Government Socialist Republic of Vietnam Independence Liberty - Happiness No: 141/2003/ND-CP Hanoi, November 20, 2003 The Government Decree by the Government On issuance of Government Bonds Government guaranteed bonds and Municipal bonds Pursuant to Law on Government Organization dated December 25, 2001; Pursuant to Law on State Budget dated December 16, 2002 As proposed by Minister of Finance, Decree: Article 1. Governing scope Chapter I General Provisions 1. This Decree provides for the issuance of Government bonds, Government guaranteed bonds and Municipal bonds, which are denominated in Vietnam Dong and foreign currencies within the territory of Socialist Republic of Vietnam. 2. This Decree shall not provide for: a) Bonds issued by the credit institutions under Law on Credit Institutions; b) Bonds issued by enterprises on the basis of discretionary financing and repaying under the provisions of Law on State-owned Enterprises and Law on Enterprises; Article 2. Terminology 1. Government bond is a type of debt securities issued by the Government with maturities, par value, interest, which defines the repayment obligation by the Government to the bond holders. 2. Government guaranteed bond is a type of debt securities issued by enterprises to mobilize funds for projects under the direction of Prime Minister, whose due repayment by the issuers is committed to by the Government with investors. In cases where the issuers fails to fulfill the settlement obligations (principal, interests) when the bonds become due, the Government shall undertake to repay the debts in place of issuers.
3. Municipal bond is a type of debt securities issued by the provincial people s committees with maturities, par value, interest, which defines the repayment obligation by the provincial people s committees to the bond holders. 4. The issuer is a legal person to borrow by means of bonds issuing governed by this Decree. 5. Bond issuance is the act of selling bonds to buyers. 6. Bond retail is the act of direct delivery of bonds and taking payments from buyers by issuers. 7. Underwriting happens when the underwriters help the issuers with formalities before the bonds are offered to the securities market, distribute bonds to investors, guarantee the purchase of bonds for reselling or purchase of remaining undistributed bonds. 8. Bond tendering is to select the institutions, individuals who are participating in the tender and eligible for criteria set by issuers. 9. Issuing agents are institutions authorised by the issuers to sell bonds to investors. 10. Bonds custody happens when bondholders deposit their bonds at institutions which are allowed to store and safekeeping bonds and perform rights over these bonds for the bondholders. 11. Repayment agents are institutions authorised by the issuers to make payments of bond principal and interest when maturity is reached. 12. Pledge happens when the bondholders deposit their bonds with individuals or institutions to guarantee implementation of some civil obligations. Article 3. Issuers 1. Issuer of government bond is the Government. 2. Issuers of government- guaranteed bonds are enterprises. 3. Issuers of municipal bonds are Provincial People s Committees. Article 4. Types of bonds 1. Government bonds include: a) Treasury Notes b) Treasury Bonds c) Central Project Bonds d) Investment Bonds e) Foreign Currency Bonds f) Public Bonds for Nation Building-up
2. Government guaranteed bonds 3. Municipal bonds. Article 5. Currency denominated and settlement. 1. Bonds shall be issued and settled in Vietnamese Dong or freely convertible foreign currencies. 2. Bonds issuance in foreign currencies shall be applicable to cases provided for by Section V, Chapter II of this Decree. 3. The currency for settlement shall be the same currency in which the bonds are denominated. Article 6. Forms of issuance Bonds are issued in forms of certificates or book-entry, bearer or non-bearer. Article 7. Par value 1. Par values of bonds issued and settled in Vietnamese Dong are 100,000 VND at the minimum. The specific par values shall be stipulated by the Minister of Finance. 2. Par values of bonds issued and settle in foreign currencies are stipulated on an issue-byissue basis. Article 8. Bonds buyers Bonds buyers shall be Vietnamese organizations and individuals, Vietnamese people resident abroad, foreign organizations and individuals working and living legitimately in Vietnam. As for the Vietnamese organization, they are not allowed to use state budget funds to buy Government bonds. Article 9. Fees for Bonds Issuance and Settlement The institutions which underwrite, undertake tender service, which are agents, trusted to organize bonds issuance and settlement shall be entitled to a fee as stipulated by Ministry of Finance. Article 10. Underwriters and Agents The underwriters or Agents for bonds issuance by means of underwriting or agent issuing are Securities companies, Investment funds, finance companies, and banks legitimately operating in Vietnam.
