Quyết định 843/QD-TTg

DECISION

ON APPROVING THE SCHEME “HANDLING BAD DEBTS OF CREDIT INSTITUTIONS SYSTEM" AND SCHEME “ESTABLISHMENT OF VIETNAM ASSET MANAGEMENT COMPANY FOR CREDIT INSTITUTIONS”

THE PRIME MINISTER

Pursuant to the December 25, 2001 Law on Government organization;

Pursuant to the June 16, 2010 Law on the State bank of Vietnam;

Pursuant to the June 16, 2010 Law on credit institutions;

Pursuant to the Decree No. 53/2013/ND-CP dated May 18, 2013, on establishment, organization and operation of Vietnam Asset Management Company for credit institutions;

Pursuant to Notice and conclusion of the Political Bureau No. 121-TB/TW dated February 20, 2013 on Scheme on handling bad debts of credit institutions system;

Pursuant to the Government’s Resolution No. 02/NQ-CP dated January 07, 2013 on a number of solutions to remove difficulties for business production, market support, solving of bad debts;

At the proposal of The Governor of the State bank of Vietnam,

DECIDES:

Article 1. To approve for the enclosed- this Decision Scheme on “Handling bad debts of credit institutions system" and scheme on “Establishment of Vietnam Asset Management Company for credit institutions” (hereinafter referred to as Scheme).

Article 2. Implementation organization

1. Responsibility of the State bank of Vietnam (hereinafter referred to as the State bank):

a. Assuming the prime responsibility for, and coordinating with relevant Ministries, agencies and People’s Committees of central-affiliated cities and provinces in carrying out solutions to reach target of handling bad debts of the credit institutions system.

b. Promulgating Decision on establishment of Vietnam Asset Management Company for credit institutions, approving its Charter.

c. Assuming the prime responsibility for, and coordinating with the Ministry of Finance and relevant other Ministries and agencies in elaborating and submitting to the Prime Minister in 2013 for approval of plan on handling bad debts of Vietnam Bank for Social Policies.

d. Directing, urging, inspecting, supervising and examining credit institutions and Vietnam Asset Management Company for credit institutions in compliance of provisions of law on handling of bad debts and objectives, solutions mentioned in Schemes.

dd. Assuming the prime responsibility for, and coordinating with the Ministry of Information and Communications, relevant agencies, organizations, People’s Committees of central-affiliated cities and provinces, information and media agencies in popularizing, propagating so as to create the support and uniformity of society, people on roles, signification, objectives, policies and solutions handling bad debts of credit institutions system.

e. For credit institutions deliberately hide bad debts, fail to strictly implement the handling solutions already approved by the Prime Minister and directions of the State bank in the course of handling of bad debts, the State bank may perform one of or several following measures:

- Conducting all-sided inspections and/or require for compulsory audit according contents as requested by the State bank;

- Restraining the expansion of operational scope, scale and area; limiting, terminating, temporarily suspending one or several banking activities; limiting division of dividend and transfer of shares or assets;

- Applying one or several safety rate higher than the set level;

- Requiring the increase of charter capital for meeting requirements on ensuring safety for banking activities;

- Deciding the limit of credit growth for credit institutions in necessary cases to ensure safety for credit institutions and their systems;

- Applying some measures, management sanctions, supervision if necessary;

- Other measures as prescribed by law.

g. Acting as focal agency to coordinate with relevant Ministries and agencies in advising, assisting the Government to regularly monitor, conduct preliminary and final reviews and learn experiences in implementation of Schemes, timely report to the Political Bureau to provide directions for handling of difficulties, problems arising beyond competence of the Government.

h. Implementing tasks, solutions under the state management responsibility assigned at Schemes enclosed with this Decision.

2. Responsibility of the Ministry of Finance:

a. Assuming the prime responsibility for, and coordinating with relevant Ministries, agencies in elaborating and submitting competent agencies for promulation of policies, regulation on tax exemption and reductiong concerning purchase and sale of collateral for handling of bad debts of credit institutions.

b. Assuming the prime responsibility for, and coordinating with the State bank and relevant other Ministries and agencies in elaborating and submitting to the Prime Minister in 2013 for approval of:

- Mechanism and plan on handling of bad debts of the Vietnam Development Bank, bad debts of loans applied to policy subjects, bad debts of state-owned enterprises;

- Plan on issuing the Government’s debt instruments for handling of the Vietnam Development Bank’s bad debts, bad debts of loans applied to policy subjects, bad debts of state-owned enterprises;

c. Assuming the prime responsibility for, and coordinating with relevant Ministries and agencies in elaborating and submitting plan on handling of bad debts of state-owned enterprises to the Prime Minister in 2013, according to Scheme “restructuring of state-owned enterprises, focusing on economic groups and state-owned corporations period 2011 - 2015” already approved by the Prime Minister at the Decision No. 929/QD-TTg dated July 17, 2012.

d. Assuming the prime responsibility for, and coordinating with relevant Ministries and agencies in elaborating and submitting to the Prime Minister in 2013 for promulgation of Decree replacing the Government’s Decree No. 69/2002/ND-CP dated July 12, 2002, on management and handling of outstanding debts for state enterprise toward strengthening duty of the Leader board of enterprises in managing debts, timely handling the arised bad debts and preventing ability of arising new bad debts; enhancing the effective use of state capital, strictly control the investment management of enterprises and system of credit institutions.

e. Implementing tasks, solutions under the state management responsibility assigned at Schemes enclosed with this Decision.

3. Responsibility of the Ministry of Construction:

a. Reviewing, amending and supplementing and completing regulations on urban, construction investment and real estate market management to facilitate for credit institutions, the Vietnam Asset Management Company for credit institutions to fast handle bad debts of system of credit institutions.

b. Implementing tasks, solutions under the state management responsibility assigned at Schemes enclosed with this Decision.

4. Responsibilities of the Ministry of Planning and Investment:

a. Assuming the prime responsibility for, and coordinating with relevant Ministries, agencies and People’s Committees of central-affiliated cities and provinces in studying, proposing to the Government for implementation of measures to accelerate public investment in and expenditure for purposes of sustainable socio-economic development.

b. Assuming the prime responsibility for, and coordinating with relevant Ministries, agencies in reviewing, submitting to competent authorities for amending and supplementing the Law on Enterprise; amending and supplementing and completing documents guiding the Law on Enterprise to facilitate for fast handling of bad debts of credit institutions system.

c. Implementing tasks, solutions under the state management responsibility assigned at Schemes enclosed with this Decision.

5. Responsibility of the Ministry of Justice:

a. Assuming the prime responsibility for, and coordinating with relevant Ministries, agencies in promulgating in 2013 the Joint Circular on handling of collateral to facilitate for fast handing of bad debts of credit institutions system.

b. Assuming the prime responsibility for, and coordinating with relevant Ministries, agencies and People’s Committees of central-affiliated cities and provinces in carrying out solutions to facilitate for fast handing of bad debts of credit institutions system.

c. Implementing tasks, solutions under the state management responsibility assigned at Schemes enclosed with this Decision.

6. Responsibilities of relevant Ministries, agencies and People’s Committees of central-affiliated cities and provinces:

a. Elaborating and carrying out plan on handling of bad debts and specific solutions to remove difficulties for business production, investment promotion, trading, consumption and market development under state management of Ministries, relevant agencies and assigned localities; taking responsibility for effective implementation of solutions on handling bad debts and solutions on removing difficulties for business production, handling of inventory, investment promotion, trading, consumption and real estate market development so as to support handling of bad debts under their assigned functions, tasks and in accordance with law.

b. Coordinating with Public Security agencies, People’s Courts at all levels and the People’s Procuracies at all levels in completely handling lawsuits concerning activities of banks and executing the civil lawsuits so as to facilitate for fast handling of bad debts of credit institutions.

c. Implementing tasks, solutions under the state management responsibility assigned at Schemes enclosed with this Decision.

7. Responsibilities of credit institutions:

a. Strictly complying with law and directions of the Government, the Prime Minister and the State bank concerning the handling of bad debts.

b. Elaborating and carrying out plan on handling of bad debts and increasing the credit quality; on initiative carrying out measures handling bad debts and restraining the increasing of bad debts.

c. Strengthening and enhancing the effective administration and management, especially, the risk control and credit management.

d. Abiding by regulations of the State bank on operational safety, credit extension; implementing classification of debts and the fully deducting and setting up the risk provisions.

e. Periodically reporting result of handling of bad debts at the request of the State bank.

