Laws of Vietnam

1. The State Bank is the State managerial organ for the borrowings and repayments of foreign debts by businesses of all economic sectors which are founded and operate according to the current law in Vietnam, including the borrowings of foreign capital by businesses founded and operating under the Foreign Investment Law in Vietnam.

2. All businesses are entitled to borrow directly from foreign countries or re-borrow from foreign loans of the Government or the State Bank according to the mode of self-borrowing and self-assuming of responsibility for repayment.

- Direct borrowing: The business makes direct borrowing from and repayment to the foreign country.

- Re-borrowing: The business borrows from a bank in the country the capital from foreign loans of the Government or the State Bank.

3. The State Bank manages the borrowings from and repayments to foreign countries through the annual plan or five-year plan for the overall level of borrowings from and repayments to foreign countries already approved by the Prime Minister.

4. The State Bank shall synthesize and draw up the general plan for borrowings and repayments of foreign debts on the basis of:

- The need in capital and capability of debt repayment of the State Bank in connection with commercial borrowings and debt repayments;

- The need in capital borrowings and the capability of debt repayment to foreign countries of the business;

- The situation of the international balance of payment;

- The monetary policy of the State in each period.

The drawing up of the plan for borrowing from and debt repayment to foreign countries by the businesses shall be effected according to the regulations of the Governor of the State Bank.

5. All borrowings from and debt repayments to foreign countries by the businesses shall be effected only through the banks with authorization to carry out external transactions (but in regard to the Commercial Banks and the Investment and Development Banks which are authorized to conduct external transactions, they are allowed to make direct borrowings from and debt repayments to foreign countries). The re-borrowings by businesses of the capital from foreign loans of the Government or the State Bank, shall be effected through the Commercial Banks and the Investment and Development Banks appointed by the State Bank and the Ministry of Finance (hereafter called lending bank in abbreviation).

6. The borrowings from foreign countries include the following:

- Borrowings by the Government (including borrowings in the form of commodities or cash);

- Borrowings by businesses (including credit organizations) in the form of commodities or cash and according to the modalities of self-borrowing and self-repayment;

- Borrowings from foreign countries by the State Bank.

1. A business is entitled to re-borrow government capital from foreign loans to implement projects requiring capital reimbursement (including investment projects in infrastructure) already agreed upon by the Vietnamese Government and the foreign side. The terms for re-borrowing shall be jointly agreed upon by the Ministry of Finance, the State Bank and the lending bank.

If the borrowing from foreign countries is interest-free, the Ministry of Finance and the State Bank shall agree on a definite interest rate.

2. In regard to the capital sources borrowed by the State Bank from foreign countries, the State Bank shall designate the lending bank. Basing itself on the terms and conditions already signed with foreign countries, the State Bank shall agree with the lending bank on the conditions for re-borrowing by the business. In principle, the re-borrowing conditions such as the term, interests rate and fee shall not have any preference on the conditions of the borrowing by the State Bank from foreign countries and not be higher than the conditions of borrowings in the country.

3. Conditions for a business to re-borrow (including government capital and capital of the State Bank borrowed from foreign countries):

a/ Concerning the investment projects: Projects, parts of projects, new constructions, transformations, expansions, renewal of technology in the domains of production, business and services.

b/ Projects capable of capital redemption or guaranteeing reimbursement of both principal and interest in the prescribed time-limit.

c/ Sound financial situation of the business: free from unpaid taxes to the budget, no overdue debt to the units inside and outside the country.

d/ The business must use the loan according to the right purpose and plan already approved and must submit itself to the supervision of the lending bank.

The lending bank shall define and guide the re-borrowing mentioned in this article.

4. Repayment shall be made in the same foreign currency used in the borrowing. If repayment is made in another foreign currency or in the Vietnamese Dong, it must have the agreement written in the credit contract concerning such matters as the rate of exchange and other related matters.

5. The lending bank shall have the last say concerning the re-borrowing by the business based on the conditions for this matter sated in Point 3, Part II of this Circular. Within 30 days of receiving the dossier of the business, the lending bank has the responsibility to notify the latter of its opinion. If after examination it finds that the business does not fill the conditions stated in Point 3, Part II of this Circular, the lending bank must report to the Governor of the State Bank, to the Minister of Finance (if it is a government loan) and also inform the owning echelon of the business so that all sides could examine and settle the question together. If it is a re-borrowing from the State bank, the lending bank shall have only to report to the Governor of the State Bank for consideration and decision.

