Vietnam’s Circular 153: Procedures for consideration and approval of foreign loans

According to the Regulations issued together with Circular No. 153/2014/TT-BTC of the Ministry of Finance of Vietnam, procedures for consideration and approval of foreign loans are as follows:

1. For single-member limited liability companies owned 100% by the state:

- The company's Board of Members and the General Director of the enterprise shall appraise and decide on investment or submit to competent authorities for investment approval, in accordance with the organization's charter and current regulations for investment projects using foreign loans. This must include clear objectives, project effectiveness, and sources of funding for project implementation.

- Develop a plan for mobilizing, using, and repaying the loan.

- Report to the owner for assessment and approval of the proposed project to borrow foreign loans through self-borrowing and self-repayment, as regulated.

2. For the owner:

After receiving the request letter and complete documentation from the enterprise within the management scope, the owner conducts an assessment of the capital mobilization plan and the use of the enterprise's loan according to regulations. The assessment includes:

- The proposed project using foreign loans must be consistent with the industry's development strategy, investment plans, and the enterprise's production and business activities.

- The total investment amount of the project.

- The capital structure of the project (owner's capital, foreign loans, other capital).

- The capital allocation plan for project implementation and the owner's ability to balance the capital for project implementation.

- The feasibility and effectiveness of the project.

- The project's ability to repay the loan (from depreciation, project profits).

- The financial capacity of the owner.

Based on the assessment results, the owner approves the loan plan and submits a set of documents to the Ministry of Finance for consideration and approval of the enterprise's foreign loan.

3. For the Ministry of Finance:

Based on the documents received from the owner, the Ministry of Finance conducts an examination of the following contents to consider for loan approval:

- The completeness and reasonableness of the documents provided.

- The necessity of the loan.

- The loan's use must be consistent with the industry's development plan, strategy, and the approved development objectives of the enterprise.

- The owner's capital allocation ability.

- The project's financial effectiveness.

- The project's ability to repay the loan.

- The financial situation of the enterprise.

Within 15 working days of receiving the complete documents from the owner, and based on the examination results, the Ministry of Finance sends a loan approval letter to the owner and the enterprise for cases that meet the conditions specified in Article 4 of these regulations. If the enterprise does not meet the conditions, the Ministry of Finance provides a written response stating the reasons for not accepting the loan.

4. For enterprises owned by the state with more than 50% of charter capital:

If the enterprise needs to borrow foreign loans through self-borrowing and self-repayment and has completed the necessary procedures according to the regulations in the company's charter regarding borrowing activities and meets the specified conditions, the state owner of the capital in the enterprise will consider and direct the authorized representative to conduct the assessment. Within 15 days of receiving the assessment results, the authorized representative reports to the owner for approval of the loan plan, ensuring the project's ability to repay and its effectiveness. After completing the assessment and approval procedures for the foreign loan, the authorized representative sends the signed loan agreement and a copy of the loan contract to the Ministry of Finance for monitoring in accordance with regulations.

View more details at Circular No. 153/2014/TT-BTC of the Ministry of Finance of Vietnam, effective from December 04, 2014.

Ty Na

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