Article 11. Listing and Trading 1. Government bonds, Municipal bonds are traded in the monetary market or discounted, pledged at the State Bank of Vietnam according to the laws. 2. Government Bonds, Government guaranteed bonds and Municipal bonds are listed and traded in the securities market according to the laws. Article 12. Bond custody and deposit Bondholders may have their bonds deposited at institutions allowed to take custody of bonds or deposited at the State Treasury, and commercial banks for safekeeping. The Ministry of Finance shall stipulate the fees for bond custody and safekeeping. Article 13. Bonds redemption by issuers The issuers have the right to redeem the bonds before they become due. Article 14. Benefits of bondholders 1. Bondholders are guaranteed by the issuers of full and due repayment of principal and interest when the bonds become due. 2. Bondholders are allowed to sell, present, bestow, bequeath or pledge and discount. 3. Bondholders are exempt from tax on bond interest income according to the law. Article 15. Scope of settlement and circulation of bonds Bonds shall not be used to replace money in circulation or to perform financial obligations to the state budget. Article 16. Loss and Damage Counterfeit bonds, bearer bonds which are missing or torn, damaged, mis-shaped, or whose contents are not intact shall not be repaid. As for the non-bearer bonds which are missing, torn, damaged, if one can prove his ownership of bonds and those bonds are yet to be repaid deceitfully, the issuers shall repay the bonds upon maturity. Article 17. Counterfeit or Deceit All acts of deceit and counterfeit of bonds shall be penalized according to the law. Chapter II Government Bonds
Section I Treasury Notes Article 18. Issuance and usage Treasury notes are the Government bonds with maturity of less than 1 year, issued by the State Treasury to develop the monetary market and mobilize funds for financing temporary budget deficits within the fiscal year. Article 19. Methods of issuing 1. Treasury notes are issued by means of auction. 2. The amount and interest of treasury notes shall be determined by the tender results. 3. The Ministry of Finance may entrust the State Bank of Vietnam, state-owned commercial banks to issue and settle treasury notes. Article 20. Eligibility for auction of treasury notes. 1. Credit institutions governed by the Law on Credit Institutions. 2. Insurance companies, insurance funds, investment funds operating legitimately in Vietnam; branches of foreign investment funds in Vietnam. 3. In cases where the persons stipulated by items 1, 2 of this Article do not buy up the amount of treasury notes issued, the State Bank of Vietnam may buy the remaining. Article 21. Usage and Repayment of treasury notes 1. All the borrowing from treasury notes shall be centralized into central budget for expending according to the Law on State Budget. 2. The central budget shall ensure the repayments of principal, interest of treasury notes upon maturity and fees for issuance, payments to institutions entrusted for issuance. Article 22. Issuance and Usage Section II Treasury Bonds Treasury bonds are Government bonds with maturity of more than 1 year, issued by the State Treasury to mobilize funds for financing budget deficits according to the annual budget projections approved by the National Assembly. Article 23. Methods of issuing 1. Retail through State Treasury system. 2. Auction through securities trading floor.