6. Basing itself on the debt payment schedule in the lending agreement between Vietnam and the foreign country, the lending bank shall agree with the business on the concrete term for repayment, taking into consideration the time for money transfer inside and outside the country in order to ensure repayment on schedule to the foreign country.

7. The lending bank has the responsibility to recover the capital to repay to the State Budget and the State Bank fully and on the prescribed time.

a/ In the process of monitoring the use of the loan, if the business meets with difficulty in repayment, the lending bank shall jointly with the business find the suitable measure to settle the difficulty. When necessary, it must report to the State Bank, the Ministry of Finance and the higher State organs of management to seek their cooperation in the solution.

b/ If the business fails to repay the debt as prescribed in the loan contract, the lending bank shall have to use its own capital to repay to the State Budget and the State Bank. In particular, in regard to the government loans for the projects assigned by the government and which carry an interest rate approximating the interest rate on the market and for which the capacity for capital redemption is low, repayment is allowed to be made according to the guidance of the Ministry of Finance.

8. Every month, if the owner of the project uses the re-loaned capital through a certain lending bank, he must report up to the 10th day at the latest on the withdrawal of capital and debt repayment situation of the previous month according to the guidance of the lending bank.

9. Every quarter and every year, the lending bank shall make an overall report to the lending bank of the superior echelon and also to the director of the State Bank branch in the province or city where the business is located, for information, monitoring and management.

10. Every quarter and every year, the general directors of the Commercial Banks and the Investment and Development Banks shall take the responsibility of drawing up general reports to the Governor of the State Bank on the results of the implementation, the real amount already borrowed and repaid of each business. The terms for filing the reports are defined as follows:

- Quarterly report: Within the first ten days of the first month in the next quarter at the latest.

- Annual report: Up to the 15th of January of the next year at the latest.

1. The following conditions must be met in effecting foreign loans in the form of self-borrowing and self-repayment by a State-owned business for investment in capital construction:

a/ The loan lies in the overall level of foreign loans already approved.

b/ The economic and technical feasibility study or report and the estimate of expenditures have been approved by an authorized echelon. The order of elaborating and approving the economic and technical feasibility study must follow the regulations of the Statute on capital construction management.

c/ A written agreement from the Guarantee Bank (if so requested by the lending party).

2. In regard to foreign loans according to the form of self-borrowing and self-repayment by the State-owned business for production and business purposes, the following conditions must be met:

a/ The loan lies in the overall level of foreign loans already approved.

b/ The production and business plan has been approved by the managerial office of higher level of the business. The examination and approval of this plan shall follow the guidance of the owning level of the business.

c/ The business owes no tax to the State Budget, has no overdue debt to the units inside and outside the country. The borrowing from foreign capital is aimed at implementing the functions and tasks of the business.

d/ The production and business plan of the business must assure the necessary amount of foreign exchange for debt re-payment.

e/ Acceptance of guarantee in principle from the Guarantee Bank if the lending party so requests.

3. A State-owned business can sign a loan for a capital construction investment project with a foreign country (according to Point 1, Part III of this Circular) only after its application for loan has been approved in writing by the State Bank and the Ministry of Finance on the conditions for loan and repayment. In regard to the loans for production and business operations mentioned in Point 2, Part III on this Circular, the loan dossier must be approved in writing by the State Bank.

4. The dossier of an application for loan from a foreign country by a State-owned business for capital construction investment and production and business shall comprise the following:

- The application for foreign loan sent to the Bank;

- The plan of production and business and the plan for debt repayment of the business already approved by the owning echelon;

- Acceptance of guarantee from the Guarantee Bank if the lending party so requests;

- The final agreement with the foreign lender on conditions such as interest rate, accompanying fees, term of loan borrowing, debt repayment and grace period, conditions of guarantee, conditions for capital withdrawal and payment and other conditions related to the loaning contract to be signed;

- In regard to a State-owned business borrowing capital for capital construction investment, the economic and technical feasibility study must be examined and approved by an authorized office;

- The investment license shall be issued by the office of the authorized echelon (if it is an enterprise with foreign invested capital).

