Mr. Do Van Tien asked the authorities to guide issues related to the management of public assets and corporate finance as follows:

Clean Water Joint Stock Company has a charter capital of 375,493,910,000 VND, of which the State's contributed capital is 184,202,790,000 VND (accounting for 49.06%). The company was equitized in 2018 according to the enterprise classification criteria attached to Decision No. 58/2016/QD-TTg dated December 28, 2016 of the Prime Minister, the State holds less than 50% of charter capital.

Implementing Decree No. 43/2022/ND-CP dated June 24, 2022 of the Government, the locality is expected to hand over investment works to build the city's surface water plant in the form of a build-transfer contract) was settled with the value of VND 421,373,642,794.

Currently, the city's surface water plant is being temporarily assigned to a clean water joint stock company to manage and operate. According to the provisions of Article 5 of Decree No. 43/2022/ND-CP dated June 24, 2022 of the Government, the city surface water plant is an urban clean water project, can be assigned to "State-owned enterprises with the function of producing and trading clean water in accordance with the provisions of the law on investment, the law on enterprises, the law on the production and trading of clean water".

At the same time, according to the provisions of Point b, Clause 4, Article 6 of Decree No. 43/2022/ND-CP, after receiving clean water supply infrastructure assets, “Enterprises with State capital that are assigned assets shall have to report to competent agencies or persons to carry out procedures for recording an increase in State capital in enterprises in accordance with the law on management and use of State capital invest in production and business in enterprises…”.

In case the city surface water plant is assigned to a clean water joint stock company, the total charter capital of the company is VND 796,867,552,794, of which the State's contributed capital is VND 605,576,432,794 (accounting for 75.99%).

According to Clause 2, Article 7 of Decision No. 22/2021/QD-TTg dated July 2, 2021 of the Prime Minister on criteria for classification of State-owned enterprises, State-owned enterprises that carry out ownership transformation, rearrangement or divestment for the period 2021-2025 shall "for enterprises which have completed ownership transformation and divestment under Decision No. 58/2016/QD-TTg dated December 28, 2016 of the Prime Minister, the State capital ratio in enterprises shall not be increased to conform to the Classification Criteria attached to this Decision, except for the case approved by the Prime Minister or prescribed by specialized law".

Mr. Tien asked, the locality assigns the city surface water plant to the clean water joint stock company which is an enterprise with state capital in the form of recording an increase in state capital in the enterprise, which conflicts with the criteria for classification of state enterprises. Does the enterprise have state capital or not?

In case of conflict, can the locality assign the city surface water plant to a clean water joint stock company which is an enterprise with state capital in the form of returning property value to the State?

The Department of Public Property Management, Ministry of Finance responded to this issue as follows:

On June 24, 2022, the Government issued Decree No. 43/2022/ND-CP (effective from August 8, 2022) stipulating the management, use and exploitation of clean water supply infrastructure assets; accordingly:

- Clauses 2, 4, 5, Article 26 of the Decree stipulate the formulation of plans for allocation, management and exploitation of urban clean water supply infrastructure assets temporarily assigned to management as follows:

"Article 26. Existence handling

… 2. Making plans for allocation, management and exploitation of infrastructure assets of clean water supply.

… b) Based on the results of reviewing and classifying assets as prescribed in Clauses 3 and 4 of this Article, the specialized clean water supply agency shall assume the prime responsibility for, and coordinate with other agencies, organizations and units. The enterprise shall make a plan for assigning management and exploitation of clean water supply infrastructure assets as prescribed in Clause 5 of this Article.

Competence, order and procedures for delivering clean water supply infrastructure assets to agencies, units and enterprises specified at Points a, b and c, Clause 1, Points a and b, Clause 2, Article 5 of this Decree shall comply with the provisions of Article 6 of this Decree with the dossier specified at Point c, Clause 1 of this Article.

The authority, order and procedures for delivering clean water supply infrastructure assets to a specialized clean water supply agency specified at Point d, Clause 1, Article 5, Point c, Clause 2, Article 5 shall comply with regulations in Clause 2 of this Article. Article 7 of this Decree with the documents specified at Point c, Clause 1 of this Article.

… 4. Review and classify urban clean water supply infrastructure assets:

… b) Urban clean water supply infrastructure assets have been assigned to enterprises with state capital in the form of property assignment, excluding the state capital component in the enterprise.

…c) Urban clean water supply infrastructure assets are temporarily assigned to the subject for management.

…5. Based on the results of the review and classification as prescribed in Clauses 3 and 4 of this Article, the provincial-level People's Committees shall assign the specialized agency in charge of clean water supply to prepare a plan for assigning management and exploitation of the property according to the provisions of this Decree specified in Articles 5, 6, 7 and 8 of this Decree for:

… b) Urban clean water supply infrastructure assets specified at Points b and c Clause 4 of this Article, except for the case of application of the form of return of property value to the State specified in this Clause 10".

- According to the provisions of Clause 10, Article 26 of Decree No. 43/2022/ND-CP of the Government, the form of handing over with return of property value to the State applies to urban clean water supply infrastructure assets. The market has assigned to enterprises with state capital in the form of property assignment, excluding the state capital component in the enterprise.