3. Underwriting 4. Agent issuing Article 24. Buyers of Treasury bonds 1. Persons stipulated by item 1, 2 Article 20 of this Decree. 2. Vietnam enterprises and economic institutions of all economic sectors. 3. Foreign institutions operating legitimately in Vietnam. 4. Vietnamese citizens, overseas Vietnamese and foreigners working, living legitimately in Vietnam. The bonds buyers under method of auction through securities trading floors shall meet all the regulations on securities and securities market. Article 25. Treasury bonds interest. Treasury bond interest (coupon rate) shall be determined by Minister of Finance on the basis of market condition at time of issuance. In the case of interest auction, the interest shall be formed as a result of auction. Article 26. Usage and Repayment of treasury bonds 1. All the proceeds from treasury bonds issuance shall be centralized into central budget for expending according to the Law on State Budget. 2. The central budget shall ensure the repayments of principal, interest of treasury bonds upon maturity and fees to institutions entrusted for bond issuance and payment. Article 27. Repayment of Treasury bonds upon maturity. 1. The State Treasury shall organize the repayment of principal, interest upon maturity to bondholders whose bonds are issued by method of retail through treasury system. 2. Credit and financial institutions may be entrusted by Ministry of Finance to make payment of bond principal, interests to bondholders whose bonds are due and issued by method of auction, agent issuing or underwriting. Article 28. Issuance and Usage Section III Central Project Bond
Central Project Bonds are government bonds with maturity of more than one year issued by State Treasury to mobilize capital funds under the Decision by Prime Minister, for projects which are supposed to be financed by central budget, planned but unallocated budget during the fiscal year. Article 29. Conditions for issuance 1. Projects which are annually listed as targeted investment by the Government. 2. Bond issuance plan, borrowed capital usage plan and repayment plan when the bonds are due shall be implemented under the Decision by the Prime Minister on the basis of proposal by the Ministry of Finance as the lead agency. Article 30. Method of issuing Central project bonds are issued by method of retail through the State Treasury system, auction or underwriting. Article 31. Buyers of bonds Buyers of central project bonds shall be applicable to the same as treasury bonds stipulated by Article 24 of this Decree. Article 32. Bond interest Central project bond interest shall be determined by Minister of Finance on the basis of market condition at time of issuance. In the case of interest auction, the interest shall be formed as a result of auction. Article 33. Usage and Settlement 1. All the borrowings from central project bonds shall be centralized at central budget to finance the projects approved by the Prime Minister. The central budget ensures the payment of principal, interest and related fees of central project bonds. 2. The payment of principal, interest of central project bonds when due shall be implemented the same as treasury bonds stipulated by Article 27 of this Decree. Article 34. Issuance and Usage Section IV Investment bonds Investment bonds are government bonds with maturity of more than 1 year issued by stateowned financial institutions, credit and financial institutions appointed by the Prime Minister to mobilize funds for investment in line with Government policies.
Article 35. Issuance principles 1. Exclusive issue for each economic objective. 2. The issue amount shall not exceed the targets approved by the Government or Prime Minister for specific economic objective or specific year. 3. Issuing plan shall be appraised by Ministry of Finance. 4. Amount of issue, time of issue, par value, maturity of bonds shall be implemented by the issuers in consensus with Ministry of Finance. 5. Minister of Finance decides the interest ceilings of bond issues. Article 36. Method of issuing, buyers of bonds Methods of issuing, buyers of investment bonds shall be applicable the same as central projects bonds stipulated by Article 30 and Article 31 of this Decree. Article 37. Bond interest Minister of Finance decides the interest ceilings of investment bonds for each time periods based on the current financial market situation and capitalization demands of issuers. In the case of interest auction, the interests shall be formed as a result of auction within the ceilings set by Minister of Finance. Article 38. Usage of proceeds from bond issue. Proceeds from investment bonds issues shall be monitored separately and used exclusively for economic objectives approved by the Prime Minister. Article 39. Bond settlement 1. Issuers shall be under duty to make payment of principal, interests of investment bonds which are due and other associated fees of issuance and settlement. 2. The State budget incurs partial or full bond interests or finances interest differences for the issuers according to decision by the Prime Minister for specific economic objective. Article 40. Issuance and usage Section V Foreign currency bonds Foreign currency bonds are government bonds with maturity of more than 1 year issued by the Ministry of Finance to finance specific objectives appointed by the Prime Minister. Article 41. Currencies of issue