5. The credit organizations which are authorized to conduct external transactions are entitled to directly borrow foreign capital within the limit of the level of loans and repayments to foreign countries already approved by the Governor of the State Bank.

6. The guarantee for the businesses to borrow foreign capital shall be effected according to the Statute on Foreign Loan Guarantee and Counter-Guarantee issued by the Governor of the State Bank.

7. The non-State businesses are entitled to directly borrow capital from foreign countries according to the form of self-borrowing and self-debt repayment on condition that the loan lies within the overall level of loans and repayments to foreign countries already approved. If the loans are aimed at implementing a capital construction investment project, the conditions for the loan must be approved by the State Bank.

8. Within 30 days after the official signing of the loan agreement, the business must supply copies of the documents signed with the foreign side to the State Bank, the Ministry of Finance and the Guarantee Bank.

9. The business is allowed to transfer the repayment to the foreign country only if this transfer complies with the Statute on Management of Foreign Currencies and the loan has been certified by the State Bank in the process of filling the procedures on foreign loans. All the capital withdrawals and debt repayments to the foreign country must be effected through the banks that are authorized to carry out foreign transactions.

10. The owning echelons of the business shall be answerable to the Prime Minister, the Governor of the State Bank and the Minister of Finance for the following:

- The economic efficiency of the production and business plan of the business, guiding and creating conditions for the business to carry out the plan already approved in order to ensure repayment of the foreign debt in full and at the prescribed time, including both principal and interest.

- To draw up an overall report on the implementation of borrowing and payment of debt to the foreign side in each quarter and in each year by the business. The terms for the filing of the report are defined as follows:

- Quarterly report: Within the first ten days of the first month in the next quarter at the latest.

- Annual report: Up to the 15th of January of the next year at the latest.

The report shall be sent to the Central State Bank and the Ministry of Finance.

1. Enterprises with foreign invested capital (including a business cooperation contract) set up under the Law on Foreign Investment in Vietnam are eligible for permission to borrow foreign capital.

2. Enterprises with foreign invested capital are entitled to borrow foreign capital like all other Vietnamese businesses in the two following forms:

a/ Re borrowing foreign loans to the State Bank through the Commercial Banks and the Investment and Development Banks;

b/ Direct borrowings of foreign capital (self-borrowing and self-repayment).

3. Enterprises with foreign invested capital are entitled to make direct borrowing from foreign countries as defined at the various points in Chapter III of this Circular on the following conditions:

a/ If the borrowings result in the increase of the investment capital or the capital for the realization of business cooperation contracts, they must have the approval of the office issuing investment licenses;

b/ When paying the foreign debt (both principal and interest), the enterprise must see to it that this shall not cause a reduction of the prescribed capital of the enterprise and ensure the strict observance of the priority order defined in Decree No. 18-CP on April 16, 1993 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam;

c/ In case the foreign lender requests the transfer of the loan to the account it opened in a foreign bank, this transfer must have the approval of the Governor of the State Bank.

4. In special cases, the Government shall decide on the guarantee for the foreign loans of an enterprise with foreign invested capital.

1. Periodically or when necessary, the branches of the State Bank in the provinces, cities and the lending bank shall inspect or control the borrowing and repayment of foreign debts of the business of which they have approved the borrowing dossiers. The results of this inspection, control and handling or suggestions shall be immediately sent to the Central State Bank. If the business has not used the loan conformably with its aims (with regards to re-borrowing plan), the lending bank is entitled to suspend the withdrawal of capital of this business and report to the State Bank, the Ministry of Finance and the owning echelon of the business so as together to take decision on a solution.

2. All violations of this Circular shall be dealt with in accordance with the law in force, depending on their seriousness.

1. This Circular takes effect from the date of its signing. All previous regulations contrary to this Circular are now annulled.

2. The heads of departments and divisions, the Chief of Administration, the Chief-Inspector of the Central State Bank, the directors of the State banks in the provinces and cities, the general directors of the Commercial Banks, the Investment and Development Banks have the responsibility to guide the implementation of this Circular within the limit of their powers and functions.

3. The ministries, branches and offices attached to the Government, the People's Committees of provinces and cities shall, according to their functions and tasks, coordinate their actions to guide the implementation of this Circular.