04 thing you should know about the Local Development Investment Fund in Vietnam

04 thing you should know about the Local Development Investment Fund in Vietnam (Internet image)

1. What is local development investment fund?

According to Clause 1, Article 3 of Decree 147/2020/ND-CP, a local development investment fund is an off-budget state financial fund established and operated by the People's Committee of a province or centrally run city not for the purpose of profit, preservation, and development of capital; performing the function of lending and investing in the locality according to the provisions of Decree 147/2020/ND-CP. Provincial-level People's Committees perform the function of representing the State Owner of the Fund.

In particular, the Local Development Investment Fund has legal status, charter capital, and a seal and may open accounts at the State Treasury and commercial banks lawfully operating in Vietnam in accordance with regulations.

(Clause 1, Article 3 of Decree 147/2020/ND-CP).

2. Principles and scope of operation of the Local Development Investment Fund in Vietnam

2.1. Principles of Operation of the Local Development Investment Fund in Vietnam

Local development investment funds are operated on the following principles:

- Financial autonomy, not for profit; preserving and developing capital; operating independently of the state budget.

- Limited liability within the charter capital.

- Make loans and investments on the right subjects and conditions according to the provisions of Decree 147/2020/ND-CP.

(Clause 1, Article 4 of Decree 147/2020/ND-CP).

2.2. Scope of operation of the Local Development Investment Fund in Vietnam

The scope of operation of the Local Development Investment Fund is regulated as follows:

- Mobilize medium and long-term capital from domestic and foreign organizations in accordance with the provisions of this decree and relevant laws.

- Lending to projects on the list of investment and lending fields of the Fund according to the provisions of Decree 147/2020/ND-CP.

- Investment in projects; investment in the establishment of economic organizations; investment in capital contributions; purchase of shares and capital contributions of economic organizations on the list of investment and lending fields of the Fund as prescribed in Decree 147/2020/ND-CP.

- Entrustment for lending and investment; receiving entrustment management of state financial funds in the locality, domestic and foreign organizations and individuals according to the provisions of law and Decree 147/2020/ND-CP.

- Carry out the issuance of local government bonds as authorized by the People's Committee of the province in accordance with the law.

(Clause 2, Article 4 of Decree 147/2020/ND-CP)

3. Conditions for setting up a new Local Development Investment Fund

To be able to establish a local development investment fund, it is necessary to meet the conditions specified in Article 6 of DDecree 147/2020/ND-CP, specifically as follows:

- Having actual charter capital at the time of establishment of not less than 300 billion VND.

- Having a project to establish a local development investment fund approved by the provincial People's Council.

- There is a draft charter on the organization and operation of the Local Development Investment Fund in accordance with the provisions of Article 8 of Decree 147/2020/ND-CP.

4. Responsibilities and powers of thhe Local Development Investment Fund in Vietnam

4.1. Responsibilities of the Local Development Investment Fund in Vietnam

According to Clause 1, Article 5 of Decree 147/2020/ND-CP, local development investment funds must perform the following responsibilities:

- Make investments and loans according to the list of investment and lending fields promulgated by the provincial People's Committee in accordance with the provisions of Decree 147/2020/ND-CP.

- Implement financial, accounting, auditing, and reporting regimes as prescribed in Decree 147/2020/ND-CP.

- Comply with the Fund's Charter on organization and operation.

- Be subject to inspection, examination, and audit by competent state management agencies according to regulations; provide data; and publicly announce the financial situation in accordance with law.

- Comply with the provisions of Decree 147/2020/ND-CP and the provisions of law related to the operation of the Local Development Investment Fund.

4.2. Powers of the Local Development Investment Fund in Vietnam

The powers of the Local Development Investment Fund are specified in Clause 2, Article 5 of Decree 147/2020/ND-CP, specifically as follows:

- To organize and operate in accordance with this Decree, the Fund's Charter on organization and operation, and relevant laws.

- To select projects that fully meet the conditions for investment and lending according to the provisions of Decree 147/2020/ND-CP.

- To be selected, arranged, trained, and employed according to the provisions of Decree 147/2020/ND-CP, the Fund's Charter on organization and operation, and relevant laws.

- To refuse a request to provide information or use the Fund's resources, if such a request is contrary to the provisions of law.

- To contact and coordinate with relevant authorities and units in the area to search for and build investment projects.

Thanh Rin

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