1. Currencies of issues are freely convertible currencies. 2. Type of foreign currencies for each issue shall be determined by Minister of Finance commensurate with usage purposes. Article 42. Method of issuance and Buyers of bonds 1. Retail through state treasury system: a) Buyers of foreign currency bonds are applicable the same as buyers of treasury bonds stipulated by Article 20 of this Decree. b) The Minister of Finance decides locations of issuing foreign currency bonds by method of retail through state treasury system. 2. Auction through State Bank of Vietnam: a) Persons participating into auction of foreign currency bonds are credit institutions governed by the Law on Credit Institutions. b) State Bank of Vietnam shall act as agent for Ministry of Finance in issuing and settling foreign currency bonds. Article 43. Principle of issuing 1. Foreign currency bonds are issued in separate batches. Ministry of Finance shall propose the detailed plan for each batch to the Prime Minister for approval. 2. Amount and structure of each issue shall be commensurate with capitalization demands of economic objectives as appointed by the Prime Minister. 3. Minister of Finance decides the time of issuance, currency denomination, amount, interest, par value and maturity of foreign currency bond. Article 44. Usage and settlement of foreign currency bonds 1. Foreign currency proceeds from bond issuance shall be expended for objectives as appointed by the Prime Minister. 2. The State Budget shall incur the payment of principal, interest of foreign currency bonds when due. In the case where foreign currency proceeds from bond issuance are sold to the State Bank of Vietnam to increase foreign exchange reserves, the State Bank of Vietnam shall be liable to resell foreign exchanges to Ministry of Finance to make payment of principal, interest of foreign bonds when due. 3. The Ministry of Finance shall stipulate the specific fees for issuance and settlement of foreign currency bonds.
Article 45. Issuance and Usage. Section VI Public Bonds for Nation Building up Public Bonds for Nation Building up are issued by the Government to mobilize capital from people s savings to finance the construction of national important projects and other essential projects to serve for production, living, physical and technical facilities for the nation. Article 46. Issuance of Public Bonds for Nation Building up. Public bonds are issued under the provisions of Ordinance 12/1999/PL-UBTVQH dated April 27, 1999 by National Assembly Standing Committee on issuance of public bonds for nation building up. Article 47. Issuance and Usage. Chapter III Government Guaranteed Bonds Government guaranteed bonds are bonds with maturity of more than 1 year, issued by the enterprises to mobilize capital for investment projects as appointed by the Prime Minister. Article 48. Eligibility for issuance. 1. Issuers are enterprises appointed by the Prime Minister to be project owners of the State s projects. 2. The investment projects have completed the formalities according to the law. 3. The Prime Minister gives permission on bonds issuance to mobilize investment capital for projects. 4. Settlement is guaranteed under the Article 50 of this Decree. 5. Plans for issuance, usage and repayment of borrowings are approved by the Ministry of Finance in writing. Article 49. Principles of issuance. 1. Bonds are issued for each specific project. 2. Issued amount for each project shall not exceed to the total value of the project. Issued value for each project shall follow Decision by the Prime Minister;
3. No new bonds shall be issued to pay for the due bonds. 4. Plans for issuance, time of issue, maturity of bonds shall be determined by issuers in consensus with Ministry of Finance. 5. Minister of Finance decides the interest ceiling for bond issue. Article 50. Settlement guarantee 1. The Ministry of Finance shall act on behalf of the Government to provide guarantee on settlement or authorize the state-owned financial and credit institutions to carry out settlement. 2. The maximum value of settlement guarantee shall be equal to 100% value (principal, interest) of bonds issued. 3. Bonds issuing enterprises shall pay to the settlement guarantor a guarantee fee at the maximum of 0.05% per annum of the guaranteed value. Guarantee fees shall be accounted into the project value as for the projects under construction investment and accounted into operating expenses as for the completed projects put into operation. 