8. Implementation of periodical reports:

a. The State bank shall act as focal agency to periodically report to the Prime Minister before July 01 and December 31 annually about progress, results, difficulties, problems in implementation of Schemes and propose solutions to reach the objective of handling of bad debts of credit institutions system; timely report to the Prime Minister for handling of problems arising beyond its competence.

b. The Ministry of Finance, the Ministry of Construction, the Ministry of Planning and Investment, the Ministry of Justice and relevant agencies and organizations shall periodically send reports to the State bank before June 20 and December 20 annually about result of implementation, difficulties, problems in implementation of Schemes and propose solutions to reach the objective of handling of bad debts of credit institutions system.

c. Relevant Ministries and agencies, People’s Committees of central-affiliated cities and provinces shall be responsible before the Prime Minister for the accuracy of figures and results of implementation of solutions related to handling of bad debts under their report responsibilities.

Article 3. This Decision takes effect on the day of signing.

Article 4. The Governor of the State bank, Ministers, Heads of ministerial-level agencies, Heads of Governmental agencies, the Presidents of the People’s Committees of central-affiliated cities and provinces and Chairperson of Board of Directors and Members' Council, General Directors (Directors) of credit institutions shall implement this Decision.

SCHEME

HANDLING BAD DEBTS OF CREDIT INSTITUTIONS SYSTEM
(Promulgated together with the Decision No. 843/QD-TTg dated May 31, 2013 of the Prime Minister)

A. OBJECTIVES, PRINCIPLES OF HANDLING BAD DEBTS OF CREDIT INSTITUTIONS SYSTEM

I. OBJECTIVES OF HANDLING BAD DEBTS

Handling of bad debts of credit institutions aims to facilitate for credit institutions to expand credit grant at rational rates, contribute in removing difficulties for business production, promote the economic growth and stabilize macro-economy; improve the liquidation and increase the safety, healthy and effective operation of credit institutions, currency market. Striving to handle basically the current bad debts by the end of 2015, control effectively and increase the credit quality so as to contribute in successful implementation of objectives in “Scheme on restructuring the system of credit institutions during 2011 – 2015” promulgated together the Decision No. 254/QD-TTg dated March 01, 2012 of the Prime Minister, concurrently creating a ground for the safe and sustainable development of the credit institutions system till 2020, meeting in a better manner for increasingly increased demand of capital and banking services for the socio-economic development.

II. PRINCIPLES OF HANDLING BAD DEBTS

The first, handling of bad debts must be expeditious, drastic and concurrently must ensure the systematic, synchronism by many measures, put in the overall program restructuring economy.

Second, mobilizating all resources in society for handling of bad debts of credit institutions system and limitting use of budget capital for the handling bad debts of credit institutions.

Third, ensuring the harmonious benefit of State, credit institutions and relevant other parties. Fisrt of all, credit institutions and borrowers must take main responsibility for bad debts arrising and sharing loss in the handling of bad debts.

Fourth, the State shall handle bad debts from providing loans to policy subjects or according to assignments of the Government. For other cases, the State just interven to handle bad debts by budget capital sources in necessary case when must ensure the safety of bank system and the stability of economy. The State shall support and create environmental and favorable conditions for the handling of bad debts of credit institutions essentially through promulgating mechanisms, policies and effective organization and management of the market purchasing and selling debts.

Fifth, handling of bad debts must ensure the publicity, transparency,under the market principle and proper with law; preventing to happen negative matters in the course of handling of bad debts.

Sixth, control bad debts at safe level and not let happening the collapse or breakdown of bank system; solutions on handling of bad debts must attach to the effective prevention, limitation and control of bad debts arising in the future.

III. SCOPE OF HANDLING BAD DEBTS OF SCHEME

Scheme focuses on handling bad debts of Vietnam credit institutions, including bad debts of credit extension, bad debts of purchase of corporate bonds and bad debts of entrusting for credit extension or purchase of corporate bonds. Focus on handling bad debts of credit institutions with rate of bad debts over 3% of total debit balance and bad debts with collateral, of which prioritize the handling of bad debts with real estate as collateral.

B. SOLUTIONS TO HANDLE BAD DEBTS AND PREVENT, LIMIT THE INCREASING OF BAD DEBTS IN THE FUTURE

I. CREDIT INSTITUTIONS PROACTIVELY HANDLING OF BAD DEBTS

Credit institutions on initiative and positively carry out the following solutions:

1. Re-assessing quality and ability of debt recovery so as to have suitable handling measures

Credit institutions must review, assess, classify all amounts of credit extension, investment in corporate bonds, entrusting investment according to the risk level.

2. Strengthening the deduction and setting up of risk provision for handling of bad debts.

On the basis of reviewing, reassessing amounts of credit extension, investment in corporate bonds, entrusting for investment, credit institutions proactively classify debts, make accounting properly with nature of bad debts, deduct, set up and use risk provisions for handling of bad debts as prescribed by law, of which, bad debts without collateral are prioritized, borrowers that are not existing and bad debts of group 5.

3. Continuing restructuring debts

Credit institutions proactively coordinate with borrowers to restructure debts (prolonging time limit of debt payment, adjusting term of debt payment) and consider reasonable reduction and exemption of interest rate for clients have good prospects after restructuring debts in order to temporarily reduce financial difficulties for clients and improve business efficiency, creating new revenue sources for debt payment to credit institutions.

4. Further supporting the capital for clients to overcome difficulties and recover

Credit institutions further invest, lend, guarantee to clients having bad debts due to temporary difficulties but having prospects for good recovery and development. For projects, investment works unfinished or going to be finished and having ability to promote economy efficiency, credit institutions further lend, invest for completion and putting into exploitation or sale for debt recovery.

5. Supplementing, completing legal dossier of collateral

Reviewing, reassessing collateral and make agreements with clients to supplement legal collateral; coordinating with clients and relevant agencies and organizations to complete legal record for loans, collateral that has not yet completed legal record.

6. Recovering debts and handling collateral

Credit institutions proactively expedite, recover debts, handle collateral; sell bad debts to Asset Management Companies, debt trading companies and other organizations, individuals.

7. Transfering debts into capital

Credit institutions change bad debts into contribution capital, share of debt enterprises at credit institutions, and participate in restructuring enterprises.

8. Selling bad debts to the Debt and Assest Trading Company (DATC) of the Ministry of Finance.

The State-owned commercial banks shall sale bad debts of State-owned enterprises to DATC for handling in the course of arranging, restructuring the State-owned enterprises. Credit institutions proactively carry out solutions for handling of bad debts of the State-owned enterprises according to plans approved by the Prime Minister.

9. Strictly control and reduce operational expenses

Credit institutions shall review, apply measures to reduce maximally expenses for labor, administration, advertisement, promotion and other operational expenses, and strengthen the setting up of risk provisions so as to create source for handling of bad debts. Credit institutions that have not yet set up risk provisions as prescribed by law will not be permitted to conduct division of dividends, profit as well as increase wages, rewards, remuneration for their officials.

Credit institutions must review, restructure organization of apparatus and the domestic and foreign network system toward simplification and effectiveness. Determinedly implement closure of office, operational termination, merger, dissolution of the ineffective attached units, branches, transaction offices and business operations. Quitting investment at ineffective enterprises and business organizations.

10. Limiting bad debts that may arise in the future

To enhance capability of administration, management, internal control and audit system; develop the risk management system and business strategies, policies, processes, procedures for credit extension under healthy and cautious direction; regularly pat attention to develop and effectively manage banks' staff, especially improve capability of assessment, credit appraisal and enhance professional qualifications, political ideology and professional ethics of banks’ staff. To strengthen the transparency in operation of credit institutions; thoroughly handle the overlapped owning among credit institutions and matter on group benefit in credit institutions; to increase the mass nature of credit institutions, to increase quantity and diversify shareholders and contributing-capital members of credit institutions.

II. SOLUTIONS APPLIED TO BORROWERS OF CREDIT INSTITUTIONS

1. The borrowers must, by themselves, consolidate, correct the activities, improve the financial and management capability, strengthen the technological application and competition; on initiative and proactively coordinate with credit institutions in elaborating and carrying out plans on restructuring debts, removing difficulties for business production; proactively develop market of goods consumption, push up export; on initiative participate in programs, solutions on enterprise support that are carried out by Ministries, sectors and localities.

2. Enterprises should pay attention to replacement of imported input elements by the raw materials available in country, strengthen use of domestic goods and services.

3. The State enterprises, economic groups and State-owned corporations proactively and positively propose and carry out plan on restructuring in accordance with the Prime Minister's Decision No. 929/QD-TTg dated July 17, 2012 on approval of Scheme "Restructuring of state-owned enterprises, focusing on economic groups and state-owned corporations period 2011 – 2015”, in which focus on making the finance to be more healthy and handling of bad debts.

