Laws of Vietnam

THE PRIME MINISTER

Pursuant to the Law on Organization of the Government on the 30th of September, 1992;

In order to strengthen the management of the fixed assets in the new situation;

At the proposal of the Minister of Finance,

DECIDES:

Article 1.- In principle, all fixed assets in State enterprises must be utilized maximally and with full accounts of depreciation cost to ensure capital retrieval on the basis of correct and full accounting of the original price as currently prescribed.

The State shall carry out a re-evaluation of the fixed assets in State enterprises. The Ministry of Finance shall be in charge and, together with the Government Pricing Committee and the General Department of Statistics, shall study and submit to the Prime Minister a plan for re-evaluation of the fixed assets for decision.

Pending the re-evaluation of the fixed assets by the State, all State enterprises must revise the original price of each item of their fixed assets, and prepare a plan for price readjustment in conformity with the current price levels, and submit them to the financial agency for consideration and decision.

Article 2.- The basis level for depreciation charge of the fixed assets in State enterprises shall be done in accordance with State provisions.

In 1995, the Ministry of Finance shall study and adjust the levels of basis depreciation charge, along the line of encouraging fast depreciation accounting so that the enterprises can have the conditions for technological modernization and renewal.

Article 3.- The increase or decrease of the levels of basic depreciation charge shall be done as follows:

a) The enterprise is allowed to increase its basic depreciation charge, on condition that it will incur no loss and in the following cases:

- The fixed asset has a high rate of technological advancement;

- The actual operation of the fixed asset is higher than its normal level;

- The enterprise is borrowing capital or mobilizing capital in all lawful manners for investment, and is given a shorter period for debt payment or capital recovery than the period for depreciation provided for by the State.

The enterprise is allowed to increase its level of basis depreciation charge by not more than 20% of the set level, and must report it to the financial agency for monitoring.

Any increase by more than 20% compared with the set level must be reported to the financial agency for consideration and decision.

b) For the fixed asset previously invested by the State, which is no longer suitable to the market mechanism, and whose utility has so low efficiency that it will incur loss for the enterprise if the basic depreciation charge is done as prescribed, the financial agency shall then consider and decide on the level of basic depreciation charge on a case-by-case basis.

Article 4.- For the fixed asset which has completed their basic depreciation but which are still in use, the enterprise shall not make any basic depreciation charge on it, but shall manage and use it in accordance with the current regime.

Article 5.- All the basic depreciation charges on fixed assets which originate from the State capital shall be retained by the enterprise for investment, replacement and refurbishing of fixed assets. The investment for construction, which comes from the retained basic depreciation charge, shall be conducted in accordance with the Regulation on Management of Investment and Construction issued together with Decree No 177-CP on the 20th of October, 1994 of the Government.

The managerial body immediately above the enterprise shall decide on the mobilization of the capital fund from the basic depreciation charge within its economic and technical branch, for use on priority targets on the principle of borrowing and repaying at appropriate interest rates.

Each year, the managerial body immediately above the enterprise shall register its plan for investment from the capital issued from basic depreciation charge with the State planning agency and the financial agency, for control of the investment procedure and targets, and for monitoring the implementation process.

Article 6.- This Decision takes effect from the 1st of January, 1995. All previous provisions which are contrary to this Decision are now annulled; the Minister of Finance is responsible for guiding the implementation of this Decision.

Article 7.- The Ministers, the Heads of the agencies at ministerial level, the Heads of the agencies attached to the Government, and the President of the People's Committees of the provinces and cities directly under the Central Government are responsible for implementing this Decision.

For the Prime Minister

Deputy Prime Minister

PHAN VAN KHAI