4. The settlement guarantor shall be liable to arrange for funds to settle the due bonds for the issuing enterprises in the cases where the issuing enterprises fail the settlement obligation. Article 51. Method of issuance. Government guaranteed bonds are issued by method of auction, underwriting or agent issuing, listed in the securities market and centrally deposited at the custodian institutions. Article 52. Buyers of bonds. Buyers of government guaranteed bonds shall be applicable the same as treasury bonds stipulated by Article 24 of this Decree. Article 53. Bond interest. The Minister of Finance decides the ceiling interest for each issue of government guaranteed bonds based on the current market condition at the time of issue. In the case of auction, interest shall be formed as a result of auction. Article 54. Usage of proceeds from bond issuance. All the proceeds from bond issuance shall be expended for the appointed projects. The enterprises shall exercise accounting treatment of revenues from bond issuance according to
current regulations and expend on the right purposes of approved projects and report periodically to Ministry of Finance. Article 55. Bond settlement. 1. Bond issuing enterprises shall be liable to pay principal, interest of bonds when due with legitimate funds of enterprises. 2. In the cases where the guarantors are obliged to arrange funds for repaying the due bonds, the enterprises shall be under duty to accept the debt and repay the guarantors with terms and conditions committed to. 3. Fees for bond issuance shall be accounted into investment project value, which is equal to value of bond issue. Article 56. Issuance and Usage. Chapter IV Municipal Bonds Municipal bonds are a type investment bonds with maturity of more than 1 year issued by State Treasuries or financial and credit institutions within the provinces under the authorization of provincial People s Committees to mobilize funds for projects which are supposed to be financed by sub-national budget, planned but not yet allocated funds during the fiscal year. Article 57. Eligibility of issuance. 1. Projects listed in the 5-year investment portfolio approved by the provincial People s Councils. 2. Plans for issuing bonds, plans for expending borrowings and plans for repaying debts when due are submitted by the provincial People s Committees to the provincial People s Councils for approval and subject to written consent by Minister of Finance. 3. The Chairman of provincial People s Committee has the decision to authorize State Treasuries or financial and credit institutions within the province to undertake the issuance and settlement of bonds. Article 58. Limit on issued amount Limit on total capitalization from municipal bonds shall be exercised according to item 3, Article 8, of Law on State Budget. Hanoi capital city and Ho Chi Minh city shall follow separate regulations by the Government. Article 59. Method of issuance
Municipal bonds are issued by method of auction, underwriting or agent issuing. Article 60. Buyers of bonds Buyers of municipal bonds shall be applicable the same as treasury bonds stipulated by Article 24 of this Decree. Article 61. Bond interest 1. Minister of Finance decides the interest band of municipal bonds in comparison with government bond interest of the same maturity. 2. Chairmen of provincial people s committees decides the specific interest rate for each type of maturity and issuance method based on the band decided by Minister of Finance and current yields of government bonds of the same maturity at the time of issuance. In the cases of interest auction, the interest shall be formed as a result of auction and based on current yields of government bonds of the same maturity at the time of issuance and within the band decided by Minister of Finance. Article 62. Usage and Settlement 1. All borrowings from municipal bonds shall be recorded as revenues of provincial budget to expend on approved projects. 2. The provincial budget shall incur the payment of principal, interest and other fees associated with issuance, settlement of municipal bonds. 3. The settlement of principal, and interest of due municipal bonds shall be applicable the same as treasury bonds stipulated by item 2, Article 27 of this Decree. Article 63. Issuance suspension 1. The following cases shall be suspended from issuing: a) Plans for issuance, funds utilization plans and repayment plans when due are not feasible. b) Issuance does not correspond with plan appraised by Ministry of Finance. c) Interest band decided by the Minister of Finance is not strictly observed; d) The amount issued exceeds issue limit set y Law on State Budget. 2. The Ministry of Finance supervises the whole process of issuing municipal bonds. In the cases where breaches are detected, Ministry of Finance requests the provincial people s committees cease the issuance and reports to the Prime Minister.