- According to the provisions of Clause 2, Clause 3, Article 5 of Decree No. 43/2022/ND-CP, then:

"Article 5. Objects and forms of delivery of clean water supply infrastructure assets

… 2. Entities assigned to urban clean water supply infrastructure assets include:

a) Public non-business units with the function of supplying clean water.

b) Enterprises with state capital have the function of producing and trading clean water in accordance with the provisions of the law on investment, the law on enterprises, and the law on the production and trading of clean water.

c) Agency specialized in clean water supply.

3. Form of delivery of clean water supply infrastructure assets

a) Deliver clean water supply infrastructure assets in the form of increasing assets to public non-business units specified in …, Point a, Clause 2 of this Article (hereinafter referred to as units), ....

b) Deliver clean water supply infrastructure assets in the form of increasing state capital to enterprises with state capital specified in …, Point b, Clause 2 of this Article to carry out the production and business of clean water in accordance with the law on management and use state capital to invest in production and business at enterprises, the law on enterprises and relevant laws.

c) Assign clean water supply infrastructure assets to a specialized agency in charge of clean water supply to draw up exploitation plans by the following methods:

Selling assets in the form of auctions to organizations to manage, use and exploit assets for the purpose of producing and trading clean water in case the property cannot be delivered to the specified subjects. at Point a, Point b of this Clause;…”.

- In Articles 6 and 7 of Decree No. 43/2022/ND-CP stipulating the competence, order and procedures for handing over assets of urban clean water supply infrastructure to public non-business units and enterprises with capital State, specialized agencies on clean water supply.

In Clause 5, Article 1 of Decree No. 32/2018/ND-CP dated March 8, 2018 of the Government (amending and supplementing a number of articles of Decree No. 91/2015/ND-CP dated October 13, 2015 of the Government on state capital investment in enterprises and management and use of capital and assets in enterprises) stipulates:

"5. Clause 2, Article 12 is amended and supplemented as follows:

2. Enterprises that continue to invest capital by the State to maintain the proportion of shares and contributed capital of the State specified in Clause 1 of this Article operate in the following industries and fields:

a) Management and operation of airports and airfields; airport operation services;

b) Management and maintenance of the road and inland waterway system; maintenance of the national railway infrastructure system;

c) Navigation information, monitoring and aviation meteorological services;

d) Large-scale mining of minerals according to current regulations on classification of mineral deposits;

đ) Searching, exploring, developing fields and exploiting oil and gas;

e) Ensuring the essential needs for production development and improving the material and spiritual life of ethnic minorities in extremely difficult socio-economic areas, mountainous, deep-lying and remote areas;

g) Planting and processing rubber and coffee in areas with special socio-economic difficulties, strategic areas, mountainous, deep-lying and remote areas associated with national defense and security.

In Section 1, Part III, Appendix Criteria for classification of State-owned enterprises and state-owned enterprises that change ownership, rearrange and divest capital in the 2021-2025 period, issued together with Decision No. 22/2021 /QD-TTg dated July 2, 2021 of the Prime Minister on the criteria for classifying State-owned enterprises and state-owned enterprises implementing ownership transformation, rearrangement and divestment in the 2021-2025 period, stipulates:

"III. Enterprises undergoing ownership transformation or divestment, with the State holding over 50% to less than 65% of charter capital, operating in the following industries and fields:

1. Exploiting, producing, supplying clean water and draining urban and rural water".

At the same time, in Clause 2, Article 7 of Decision No. 22/2021/QD-TTg stipulates: "2. For enterprises that have completed ownership transformation and divestment according to Decision No. 58/2016/QD-TTg dated December 28, 2016 of the Prime Minister, the State capital ratio shall not be increased at enterprises to conform to the Classification Criteria attached to this Decision, unless otherwise approved by the Prime Minister or otherwise prescribed by specialized law". 

Pursuant to the above provisions and the content of Mr. Do Van Tien's question, the delivery of urban clean water supply infrastructure assets temporarily assigned to enterprises with state capital shall be carried out in the following forms: in Clause 2, Clause 3, Article 5; Articles 6, 7 and 8 of Decree No. 43/2022/ND-CP of the Government; does not apply the form of delivery with return of property value to the State.  

In case of handover of urban clean water supply infrastructure assets temporarily assigned to enterprises with State capital in the form of recording an increase in State capital in enterprises, it must comply with the provisions of law on management and use of state capital invested in production, doing business at enterprises, the law on enterprises and relevant laws; in which related to the ratio of State capital in enterprises, the specialized agency on clean water supply of the province needs to report to the Provincial People's Committee for a written request to the Ministry of Planning and Investment (the agency in charge of submitting to the Prime Minister). The Prime Minister signed and promulgated Decision No. 22/2021/QD-TTg dated July 2, 2021 to guide the implementation in accordance with the law.

Accordingly, the People's Committee of the province considers and decides on the allocation of infrastructure assets for urban clean water supply to ensure efficiency, in accordance with the provisions of the law and take responsibility for their decisions.

In addition, the settlement of investment capital of the city's surface water plant works must comply with the provisions of the law on investment, the law on construction and other relevant laws.