost for purchasing rice at warehouse.

- If the original price of export rice calculated from method of purchasing rice which satisfy standard for export from units providing rice for export, the original price of export rice is only included the purchase price of export rice and costs stated in section C of above table.

b. Content of some basic expenses is defined as follows:

b1. Raw material cost means cost for purchasing paddy (or rice) including: purchase price of paddy (or raw material rice) satisfying the export standard and conforming with the domestic price ground of paddy, rice at time of purchase for export and costs serving the export goods purchase; particularly,

- The purchase price provided by traders exporting rice and conforming to the orientated paddy price, which is announced and guided by competent agencies for implementation, conforming to the market price in region.

- Costs for the export goods purchase include: Costs for delivery and receipt, weigh, settlement, other costs for the export goods purchase (if any).

If state has regulations on expenditure policies, regimes and levels, economical-technical norms applicable to these costs, they will be calculated in accordance with such regulations. For types of costs have no regulation of State, norms, expenditure regimes which are promulgated by associations (if any), Boards of Directors, Members' Councils or General Directors (Directors) of enterprises, provided that they are responsible for the accuracy of decisions, will be applied.

For salary cost for a course of trading in export rice calculated according to labor norm and according to the mentioned-above principle multiplied (x) by unit price of salary or wage. Unit price of salary is calculated by basing on the basic salary as prescribed by state; including: Salary, based-salary allowances, based-salary payable amounts (social insurance, medical insurance, fund of Trade Union and unemployment insurance) and other benefits to laborers as prescribed by the Labor Code, law on salary and law on enterprise income tax. Method of formulation, competence of approval and registration of salary unit price will comply with current provisions for the production and business enterprises.

b2. Costs for hulling paddy to become rice:

- If traders self-organize the hulling, costs for hulling the paddy to become rice such as costs for transport, loading, cost for direct laborers, cost for revoking main product, secondary product, and other relevant costs (if any). The principle for calculation of these costs shall comply with guide in item b1, point b, clause 2 Article 6 of this Circular.

- If traders must hire other hulling facilities for hulling and processing rice for them, costs will be calculated according to the actual hire price conforming to the ground of market price at time of hiring as presented on economical contract, record of contract liquidation, invoices, vouchers as prescribed by law.

b3. Cost for polishing rice, cost for rice classification, cost for transport and loading:

The principle for calculation of these costs shall comply with guide applicable to calculation of cost for hulling paddy to become rice at item b2, point b, clause 2 Article 6 of this Circular.

b.4 Costs such as: General production cost, financial cost, sale cost, administration cost, allocation cost in order to include in cost price of product will apply to provisions in Clause 3, Clause 4, Clause 5, Clause 6, Clause 7 Article 10; expenditures not permitted to include in reasonable and valid expenses for defining the cost price of product, provision in Article 11, regulation on pricing of asset, goods and service promulgated together with the Circular No. 154/2010/TT-BTC dated October 01, 2010, of the Ministry of Finance, on promulgating Regulation on the pricing of assets, goods and services will be applied.

b5. Value of secondary product revoked is defined by: Total secondary product revoked in the course of processing the export rice multiplied (x) by sale price of secondary product revoked according to the ground of market price.

3. Tentative profit:

a) Principle to define profit: Based on provision in Article 3 of this Circular, traders will anticipate the profit rate or the profit level which is reasonable, conformable to the average profit rate of sector.

The profit level is calculated by the profit rate (%) on the original price of export rice.

b) Method to define profit:

The maximum tentative profit level is defined by the actual profit rate of entire rice export sector (already audited or settled by agencies competent to approval) at average number per year of three preceding year with time of price calculation.

SECTION II. METHOD OF DEDUCTION

Article 7. Grounds to calculate price

1. Based on the rice price on world market.

2. Based on the average cost for traders to transport rice from export port to locations for sale to customers buying rice at import port (CNF/CIF to a defined port) and complete the transfer of rice ownership of export traders to the import customers.

3. Based on the rice export policy and policies related to rice export of state in each period.

Article 8. Method of determining the average export rice floor price of each criterion and grade of rice

1. The average export rice floor price according to each criterion and grade of rice is defined according to the following formula:

2. Determination of the total costs to transport product from the export port to the import port include the following actual and reasonable costs:

- Cost for international transport and loading and unloading (in case of agreement in which the sale party will bear cost for loading and unloading);

- Charges, fees of harbor;

- Customs charges and fees;

- Costs for product test;

- Other costs (if any).

SECTION III. CONDITIONS FOR APPLICATION OF THE METHODS OF DETERMINING THE FLOOR PRICE FOR RICE EXPORT

Article 9. Conditions for application of the methods of determining the floor price for rice export

1. Based on the expenditure for trading in rice export and based on the world market price, based on export condition according to FOB or CNF/CIF price, traders trading in rice export may select application of either of methods of determination conforming to provisions in section I, section II chapter II of this Circular so as to define the specific price level, ensure implementation in accordance with principles of determining the floor price for export rice prescribed in Article 3 of this Circular.

2. In case where the world market price down lower, traders must calculate to reduce their business costs, not entitled to down the purchase price of paddy, rice of producers not conforming to the orientated paddy price according to guide of competent agencies and the ground of market price, and must comply with measures to stabilize price of paddy, rice in domestic market as prescribed in the Government’s Decree No. 109/2010/ND-CP dated November 04, 2010, on trading in rice export and provisions of relevant law on stabilizing price.

Chapter 3.

IMPLEMENTATION ORGANIZATION

Article 10. Implementation organization

1. The Vietnam Food Association:

Based on provision in this Circular and summing up of reports on results of calculation to determine the floor price for export rice of traders exporting rice, calculation of the floor price for export rice according to each criterion, grade of rice at the general average level of trading in rice export, it shall announce the floor price for export rice at the beginning of crop in conformity with each period serving as basis for traders in signing and registration of contracts of rice export. And it shall notify the Ministry of Finance, the Ministry of Industry and Trade about the floor price already announced and must make detailed explanations about calculation, announcement and change of price. Weekly, it shall notify the purchase price of paddy, price of export rice of all kinds of provinces providing rice goods and quarterly, annually, sum up notices of cost price for export rice of export enterprises and send them to the Ministry of Finance.

2. Traders exporting rice:

Based on provisions in this Circular, traders shall calculate to determine the floor price for export rice of their units and report to the Vietnam Food Association to sum up generally. Quarterly, annually, they shall send reports on cost price of rice export to the Vietnam Food Association to sum up and notify the Ministry of Finance.

Article 11. Effect

This Circular takes effect on August 01, 2011.

In the course of implementation, any arising problems should be reported to the Ministry of Finance for guide and settlement.