III. SOLUTIONS ON MECHANISM, POLICY

1. Mechanisms and policies of monetary and credit and banking

a. The State bank shall check, supervise strictly the restructuring debts of credit institutions with the aim to limit the incorrect report of credit quality and proactively terminate implementation of the Decision No. 780/QD-NHNN dated April 23, 2012 of the Governor of State bank, on classification of loans rescheduled payment term at appropriate time.

b. The State bank shall direct credit institutions in expense retrenchment, proactively classifying debts, setting up and using provisions for handling of bad debts through use of risk provisions, debt sale, handling of collateral, concurrently supervise, tightly inspect business results and profit distribution of credit institutions.

c. The State bank shall operate flexible, tight and cautious monetary policy and supply amounts in line with target of restraining inflation, stabilize macro-economy, continue lowering the ground of interest rate in line with the inflation reduction level,concurrently ensure liquidity of the bank system, facilitate for credit institutions to reasonably grow credit. The State bank shall coordinate with Ministries, sectors and localities in proactively elaborating, carrying out the credit program reasonably supporting for business production, production, investment and consumption promotion. Beside that, the State bank shall direct credit institutions in further accelerating the administrative procedure reform, simplifying of loan procedures, saving the expenses by reducing the loaning interest rates so as to support for the credit growth of economy.

d. The State bank shall issue policies, measures to support the credit growth and remove difficulties for business production, especially in real estate, agriculture and rural field, export and auxiliary industry, and small and medium-sized enterprises.

dd. The State bank shall revise and complete regulations on safety for banking operation with the aim to control, limit risks for credit institutions including regulations on safe rates; regulations on purchase of corporate bonds, credit extension; regulations on entrusting operation.

e. Accelerating and ensuring the effectiveness in restructuring of credit institutions, drastically handling credit institutions that operate weakly, fairly and ineffectively on the basis of synchronously carrying out solutions of restructuring system of credit institutions as stated in Scheme “Restructuring the system of credit institutions during 2011 – 2015” promulgated together with the Decision No. 254/QD-TTg dated March 01, 2012 of the Prime Minister.

2. Groups of solutions on solving inventory, removing difficulties for enterprises, pushing up development of business production; development of real estate market.

a. Groups of solutions on solving inventory, market and investment support

- Ministries, sectors and localities should drastically carry out solutions on removing difficulties for business production and market support, reduction of inventory quantity, pushing up the goods consumption, promotion of domestic investment and consumption, particularly:

+ The Ministry of Planning and Investment shall coordinate with other Ministries, sectors and localities in further accelerating implementation and disbursement for projects using capital from the State budget, capital of national target program, capital of Goverment bonds already allocated for projects and capital permitted to advance of the annual plan. Focus on investment in projects creating a large pervasive power, projects using many domestic input elements. Accelerating implementation and disbursement for investment programs and projects using budget capital under the Program on building new rural areas, social houses, dormitory for students, pupils, investing on solidification of canals and the rural infrastructure development. Carrying out synchronous measures on mobilization and disbursement of official development assistance (ODA) capital, foreign direct investment (FDI) capital, in which pay attention to attract new investment waves with huge scale and high technology. Pushing up education and supply of human resource at the request of enterprises; fast carry out the cooperation with foreign enterprises about human source and technology transfer. Further improving procedures for investment, deleting the investment barriers, create favorable infrastructure and accelerate the ground clearance, defining clearly and enhancing responsibility for appraisal prior disbursement and supervision post disbursement so as to ensure that projects performed and further performed are feasible, effective. Tightly inspecting the plan implementation of owners, overcoming delay situation in completing procedures for investment, biding, hand-over test and capital payment. The Ministry of Planning and Investment shall research and propose to the Government for measures to stimulate demands through stepping up investment and public expenditure for purposes of sustainable socio-economic development;

+ The Ministry of Industry and Trade shall assume the prime responsibility for, and coordinate with relevant agencies and organizations in carrying out synchronous and effective solutions to promote trade, step up export; organizing, managing and developing effectively the domestic goods consumption market; carrying out measures to support enterprises promoting sale of goods produced domestically on the domestic market, bringing goods to rural areas, encouraging enterprises for linkage in consuming products produced domestically; stepping up the campaign “Vietnamese persons prioritize for use of goods made in Vietnam”. Accelerating the approval and implementation of programs on foreign trading promotion, signing commercial treaties with partners Catching up and updating market conditions, timely supplementing the effective schemes, elaborating plan on additional support, in which concentrate on expanding potential markets and submit to competent authorities for decision;

+ Ministries, sectors (Industry and Trade, Agriculture and Rural Development, etc) shall assume the prime responsibility for, and coordinate with agencies, localities and professional associations in analysing, assessing the actual operation and inventory of sectors, fields, localities so as to elaborate and carry out appropriate programs and solutions to remove difficulties for business production, reduce inventory and support credit through the agriculture and rural areas loan programs. programs on loans for livestock and aquaculture support; proactively carry out programs on linking among investment – production – banking credit and consumption so that the bank credit capital may meet effectively the economy’s loan demands, stimulate production, business, consumption, export, releasing inventory and removing difficulties for enterprises of all fields, sectors.

- The Ministry of Finance shall assume the prime responsibility for, and coordinate with Ministries, sectors and localities in implementing the following solutions:

+ To focus on stepping up disbursement of investment capital from budget, capital of Government bonds, ODA counterpart funds for projects on socio-economic infrastructure, especially in electricity, traffic, advance funds of annual plan so as to contribute in stimulating the increase of total domestic demand. To carry out measures to raise revenue of budget, combat the revenue loss of budget, to raise effectiveness of budget expenditure and raise budget expenditure for infrastructure development on the basis of reducing expenditure for unneccessary branches and fields;

+ Prolonging time limit of paying VAT, EIT for medium and small-size enterprises; enterprises of investment and business in (sale, lease, purchase lease) of dwelling house; enterprises producing iron, steel, cement, brick, tile; intensive-labor enterprises in production, processing goods, agricultural products, forestry products, aquatic products, textile and garment, leather and shoes, electronic components, construction of socio-economic infrastructural constructions;

+ Reducing 50% of land rents in 2013, 2013 for economic organizations, households and individuals that are rented land by State and the payable land rents as prescribed in the Government’s Decree No. 121/2010/ND-CP dated December 30, 2010 increase to twice in comparison with the payable level in 2010 (according to the policy of collecting land rents before the effective day of the Decree No. 121/2010/ND-CP) In case where land rents after being reduced are still more than twice in comparison with payable land rents of 2010, they will be further reduced land rents till the level equal to twice payable land rents in 2010. Amending and supplementing regulations guiding on procedures for reduction of land rents in more simply and favourable direction for implementation;

+ To permit the investors of projects that State have handed over land but they have not yet finished the obligations on paying land use levy due to financial difficulties, to be entitled to pay land use levy according to the payment schedule of goods sale amounts within 24 months from the day of having the tax agencies’ notices about paying land use levy.

On the basis of balance capacity of local budget, People’s Committees of central-affiliated cities and provinces shall consider, decide the specific prolonged time limit of paying the land use levy for each project after reporting the Standing Committee of People’s Councils at the same level;

+ Researching and submitting competent agencies for consideration and decision: (i) To apply EIT rate of 20% from July 01, 2013 (earlier than 06 months in comparison with the tentative roadmap on implementation of Law on amending and supplementing a number of articles of Law on EIT) for small and medium-size enterprises; (ii) to apply the EIT rate of 10% from July 01, 2013 (earlier than 06 months in comparison with the tentative roadmap on implementation of Law on amending and supplementing a number of articles of Law on EIT) for incomes from investment and business in social houses. Social houses are defined as prescribed by law on houses; (iii) To reduce 50% of the output VAT from July 01, 2013 till the end of June 30, 2014 for activities of social house investment and business; (iv) To reduce 30% of the output VAT from July 01, 2013 till the end of June 30, 2014 for investment and business activities (sale, lease, purchase lease) of houses being apartment with floor area of less than 70 m2 and sale price of less than 15 million dong/ m2; (v) to supplement preferential tax for expansion investment in preferential fields, trades and areas as prescribed by the Law on Enterprise income tax exercised from July 01, 2013 (earlier than 06 months in comparison with the tentative roadmap on implementing the Law on amending and supplementing a number of articles of by the Law on Enterprise income tax). Duration for tax exemption and reduction applied to expansion investment shall be equal to duration of tax exemption and reduction applied to enterprises newly established in the same areas, fields prioritized enterprise income tax;