Article 64. Ministry of Finance Chapter V Responsibility and Power in terms of Governance 1. Guide and supervise the issuance, utilization, settlement of government bonds and government guaranteed bonds. 2. To formulate plans for issuance of central projects bonds to submit to Prime Minister for approval. 3. To organize issuance of treasury bonds, central project bonds, foreign currency bonds and public bonds for nation building up as stipulated by Chapter II of this Decree. 4. To appraise plans and supervise the whole process of issuing municipal bonds. To suspend issuance of municipal bonds as stipulated by Article 63 of this Decree. 5. To make arrangement with issuers on issuance plans, implementation plans of government investment bonds and government guaranteed projects bonds. 6. To decide interest rate of treasury bonds, central projects bonds; ceiling interest of investment bonds, government guaranteed bonds; and interest band of municipal bonds. Article 65. State Bank of Vietnam. 1. To co-ordinate with Ministry of Finance in organizing auctions for treasury notes and foreign currency government bonds through the State Bank of Vietnam. 2. To co-operate with Ministry of Finance in determining government bond and government guaranteed bond interests. 3. To buy the foreign currency proceeds from issuance of foreign currency bonds to increase foreign exchange reserves and sell foreign currencies to Ministry of Finance to make payment of principal and interest of foreign currency bonds when due. 4. To direct the credit institutions to issue investment bonds under Decision by the Prime Minister. Article 66. State securities Commission 1. To co-ordinate with Ministry of Finance in organizing issuance of Government bond through auction in securities market. 2. To regulate and supervise listing and trading of bonds through centralized securities transaction market. Article 67. Provincial People s Committees, Municipalities issuing Municipal bonds.
1. To formulate plans for issuing bonds, repayment plans to submit to provincial People s Councils for approval and to Ministry of Finance for appraisal. 2. To organize issuance of municipal bonds according to plans appraised by Ministry of Finance. 3. To scrutinize and supervise fund utilization and recover funds borrowed from issuing municipal bonds. 4. To balance provincial budget to ensure the repayment of bonds when due. Article 68. Bond issuers 1. To formulate plans for issuance, implementation plans commensurate with funds utilization demands. 2. To issue bonds and repay bonds when due. 3. To report periodically to Ministry of Finance issuance results and bonds repayment. Article 69. Dealing with breaches Organizations, individuals breaching provisions of this Decree, depending on level of breaches, shall be dealt with by means of administrative or disciplinary penalties. If material damages are caused, compensation shall be made according to the laws. If serious breaches are made, criminal proceedings shall be sought. Article 70. Implementing effects Chapter VI Implementing clauses This Decree shall take effect 15 days since the date of publication on Official Gazette and shall replace Decree 01/2000/ND-CP dated January 13, 2000 by the Government on issuing Regulations on Government Bonds issuance. Article 71. Guidelines responsibility Minister of Finance shall be liable to provide guidelines on this Decree. Article 72. Implementation responsibility Ministers, heads of Ministerial agencies, head of agencies under the Government, Chairmen of provincial and municipal people s committees, shall be liable to implement this Decree.
On behalf of the Government Prime Minister Phan Van Khai (signed) Recipients: - Central Party Secretariat - Prime Minister, Deputy Prime Ministers - Ministries, Ministerial agencies, and agencies under the Government - People s Councils, People s Committees of provinces and municipalities - Office of Central Party and Party Committees - Office of the National Assembly - Office of the President - The Supreme Procuracy - The Supreme Court - Central agencies of associations - Official Gazette - Office of the Government: departments and subordinate units - Archive: