Vietnam: What is the maximum foreign loan amount used for executing investment projects of borrowers other than credit institutions and foreign bank branches?
- What is the maximum foreign loan amount used for executing investment projects of borrowers other than credit institutions and foreign bank branches in Vietnam?
- What are the methods for proving purposes of foreign loans without the Government's guarantee by borrowers other than credit institutions in Vietnam?
- What is the time for signing agreements on foreign loans without the Government's guarantee in Vietnam?
What is the maximum foreign loan amount used for executing investment projects of borrowers other than credit institutions and foreign bank branches in Vietnam?
Pursuant to the provisions in Clause 1, Article 18 of Circular 08/2023/TT-NHNN as follows:
Limit on foreign loans
1. If the foreign loan capital is used for executing an investment project:
a) The sum of outstanding principal amounts of the borrower’s medium/long-term domestic and foreign loans (including short-term loans that are extended and overdue short-term loans that are treated as medium/long-term loans) used for executing its investment project shall not exceed the limit on borrowed capital of that investment project;
b) The limit on borrowed capital of the investment project prescribed in Point a Clause 1 of this Article is the difference between the total investment capital of the investment project and the paid-in capital of investors as specified in the investment certificate, investment registration certificate or written approval for investment guidelines.
2. If the foreign loan capital is used for executing business plans or other projects of the borrower:
The sum of outstanding debts of the borrower’s medium/long-term domestic and foreign loans (including short-term loans that are extended and overdue short-term loans that are treated as medium/long-term loans) used for this purpose shall not exceed total demand for borrowed capital defined in its plan for use of foreign loan capital approved by an authorized approving authority.
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Thus, the maximum foreign loan amount used for executing investment projects of borrowers other than credit institutions and foreign bank branches in Vietnam is specified as follows:
- The sum of outstanding principal amounts of the borrower’s medium/long-term domestic and foreign loans (including short-term loans that are extended and overdue short-term loans that are treated as medium/long-term loans) used for executing its investment project shall not exceed the limit on borrowed capital of that investment project;
- The limit on borrowed capital of the investment project mentioned above is the difference between the total investment capital of the investment project and the paid-in capital of investors as specified in the investment certificate, investment registration certificate or written approval for investment guidelines.
What are the methods for proving purposes of foreign loans without the Government's guarantee by borrowers other than credit institutions in Vietnam?
Pursuant to the provisions in Clause 4, Article 17 of Circular 08/2023/TT-NHNN as follows:
Article 17. Loan purposes
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4. The borrower shall be required to prove its foreign loan purposes by presenting:
a) Investment certificate, investment registration certificate or written approval for investment guidelines as prescribed by the investment law and other relevant law provisions, if the foreign loan capital is used for executing the borrower’s investment project;
b) The plan for use of foreign loan capital as prescribed in Clause 3 Article 7 of this Circular, if the foreign loan capital is used for executing the borrower’s business plans or other projects;
c) The debt restructuring plan as prescribed in Article 8 of this Circular, if foreign loan capital is used for restructuring the borrower’s foreign debts.
Thus, borrowers other than credit institutions in Vietnam shall prove the purposes of their foreign loans without the Government's guarantee by presenting:
- Investment certificate, investment registration certificate or written approval for investment guidelines as prescribed by the investment law and other relevant law provisions, if the foreign loan capital is used for executing the borrower’s investment project;
- The plan for use of foreign loan capital as prescribed in Clause 3 Article 7 of Circular 08/2023/TT-NHNN, if the foreign loan capital is used for executing the borrower’s business plans or other projects;
- The debt restructuring plan as prescribed in Article 8 of Circular 08/2023/TT-NHNN, if foreign loan capital is used for restructuring the borrower’s foreign debts.
What is the time for signing agreements on foreign loans without the Government's guarantee in Vietnam?
Pursuant to Clause 3, Article 9 of Circular 08/2023/TT-NHNN on foreign loan agreements as follows:
Foreign loan agreement
1. A foreign loan agreement is a document or a set of some documents recording specific agreements between the parties under which the lender provides or promises to provide the borrower with a sum of money or assets (in case a foreign loan is granted in the form of a finance lease contract) which shall be used for specific purposes within a given period of time on the principle of repayment of both principal and interests (if agreement on interests is made).
2. The foreign loan agreement must be made in writing. In case the foreign loan agreement is made in the form of electronic messages, it must comply with provisions of law on electronic transactions.
3. The foreign loan agreement must be signed before or on the day on which the foreign loan capital is withdrawn. The foreign loan agreement may be signed on the day on which the foreign loan capital is withdrawn if:
a) It is a short-term foreign loan which will be disbursed after the loan agreement is signed by the parties; or
b) It is a foreign loan converted from funds for investment preparations of projects granted investment registration certificate in accordance with regulations of law on management of foreign currency for foreign borrowing and debt repayment, and foreign direct investments in Vietnam.
Thus, the foreign loan agreement must be signed before or on the day on which the foreign loan capital is withdrawn.
Note: The foreign loan agreement may be signed on the day on which the foreign loan capital is withdrawn if:
- It is a short-term foreign loan which will be disbursed after the loan agreement is signed by the parties; or
- It is a foreign loan converted from funds for investment preparations of projects granted an investment registration certificate in accordance with regulations of law on management of foreign currency for foreign borrowing and debt repayment, and foreign direct investments in Vietnam.
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