- Ministries, sectors and localities implement drastically the Directive No. 27/CT-TTg dated October 10, 2012 of the Prime Minister, on key solutions to overcome arrears in capital construction at localities, in which: Localities must review, classify works, projects and arrears; elaborate plans and roadmaps so as to completely handle all arrears in capital construction till 2015 by budget funds and other funds; must prioritize to allocate funds for handling arrears in plan on allocating investment capital from budget so as to ensure that at least 30% of arrears in capital construction may be handled every year. To focus on mobilization of all capital sources in order to handle fast arrears in capital construction and early finish the facilities about to finish and put into use, concurrently drastically terminate or transfer ineffective investment projects. Amounts to pay arrears in capital construction must be prioritized to pay overdue debts to banks after having already paid full wage for officials.

n. Groups of solutions on real estate market development

- Groups of solutions adjusting the supply source for real estate market:

+ The Ministry of Construction shall assume the prime responsibility for, and coordinate with agencies, organizations and localities in implementing the following solutions:

(i) To review, handle projects on urban development, dwelling house development that are carring out and that are assigned projects but not yet been carried so as to classify projects to be continue developing, projects have to adjust structure, type of dwelling houses for conformity with the market’s demand and social resources;

For projects assigned to investors but not yet finished clearance and not in line with local development plan, they shall be stopped implementation; only projects on development of social houses, houses for resettlement serving demand on houses for resettlement, facilities for National defense and security, national benefits, public benefits in localities may be considered for continuing implementation; for projects have been or being implemented ground clearance but not suitable with demand and local plans on socio-economic development, investors may be permitted to organize temporary production and business, not let land vacant and they may be continued investment only when being permitted by competent authorities; for projects on trading house development that have finished the ground clearance but the house construction works have not yet carried out, they are permitted to adjust planning so as to increase proportion of social houses serving the poors, persons with low incomes, houses for cadres, civil servants, workers and armed forces; restructuring houses in projects for conformity with the market’s demand; for the house construction works that have been finished but not yet been able to sell because they are not suitable with market's demand, depended on each area, they are permitted to adjust the structure of apartment for conformity with demand and solvency of majority of purchasers.

It is permitted to change projects on trade houses to social houses so as to lease or purchase lease for policy subjects: Persons with low income, cadres, civil servants, public employees, armed forces, workers, students and labors in service facilities such as hospitals, schools, hotels, trading services having need but they must be suitable with planning and conditions of infrastructure. In case these persons subject to exemption, reduction of land use levy as prescribed by law, they shall be deducted amounts that they must pay to budget or budget may return the land use levy already paid.

(ii) To guide and support the real estate enterprises in proactively adjust the business operation, restructuring enterprises for conformity through measures on reducing sale price, adjusting structure of goods in line with the affordability of market, applying methods of flexible sale, encouraging the change for type of lease, purchase lease; change for social houses, use properly with purpose of loans and amounts mobilized from clients, implement publicity, transparency, properly with commitments of schedule, create confidence for clients;

(iii) To shorten duration of appraisal and approval of master plans, especially, fast solve procedures that allow structure adjustment of projects that are in inventory status, unfinished construction for conformity with market demand, procedures for change from projects on trading house to social houses;

(iv) To further complete the system of legal documents on urban management, housing development, real estate business in direction of strengthening state management, effective control of planning, plans on land use, construction planning, plans on housing development, real estate price to ensure the supply and demand balance, in line with plan on socio-economic development of each locality, the market’s demand;

(v) To implement the national Strategy on housing development by 2020 and a vision till 2030 already approved by the Prime Minister.

+ The Ministry of Natural Resources and Environment shall assume the prime responsibility for, and coordinate with the Ministry of Construction and relevant agencies in promulgating documents guiding processes, overall methods of recovering land, projects not eligible to continue investment so as to have legal grounds in unified management nationwide; further complete the system of legal documents on land.

- Groups of solutions supplying the output for real estate market:

+ The Government and People’s Committees at all levels may consider to purchase some types of facilities, real estate that are being mortgaged for loans at banks and prepared for completion or have finished but not able to sell so as to serve for purpose of social security and activities of state agencies;

+ Localities that have a big inventory quantity of real estate products shall limit maximally use of capital for investment and construction of new houses for resettlement; shall use those capital sources for purchasing the suitable projects on trading house in serve of demand on resettlement, use as social houses for lease, purchase lease to policy subjects, persons with low incomes, cadres, civil servants, public employees, armed forces, workers and employees;

+ The Ministry of Construction shall assume the prime responsibility for, and coordinate with other Ministries, relevant sectors and localities in permitting enterprises doing business in real estate to pay the land use levy under the progress of housing sale and lease; fast solving procedures to remove difficulties for enterprises, restructuring, changing purpose of projects; having mechanisms, incentive policies for real estate projects, especially, for social housing projects that use essentially the domestic raw materials; to make final review of the Resolution No. 19/2008/NQ-QH12 dated June 03, 2008 of the National Assembly on pilot permission for foreign organizations and individuals to purchase and own residential houses in Vietnam; studying and proposing to the Government so as to report to the National Assembly for consideration and decision on expanding subjects and conditions of purchase and owning residential houses of the foreign organizations and individuals in Vietnam;

- Groups of credit solutions for the real estate market:

The State bank shall direct credit institutions in implementing the following solutions:

+ To further expand credit for real estate field at rational level,in line with the financial capacity of credit institutions and solutions on monetary and credit management of the State bank, in which prioritize to focus on loans to projects on real estate prepared to finish, projects on social house development for persons with low incomes, laborers in industrial zones and other policy subjects at the rational rates and not count the rate of this debt balance in the restricted total debt balance of loans to real estate; to promulgate the loaning criteria for various real estate, limit the credit concentration so much for projects on real estate, high-grade houses; to direct credit institutions to have packs of long-term credit products at reasonable rate serving households, individuals to borrow for purchase of residential houses, especially subjects with low incomes, difficulties in housing matter (such as persons with low incomes in urban areas, cadres, civil servants, public employees and armed forces) to be mortgaged by the houses going to purchase; to direct the State commercial banks to save a reasonable quantity of capital (at least about 3% of total debt outstanding of state commercial banks) so as to provide loans to persons with low incomes, cadres, civil servants, public employees and armed forces for lease or purchase lease of social houses and purchase of trading houses with area of less than 70 m2, sale price less than 15 million VND/m2 at a rational interest rate, term of debt payment in line with solvency of clients and provide loans to enterprises constructing social houses, enterprises changing utility of investment projects into projects on social houses at a rational interest rate and term of debt payment in line with term of fund source and solvency of clients. The State bank spends between 20 and 40 thousand billion VND through refinancing at a rational interest rate and the maximum duration of 10 years, depend on subjects using loans to support the State commercial banks in providing loans to the subjects mentioned above. To coordinate with the Ministry of Construction in guiding, implementing regulation on loans to the above subjects so as to ensure the effective use in proper with purpose of these credit grants.

+ To review, accelerate approval of credit extension for projects on production and business that are effective and have high ability to recover capital, and proactively handle, submit to competent agencies for decision on credit extension over the permitted limit for the national key projects, projects serving socio-economic development;

+ To review, assess the solvency of borrowers including enterprises doing business in real estate so as to restructure debts for conformity; for clients having plans on investment and business that are feasible and able to sell products, credit institutions may consider to restructure debts and futher supply loans to serve production.

- Groups of solutions on financial policies for the real estate market:

+ The Ministry of Construction shall assume the prime responsibility for, and coordinate with the relevant Ministries, agencies and organizations in studying and establishing of funds saving houses, funds on real estate investment, agencies re-lending by mortgaging the houses, creating chanel mobilizing the long-term capitals for real estate market; promulgate regulations for foreign investment projects that must finish works under a definite rate of foreign capital resource before mobilizing capital from domestic organizations and individuals for investment;

+ The Ministry of Transport shall assume the prime responsibility for, and coordinate with the Ministry of Finance and the Ministry of Planning and Investment in building plans on issuing bonds guaranteed by the Government for investment in expansion of national highways 1A and 14 according to the Resolution of the National Assembly and Law on Public Debt Management.

c. Group of solutions supporting the handling of bad debts

- The Ministry of Finance shall assume the prime responsibility for, and coordinate with Ministries, sectors and localities in implementing the following solutions:

+ To review, revise and complete regulations on procedures for and conditions of guarantee and have solutions to increase the scale and effectiveness of activities of the guarantee Fund for medium and small-size enterprises to borrow capital from banks. To strengthen the effective management of guarantee supply of the Government with the aim to minimize risk, ensure solvency and maintain the safe limits of national debts. The Ministry of Finance shall complete the mechanism of credit guarantee for medium and small –size enterprises through the system of the Vietnam Development Bank and local credit guarantee Funds, in which focus on the following solutions: (i) To use VND 250 billion from the Support Fund for arrangement and development of enterprises to grant additionally the Fund for guarantee provision at the Vietnam Development Bank. To implement re-assessment on capacity and scale of credit guarantee of the Vietnam Development Bank so as to define the capital demand suitably; and assign the Ministry of Planning and Investment to balance from expenditure source for development investment in some following years in order to supply capital to the credit guarantee fund at the Vietnam Development Bank; (ii) To strengthen the financial resource for the local credit guarantee funds from the sources: Amounts collected from equitization and not yet remitted to the Central, local budget so as to grant additionally the charter capital for the local credit guarantee funds; (iii) To consider, revise reduction of the loaning interest rates of investment and export credits in line with the ground of market interest rates;

+ To submit to competent agencies for promulgation of policies, regulations on tax exemption and reduction of purchase and sale of collateral of credit institutions so as to handle bad debts of credit institutions; to carry out synchronously and effectively solutions on tax reduction and exemption, prolong time limit of tax payment under the Government’s Resolution No. 13/NQ-CP dated May 10, 2012;

+ To complete the legal frame for forming, developing and managing the market of debt purchase and sale. To complete the financial regulations on merger, consolidation, acquisition, equitization, remission of debts, restructure of debts, change of debts into equity capital for enterprises. To promulgate list of companies of price appraisal, accounting and audit companies eligible to participate in the process of handling bad debts so as to define the market value of enterprises, assets and bad debts;

+ To develop the capital market, to unfreeze capital flows to invest in capital market, to raise liquidity for market; to encourage development of bond market, especially corporate bonds, to reduce the enterprises' dependence on the credit capital sources of banks;

+ To complete the operational model of State Capital Investment Corporation (SCIC) and DATC with the aim to raise role and operational effectiveness of these organizations in handling of backlog bad debts and assets of State enterprises, groups and corporations. To enhance the professional qualification, the financial resource and operational scale of DATC in handling of bad debts and backlog of state enterprises subject to re-arrangement, restructuring. To use the amounts collected from equitization in order to supplement capability for DATC to facilitate for DATC to proactively participate in the course of restructuring finance, handling of bad debts of state enterprises, economic groups, state corporations and credit institutions;

+ To direct the Vietnam Development Bank: (i) To provide loans to enterprises having demand for borrowing capital to purchase aquatic feed serving export under the mechanism on borrowing the export credit capital of State; (ii) To consider to prolong time to borrow investment credit capital of State from 12 years up to 15 years maximally (total loaning time is 15 years maximally) for some projects on economic infrastructure with a big investment scale and meeting difficulties in fields of electric production, clean water provision, cement, steel, environment; (iii) To consider to prolong the maximum loaning duration from 12 months up to 36 months (total the maximum loaning duration is 36 months) for export credit loans of State for groups of export vegetables and fruits, aquatic products; (iv) To supplement maximally 10 thousand billion VND (including 5 thousand billion VND in the limit of capital mobilization of the Vietnam Development Bank in 2013 that have been allocated by the Prime Minister at the Decision No. 1788/QD-TTg dated November 29, 2012 and issuing additionally 5 thousand billion VND bonds guaranteed by the Government outside of the limit of guarantee for the Vietnam Development Bank in 2013) applied to the credit programs on investment in solidification of canals, development of rural roads, infrastructure for aquaculture and rural professional villages, not fall in the annual fund of 5 thousand billion VND already approved by the the Prime Minister at the official dispatch No. 1589/TTg-KTTH dated October 03, 2012. To expand subjects of loans to be construction works of concreting bridge, rural roads (including inter-commune roads, inter-district roads).

- The Ministry of Planning and Investment shall assuming the prime responsibility for, and coordinating with relevant Ministries and agencies in reviewing, submitting to competent authorities for amending and supplementing the Law on Enterprise; amending and supplementing and completing documents guiding the Law on Enterprise, especially, regulations related to establishment and management of enterprises so as to ensure transparency and effectiveness, avoid the some subjects's misusing which due to the easy mechanism on enterprise establishment and ineffective state management, they may implement acts violating law, causing loss for credit institutions in credit relation;

- In 2013, the Ministry of Justice shall expeditiously coordinate with Ministries, sectors to promulgate the Joint Circular on handling of collateral in direction which permit credit institutions to proactively sell, put in sale and handle collateral under agreements with customers. The relevant agencies, organizations shall base on agreement of relevant parties to shortcut procedures for handling of collateral, accelerate handling of bad debts; amend and supplement and complete regulations on sale, handling of collateral so as to help banks handling collateral, recover debts fastly and conveniently; to renew, improve effectiveness of civil enforcement to protect the debt owner’s right of credit institutions and assist credit institutions to recover asset in earliest time;

- Ministries, agencies, organizations shall tightly coordinate with Public Security agencies and Courts accelerate and completely handle lawsuit related to banking activities and execute civil judgements so as to facilitate for credit institutions to recover debts, reduce bad debts and facilitate for credit expansion for the economy. To limit criminalization of economic activities in the banking field; prioritize to apply the handling measures on economy and civil aspects so as to overcome consequences and recover maximally money and assets for banks. To detect and handle strictly according to law cases of intentionally delay for debt payment to bank, intentionally act contrary to regulations and cause serious damages to banks;

- Ministries, sectors and localities shall carry out the following solutions:

+ To support credit institutions in completing the legal records relating to collateral of loans so as to able to recover assets and to early handle bad debts of credit institutions;

+ Drastically and synchronously carry out solutions to restructure credit institutions, securities market and state enterprises according to Scheme on “Restructuring system of credit institutions during 2011-2015”, Scheme on “Restructuring securities market and insurance enterprises”, Scheme on “Restructuring state enterprises, the center is economic groups, state corporations during 2011 - 2015”, the overall Scheme on “Restructuring economy in association with change of the growth model in direction of increasing quality, effectiveness and competition capability during 2013-2020” already approved by the Prime Minister; proactively carry out synchronous solutions on arrangement, renewal and restructuring of state enterprises, economic groups and state corporations in association with the handling of bad debts and make finance of state enterprises more healthy; to strictly combine solutions making finance of state enterprises more healthy with handling bad debts of credit institutions;

+ People’s Committees of central-affiliated cities and provinces shall strengthen to catch up activities of credit guarantee in their localities and have timely solutions to remove difficulties so that agencies may implement in accordance with laws.

IV. SOLUTIONS ON INSPECTION AND SUPPERVISION

The State bank shall strengthen inspection, supervision of credit institutions in implementation of regulations on credit extension, safe operation and classification of debts, setting up of risk provision; inspect, examine and strictly supervise credit institutions, The Vietnam Asset Management Company for credit institutions in compliance of law and objectives, solutions stated in Schemes; proactively renew organization and activities of banking inspection and supervision in line with international practices and standards; raise capacity of warning, preventing and handling risks in banking operation; implement by them selves or coordinate with functional agencies in detecting and strictly handling acts violating law in banking operation. To promulgate mechanisms, regulations, guide credit institutions in handling completely the overlapping owning among credit institutions and raise the transparency in activities of credit institutions; carry out measures to ensure that credit institutions are not entitled to contribute capital, buy share of enterprises and orther credit institutions which are shareholders, members contributing capital of those credit institutions.

To further complete the legal framework on management, inspection, supervision in monetary, banking, securities, insurance and state enterprises.

Ministries, sectors and localities shall step up the inspection, supervision of activities of enterprises, especially, state enterprises, state groups and corporations; strengthen effectiveness of management, inspection, supervision of real estate market, capital market, monetary market, urban planning and development.

V. ESTABLISHMENT OF THE VIETNAM ASSET MANAGEMENT COMPANY FOR CREDIT INSTITUTIONS IN ACCORDANCE WITH THE SCHEME ALREADY APPROVED BY THE PRIME MINISTER

The Vietnam Asset Management Company for credit institutions is a typical enterprise of which 100% of charter capital is owned by State and it subject to the direct management and supervision of the State bank. The Vietnam Asset Management Company for credit institutions is established as a special instrument of State with the aim to contribute in fast handling bad debts, make finance of credit institutions more healthy, minimize risks for credit institutions, enterprises and promote the reasonable credit growth for the economy.

The Vietnam Asset Management Company for credit institutions is established, organized and operates in accordance with regulations of the Government and relevant law.

SCHEME

ESTABLISHMENT OF VIETNAM ASSET MANAGEMENT COMPANY
(Issued together with Decision No. 843/QD-TTg dated May 31, 2013 of the Prime Minister)

A. LEGAL GROUNDS FOR ESTABLISHMENT OF VIETNAM ASSET MANAGEMENT COMPANY

The Vietnam Asset Management Company is established and operating under the Law on the State Bank, Corporate Law and Decree No.53/2013/ND-CP dated of May 18, 2013 of the Government on the establishment, organization and operation of the Vietnam Asset Management Company.

Governor of the State Bank of Vietnam issues the Decision to establish the Vietnam Asset Management Company, and approves the Charter and contents modifying and supplementing the Charter of the Vietnam Asset Management Company.

B. ESTABLISHMENT OF VIETNAM ASSET MANAGEMENT COMPANY

I. COMPANY NAME

Vietnam Asset Management Company

II. LEGAL STATUS

The Vietnam Asset Management Company (hereafter referred to as Asset Management Company) is a particular enterprise with 100% State-owned charter capital, subject to the state management, direct inspection and monitoring from the State Bank of Vietnam (hereinafter referred to as the State Bank).

The Vietnam Asset Management Company has its head office in Hanoi, legal status and private seal, independent accounting, and may open its account at the State Treasury and commercial banks as prescribed by law.

III. OBJECTIVES AND PRINCIPLES OF OPERATION OF VIETNAM ASSET MANAGEMENT COMPANY

The Vietnam Asset Management Company is established as a special tool of the State to contribute to quick processing of bad debt, financial health, risk mitigation for credit institutions and enterprises and boost of reasonable growth of credit to the economy.

The Vietnam Asset Management Company operates under principles of self-financing cost, not for profit, public, transparent; minimizing risks and costs in handling of bad debts.

IV. MAIN OPERATION OF VIETNAM ASSET MANAGEMENT COMPANY

The Vietnam Asset Management Company has a number of main activities:

1. Purchasing bad debts of credit institutions.

2. Recovering, collecting, processing, and selling debts and collateral.

3. Restructuring debts, adjusting conditions for debt repayment, converting debts into contributed capital of the borrower.

4. Investing, repairing, upgrading, operating, using and leasing collateral whose debts are collected by the Vietnam Asset Management Company.

5. Managing the bad debts bought and examining and monitoring the collateral related to the bad debts including documents and records related to the bad debts and loan security.

6. Consulting, mediating sale and purchase of debt and assets.

7. Making financial investment, contributing capital and buying shares.

8. Organizing auction of assets.

9. Guarantee for organizations, businesses and individuals to borrow capital from credit institutions.

10. Other activities in line with the functions, duties of the Vietnam Asset Management Company after it is permitted by the Governor of State Bank

The Vietnam Asset Management Company may authorize the debt sale credit institutions (i) to manage the debts bought, collateral of the debts and dossiers and documents related to the debts; (ii) to perform the right of the Vietnam Asset Management Company for the debts; (iii) to carry out activities specified from Point 2 to Point 5 above mentioned.

V. RIGHTS OF THE VIETNAM ASSET MANAGEMENT COMPANY

The Vietnam Asset Management Company has the following rights:

1. To request the debt sale credit institutions, borrowers, debt payer, securing party and agencies, organizations and individuals concerned to provide information and documents on the organization and activities of the borrower, debt payer, securing party, information, documents about the bad debts, collateral of the bad debts which have sold to the Vietnam Asset Management Company.

2. To request the credit institutions to sell bad debts to the Vietnam Asset Management Company.

3. To participate in the process of borrower restructuring after capital contribution and purchase of shares from the borrower.

4. To receive the right collateral to replace the implementation of the securing party’s duties as prescribed by law; to distrain the collateral for bad debt settlement and recovery.

5. To request the state management agencies concerned, law enforcement agencies to complete the procedures, legal documents on collateral and coordinate and support during the distrainment of collateral and recovery and settle of debts and collateral.

6. To request the secured transaction registration agencies to ensure the implementation of secured transaction registration related to the collateral of the bad debts.

7. The Vietnam Asset Management Company will become a secured party and may perform the registration of secured transaction based on contract of sale and purchase of bad debts without having to re-sign the contract of guarantee with the securing party.

8. To monitor and inspect credit institutions in the implementation of activities authorized by the Vietnam Asset Management Company.

9. To be given a percentage of the recovered amount of bad debts which have been purchased by the Vietnam Asset Management Company by special bonds under regulations of the State Bank after consultation with the Ministry of Finance.

10. Other rights of creditors and secured party are under regulations of law.

VI. OBLIGATIONS OF THE VIETNAM ASSET MANAGEMENT COMPANY

It has the following obligations:

1. Conserving and developing funds which are allocated by the State.

2. Performing annual independent audit.

3. Implementing the registration of contract of sale and purchase of debt claim in accordance with the law on secured transactions.

4. Taking responsibilities for explanation before state management agencies and public about situation of operation.

5. Performing other duties as prescribed by the Charter and regulations of law.

VII. FINANCE

1. Charter capital

The charter capital of the Vietnam Asset Management Company is 500 billion VND and is adjusted when necessary.

2. Capital sources

The capital sources of the Vietnam Asset Management Company

a) Charter capital

b) Issuance of special bonds for settlement of bad debts as prescribed by the Government. The special bonds have a number of characteristics as follows:

- Issued in the form of certificates, book entry or electronic data;

- Face value of special bonds is equal to the price of debt purchase;

- Issued in Vietnam dong at interest rate of 0% / year;

- Used to refinance loan from the State Bank as prescribed by the Law on the State Bank.

- Maximum time limit is 5 years;

- Credit institutions selling debts and owning special bonds have to set up provisions for risks in operating costs at the rate of not less than 20% / year over the face value of bonds within the time of holding.

c) Funds permitted for setting up provision.

d) Other funds raised under the regulations of law.

The Government stipulates particular mechanism for issuing special bonds and raising capital of the Vietnam Asset Management Company.

3. Revenue, expenses, funds and profit distribution

a) Revenue of the Company Asset Management includes:

- Proceeds from debt collection and customer’s repayment.

- Proceeds from selling debts and collateral;

- Proceeds from financial investment, capital contribution and purchase of share.

- Fees and commissions earned from the operations of consultation, sale and purchase brokerage, settlement of debts and assets;

- Proceeds from lease and operation of assets;

- Revenue from financial operations;

- Non-recurring income;

- Revenue from asset auction fees;

- Other revenues;

b) Business costs of the Vietnam Asset Management include:

- Costs of debt purchase;

- Cost of debt collection;

- Costs of consultation, brokerage of sale and purchase, settlement of debts and assets;

- Costs of the sale of debts, sale of shares and transfer of contributed capital;

- Costs of maintenance, investment, repair and upgrade of assets;

- Costs of provisions for risks of bad debts purchased at market price; investments, financial provision and guarantee;

- Expenditure for salary, bonus, allowances to officials and employees;

- Costs of asset auction;

- Costs of company management;

- Payment of interest on loans;

- Costs of assets;

- Other expenditures.

c) Profit distribution and set-up of funds of the Vietnam Asset Management Company comply with regulations of law.

d) The Ministry of Finance makes specific guidance on the setup and use of provision for investments, financial provision, guarantee, revenues, expenditures, profit distribution, setup and use of funds of the Vietnam Asset Management Company.

dd) The Vietnam Asset Management Company will set up provision for risks into the operating costs and use of provision for risks for bad debts purchased at market price as prescribed by the State Bank.

e) The Vietnam Asset Management Company may apply a number of particular financial mechanisms as follows:

- Mechanism of salary, bonuses and allowances in accordance with the law applicable to state-owned enterprises and consistent with the specific activities of the Vietnam Asset Management Company;

- Not having to set up provisions for risks of bad debts purchased by special bonds, the receivables from credit institutions;

- Not applying provisions on investment outside sector of state-owned enterprises for Vietnam Asset Management Company.

4. The Vietnam Asset Management Company performs the accounting under the guidance of the State Bank.

VIII. BUSINESS MANAGEMENT

The Vietnam Asset Management Company may organize and operate as prescribed by the Government and relevant regulations of law. The State Bank appoints and dismisses the Chairman and members of the Board of members, Head and members of the Supervisory Board, General Director and Deputy General Director of the Vietnam Asset Management Company.

The Board of members of the Vietnam Asset Management Company includes no more than 7 members, the Supervisory Board consists of not more than 3 members. The managers and executives and professional staff of the Vietnam Asset Management Company are mainly taken from the State Bank and credit institutions.

IX. REQUIREMENTS ON TRANSPARENCY, PUBLICITY FOR VIETNAM ASSET MANAGEMENT COMPANY

The Vietnam Asset Management Company must ensure the transparency, publicity during the process of sale and purchase and settlement of bad debts in order to prevent group interests, prevent and combat corruption and negative activities in operation of the Vietnam Asset Management Company.

The Vietnam Asset Management Company will perform the publicization and transparency of the following issues:

1. The Vietnam Asset Management Company’s financial statements are independently audited annually

2. Procedures and methods of valuation of debts and assets.

3. Procedures and methods of selling of debts and assets.

4. Selling of debts and assets.

5. Providing customers who purchase debts and assets with necessary information about the debts and assets that the Vietnam Asset Management Company plans to sell.

X. CONDITIONS FOR BAD DEBTS PURCHASED BY THE VIETNAM ASSET MANAGEMENT COMPANY

The credit institutions’ bad debts purchased by the Vietnam asset management company must meet the following conditions:

1. The bad debts (in VND or foreign currency of Vietnamese credit institutions include bad debts in credit granting activities, purchase of corporate bonds, entrustment of purchase of corporate bonds, entrustment of credit granting and other activities as prescribed by the State Bank.

2. For bad debts with collateral, firstly focusing on settlement of bad debts with collateral which is real estate, including collateral constituted as real estate in the future.

3. Bad debts and collateral must be legal with valid documents and papers.

4. Existing borrowers.

5. Balance of bad debts or bad outstanding debts of the borrowers are not lower than the level prescribed by the State Bank.

The Prime Minister will decide on the purchase of bad debts of credit institutions that do not meet the above conditions.

Scope and buyers of bad debts and assets may be submitted by the Governor of the State Bank to the Prime Minister for consideration and decision in accordance with the requirements on settlement of bad debts from time to time in accordance with the law and the capacity of the Vietnam Asset Management Company to ensure basic settlement of bad debts and bring the rate of bad debt of credit institutions down to safe level.

XI. MEASURES TO SETTLE DEBTS AND COLLATERAL OF THE VIETNAM ASSET MANAGEMENT COMPANY

After having purchased bad debts from credit institutions, the Vietnam Asset Management Company will directly or authorize to coordinate with the debt sale credit institutions to take the following measures:

1. Executing the rights of the credit, secured party for the borrower, debt payer and securing party in order to recover debts and collateral.

2. Urging and requiring debt repayment, collecting debts from the borrowers, the debt payers and securing party.

3. Carrying out bad debt restructuring and supporting the borrowers.

4. Reaching an agreement with the borrower on converting debts into contributed capital and equity to participate in restructuring of finance and borrowers’ activities.

5. Collecting debts by receiving the right collateral of the debt; recovering, distraining and dealing with collateral as prescribed by law.

6. Selling debts to organizations or individuals;

7. Initiating a lawsuit against the borrowers, debt payer and securing party

8. Filing to request the Court to conduct the procedures for bankruptcy as prescribed by law on bankruptcy for the borrower who is unable to make debt repayment and for the debt payer, the securing party that are unable to perform their obligations.

XII. MEASURES TO RESTRUCTURE BAD DEBTS AND SUPPORT BORROWERS OF THE VIETNAM ASSET MANAGEMENT COMPANY.

1. The Vietnam asset management company will take the measures to restructure debts in order to support the borrowers as follows:

a) Adjusting the repayment period, repayment time limit in accordance with the conditions of borrowers’ production and business.

b) Applying interest rate of the debts purchased in accordance with the borrower’s repayment capacity and market conditions.

c) Reducing a portion or exempting the entire overdue interest which the borrowers are unable to repay their debts.

2. In cases the borrowers are assessed with good resilience, the Vietnam Asset Management company will consider, make investment and provide financial support for the borrowers to handle temporary financial difficulties and restore their production business.

3. The Vietnam Asset Management Company will secure loan to the borrowers from credit institutions in case the borrowers are assessed with good resilience or having efficient new projects which guarantees repayment of debt.

XIII. PURCHASE OF DEBTS OF THE VIETNAM ASSET MANAGEMENT COMPANY AND SETTLEMENT OF MONEY FROM DEBT COLLECTION

1. Purchase of bad debts of the Vietnam Asset Management Company

a) The Vietnam Asset Management Company will buy bad debts of credit institutions at the book values of the borrower’s unpaid outstanding debts, which have been deducted by the unused provision for that debt, and pay such debt sale credit institutions with special bonds.

When in need of capital, credit institutions may use special bonds to refinance loans of the State Bank. The State Bank will decide the rate to refinance the specific loan compared with the face value of special bonds for submission to the Prime Minister to decide on the interest rate for refinancing loans on the basis of special bonds in each period.

b) Based on financial capability, economic efficiency and market conditions, the Vietnam Asset Management Company will purchase bad debt of credit institutions at the market price by the capital sources which are special bonds on the basis of agreement and the value of bad debt is revalued for bad debts which meet the following conditions:

- Meeting the conditions for bad debts purchase by the Vietnam Asset Management Company mentioned in Section X, Part B;

- Being assessed with the full recovery of the money used to purchase bad debts;

- Collateral of bad debts may be put on sale;

- Borrowers have prospect of restoring their solvency.

In case of purchase of bad debt at market value, the Vietnam Asset Management Company will reassess the value of bad debts on the basis of possibility to recover capital and collateral of bad debts, when necessary, the Vietnam Asset Management Company may hire a consultancy organization to valuate the bad debts and collateral.

c) The Vietnam Asset Management Company has the right to own and settle the debts purchased as prescribed by law.

d) In principle, after purchasing the debts, the Vietnam Asset Management Company, borrower, debt payer and securing party have all the rights and obligations related to the debts sold to the Vietnam Asset Management Company under the agreement and regulations of law. The rights and obligations related to the debts including the principal and interest debts which the borrowers have not paid yet.

dd) When necessary, the State Bank will take measures applicable to credit institutions specified in Section XV, Part B to sell bad loans to the Vietnam Asset Management Company for financial restructure and strengthening of credit institutions credit to meet the safety standards of banking activities.

2. Settlement of amount of debt recovery

The amount of debt recovery is settled as follows:

a) After deducting costs related to the settlement of collateral, the amount of debt recovery through the sale of debt, settlement of borrower’s collateral for debt repayment, the debt payer’s repayment may be used for payment of borrower and debt payer’s repayment obligations

b) After deducting the amount paid to the Vietnam Asset Management Company as prescribed, the debt sale credit institution is entitled to the amount of debt recovery from bad debts sold to the Vietnam Asset Management Company due to the borrowers’ debt repayment, debt payer, securing party; sale of debts, sale and settlement of collateral.

c) The order of priority of payment upon settlement of collateral will comply with the provisions of the Civil Code and the law on registration of secured transactions.

XIV. PAYMENT OF SPECIAL BONDS AND REPURCHASE OF BAD DEBTS PURCHASED BY THE VIETNAM ASSET MANAGEMENT COMPANY BY SPECIAL BONDS

Within 05 working days after the provision amount set up for special bonds is not lower than the book value of outstanding debts of the related bad debts or within 05 working days after the special bonds are due, the debt sale credit institution will:

1. Refund outstanding debt of loan refinancing on the basis of special bonds related to the State Bank.

2. In case the debts are not fully recovered, the credit institute will purchase bad debts from the Vietnam Asset Management Company at the book value of outstanding debts and return special bonds related to those debts to the Vietnam Asset Management Company and is given a payment over amount of debt recovery by the Vietnam Asset Management Company.

3. In case the debts are fully recovered, the debt sale credit organization will return the special bonds to the Vietnam Asset Management Company and is given a payment from amount of debt recovery by the Vietnam Asset Management Company as prescribed.

XV. MEASURES APPLICABLE TO THE TRANSFER, SALE OF BAD DEBT OF CREDIT INSTITUTION TO THE VIETNAM ASSET MANAGEMENT COMPANY

1. The credit institutions having the rate of bad debt from 3% or more, or a different rate of bad debt prescribed by the State Bank do not transfer, sell debts to the Vietnam Asset Management Company, the State Bank will apply one or more of the following measures to secure the safe operation of credit institutions:

a) Requesting those credit institutions to hire independent audit company to re-assess the quality and value of the assets, equity and charter capital of those credit organizations. The cost of audit and re-valuation will be paid by those credit organizations.

b) The State Bank inspects the asset quality and capital of the credit institutions.

2. On the basis of result of valuation of asset and inspection, the credit organizations may apply the following measures:

a) Selling bad debts to the Vietnam Asset Management Company so that the rate of bad debt/total outstanding debt does not exceed 3%.

b) Credit institutions must set up adequate provision for risks while ensuring to meet adequacy ratio prescribed by the State Bank.

c) Restructuring the credit institutions by the plan approved by the State Bank.

C. IMPLEMENTATION ORGANIZATION

I. RESPONSIBILITIES OF STATE BANK OF VIETNAM

1. Assuming the prime responsibility and coordinating with Ministries, sectors and localities to organize the implementation of this Scheme.

2. Appointing and dismissing members of the Board of members, the members of Supervisory Board, General Director, Deputy General Director of the Vietnam Asset Management Company; issuing decision on establishing the Vietnam Asset Management Company and approving the Charter and modifying and supplementing the contents of the Vietnam Asset Management Company as prescribed by law.

3. Using legitimate capital sources to ensure sufficient charter capital the Vietnam Asset Management Company.

4. Assuming the prime responsibility and coordinating with agencies and organizations concerned to develop and issue legal documents on the operations of the Vietnam Asset Management Company and activities of sale and purchase of debts.

5. Performing the rights and obligations of representative of State capital’s owner at the Vietnam Asset Management Company; state management, monitoring, examination, inspection and handling of violations of credit institutions, the Vietnam Asset Management Company in compliance with regulations of law on sale, purchase and settlement of bad debts.

6. Flexibly operating and synchronously applying monetary policy tools to mitigate the impact of settlement of bad debts on monetary policy, requesting the Prime Minister to decide on specific interest rate of loan refinancing on the basis of special bonds in each period.

7. Arranging adequate funding, personnel, facilities, workplace to meet operational requirements of the Vietnam Asset Management Company.

8. Assuming the prime responsibility and coordinating with the Ministry of Finance to guide the accounting of the Vietnam Asset Management Company.

9. Guiding credit institutions and the Vietnam Asset Management Company the operation of sale, purchase and settlement of bad debts.

10. Guide contents assigned in Decree No. 53/2013/ND-CP of May 18, 2013 of the Government on the establishment, organization and operation of the Vietnam Asset Management Company.

II. RESPONSIBILITIES OF THE MINISTRY OF FINANCE

1. Assuming the prime responsibility and coordinating with the State Bank to guide the financial mechanism, the setup and use of provision for investments, financial supply and guarantee for the Vietnam Asset Management Company.

2. Assuming the prime responsibility and coordinating with agencies and organizations concerned to request the competent authority to issue policies on exemption and reduction of corporate income tax and VAT for the Vietnam Asset Management Company.

3. Coordinating with the State Bank to guide the accounting of the Vietnam Asset Management Company.

III. RESPONSIBILITIES OF THE MINISTRY OF JUSTICE

1. Assuming the prime responsibility and coordinating with agencies and organizations concerned to study and complete documents guiding the order and procedures for asset auction in accordance with the provisions in the Decree No. 53/2013/NĐ-CP dated May 18, 2013 of the Government on establishment, organization and operation of the Vietnam Asset Management Company and regulations of relevant laws.

2. Assuming the prime responsibility and coordinating with agencies and organizations concerned to direct the attached units, the secured transaction registration agencies to coordinate and support the Vietnam Asset Management Company to register secured transactions.

IV. RESPONSIBILITIES OF THE MINISTRY OF NATURAL RESOURCES AND ENVIRONMENT

Directing and guiding the attached units to coordinate and support the implementation of transfer of land use right during the settlement of collateral of the Vietnam Asset Management Company.

V. RESPONSIBILITIES OF THE MINISTRY OF LABOUR - INVALID AND SOCIAL AFFAIRS.

Assuming the prime responsibility and coordinating with the Ministry of Finance and the State Bank to guide the mechanism of salary, bonus and allowances of the staff working at the Vietnam Asset Management Company by the mechanism applicable to the State enterprise and in line with the particular operation of the Vietnam Asset Management Company.

VI. RESPONSIBILITIES OF MINISTRIES, AGENCIES AND ORGANIZATIONS CONCERNED AND PEOPLE’S COMMITTEE OF ALL LEVELS

1. People’s committee and policy agencies of at levels where the recovery and distrainment of secured assets are executed will participate in the recovery, distrainment and inventory of secured assets and take measures as prescribed by law to maintain security and order to ensure the implementation of the rights of the Vietnam Asset Management Company in recovery and distrainment of secured assets.

2. People’s Committee and tax agencies at all levels will support the Vietnam Asset Management Company to complete all procedures and records to implement financial obligations with the state upon transfer of right of collateral to the purchaser.

3. People's Committee and agencies of natural resources and environment and agencies concerned at all levels will coordinate to perform the procedures for registration, transfer of ownership and use of assets at the request of the Vietnam Asset Management Company.

4. Within the scope of duties and powers assigned, the Ministries, agencies and organizations concerned and People's Committees at all levels have the responsibility to direct the attached units to complete procedures and legal records of the collateral and settlement of collateral, debt recovery at the request of the Vietnam Asset Management Company.

VII. RESPONSIBILITIES OF CREDIT INSTITUTIONS

1. Assessing and defining bad debts eligible for sale to the Vietnam Asset Management Company.

2. Selling bad debts to the Vietnam Asset Management Company.

3. Credit institution selling bad debts to the Vietnam Asset Management Company will:

a) Fully and promptly providing the Vietnam Asset Management Company with information and documents concerning the borrower, debt payer, securing party, debts, collateral of the debts sold to the Vietnam Asset Management Company, taking responsibility for the accuracy and completeness of information and documents.

b) Closely coordinating with the competent agencies and authorities, the Vietnam Asset Management Company and borrowers to complete the procedures and legal documents related to bad debts and collateral of the bad debts sold to the Vietnam Asset Management Company.

c) Considering and granting credit to the borrowers who have bad debts sold to the Vietnam Asset Management Company as agreed and prescribed by law.

4. Credit institutions selling bad debts to the Vietnam Asset Management Company and receiving special bonds will:

a) Set up annual provision for risk for special bonds into the operating costs at a rate of not less than 20% of the face value within the period of special bonds to create sources for settlement of bad debts when they are re-purchased from the Vietnam Asset Management Company.

b) Using special bonds to re-purchase at the book value the bad debts purchased by special bonds but have not settled or fully recovered at the time the special bonds are due as prescribed.

c) Receiving and implementing tasks authorized by the Vietnam Asset Management Company as prescribed.

d) Recording in the operating costs the costs related to the management, recovery, settlement of debt and collateral of the bad debts purchased by the Vietnam Asset Management Company by the special bonds and the costs relating to the implementation of activities under the authorization of the Vietnam Asset Management Company.

dd) Ensuring the safety of assets, records, documents under the authorization of the Vietnam Asset Management Company; monitoring, urging, recovering and settling bad debts and collateral under the authorization of the Vietnam Asset Management Company.

e) Immediately notifying the Vietnam Asset Management Company upon generation of the amount of outstanding debt recovery, interests, settlement and sale of collateral.

5. Performing other responsibilities as prescribed by law.

VIII. RESPONSIBILITIES OF BORROWER AND DEBT PAYER

1. Fulfilling the obligations of credit institutions and the Vietnam Asset Management Company under commitment and regulations of law and regulations.

2. Arranging capital and proactively selling assets and handing over collateral owned by the borrower to repay the outstanding debts and interests to the Vietnam Asset Management Company or credit institutions authorized by the Vietnam Asset Management Company.

3. Closely cooperating and providing adequate and timely information and documents as required by the Vietnam Asset Management Company and credit institutions authorized by the Vietnam Asset Management Company; taking responsibility for the accuracy of the information and documents provided for the Vietnam Asset Management Company and credit institutions authorized by the Vietnam Asset Management Company.

4. Completing the legal documents relating to bad debts and collateral of bad debts sold to the Vietnam Asset Management Company.

5. Supplementing and replacing collateral or taking measures to guarantee debt repayment in accordance with agreement between the parties concerned.

6. Accepting the sale and purchase of debts between the credit institutions and the Vietnam Asset Management Company.

7. Performing other responsibilities as prescribed by law.

IX. RESPONSIBILITIES OF THE SECURING PARTY

1. Fulfilling its obligations under the contract of guarantee signed and regulations of law.

2. Closely cooperating and providing adequate and timely information and documents as required by the Vietnam Asset Management Company and credit institutions authorized by the Vietnam Asset Management Company; taking responsibility for the accuracy of the information and documents provided for the Vietnam Asset Management Company and credit institutions authorized by the Vietnam Asset Management Company.

3. Arranging capital and proactively selling assets and handing over collateral owned by the securing party to repay the outstanding debts and interests to the Vietnam Asset Management Company or credit institutions authorized by the Vietnam Asset Management Company.

4. Supplementing and replacing collateral or taking measures to guarantee debt repayment in accordance with agreement between the parties concerned.

5. Accepting the sale and purchase of debts between the credit institutions and the Vietnam Asset Management Company.

6. Performing other responsibilities as prescribed by law. /.