Vietnam: 03 support policies for people suffering from flood damage

On October 23, 2020, the Governor of the State Bank sent the Official Dispatch No. 7751/NHNN-TD requesting the chairmans of the Board of Directors, general directors of credit institutions, foreign bank branches, directors of the branches of the State Bank of the provinces and cities: Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Tri, Thua Thien Hue, Da Nang, Quang Nam, Quang Ngai, Binh Dinh, Phu Yen, Khanh Hoa, Kon Tum, Gia Lai, Dak Lak, Dak Nong, Lam Dong to immediately perform a number of work contents to support people to overcome the consequences of floods in the Central and Central Highlands regions.

Beneficiaries of policies to support agricultural and rural development and a number of measures to overcome consequences caused by natural disasters for these subjects are specified as follows:

1. Beneficiaries of support policies

According to Clause 2 Article 2 of the Decree No. 55/2015/NĐ-CP of Vietnam’s Government (amended by Clause 1 Article 1 of Decree No. 116/2018/NĐ-CP), beneficiaries of support policies include:

- Individuals living in rural areas or doing agribusiness or farm owners;

- Cooperatives and cooperative alliances in rural areas or those engaged in agriculture business;

- Enterprises operating in rural areas, except for the following entities: real estate enterprises, mining enterprises, power generation enterprises and enterprises not specified in Point b Clause 2 this Article which are located in industrial zones or export processing zones;

- Providers of agricultural supplies for agriculture production and enterprises producing, purchasing, processing or consuming agricultural products and byproducts.

2. Support policies

Guaranteed loan up to VND 03 billion:

According to Clause 2 Article 9 of the Decree No. 55/2015/NĐ-CP of Vietnam’s Government (amended by Clause 3 Article 1 of Decree No. 116/2018/NĐ-CP), individuals, family households, artels, business households, cooperatives, cooperatives alliances and farm owners, shall be provided with unsecured loans dependent on the following limits:

- A maximum amount of VND 100 million for individuals and family households which reside outside of rural areas and do agribusiness (except for individuals, family households investing in industrial and fruit perennials);

- A maximum amount of VND 200 million for individuals and family households which reside within rural areas;

- A maximum amount of VND 200 million for individuals, family households investing in industrial and fruit perennials;

- A maximum amount of VND 300 million for artels and business households;

- A maximum amount of VND 500 million for aquacultural production households, offshore fishery households signing the contract for product consumption with direct processing and export organizations;

- A maximum amount of VND 01 billion for cooperatives, farm owners that operate within rural localities, or carrying out business operations in the agriculture sector;

- A maximum amount of VND 02 billion for cooperatives specializing in aquacultural production or offshore fishery or provision of services for the offshore fishery; aquacultural farm owners; cooperatives alliances operating within rural localities or carrying out business operations in the agriculture sector, exclusive of entities specified at Point h Clause 2 of this Article;

- A maximum amount of VND 03 billion for cooperatives alliances specializing in aquacultural production or offshore fishery or provision of services for the offshore fishery.

Exemption and reduction of loan interest rates:

This is one of the important contents to support people to overcome the consequences of floods in the Central and Central Highlands regions that the State Bank of Vietnam has issued a document to send to competent individuals and organizations. Therefore, it is necessary to wait for the decision on loan interest exemption or reduction from credit institutions.

Debt freezing shall be considered for debtors:

Debt freeze means that credit institutions have not yet collected debts from customers and do not charge interest on loans arising during the time of debt freezing.

According to Clause 2 Article 12 of the Decree No. 55/2015/NĐ-CP of Vietnam’s Government (amended by Clause 6 Article 1 of Decree No. 116/2018/NĐ-CP), time limit for consideration for debt freezing is specified as follows:

In case the customer suffers loss of their loans or loan-derived assets due to a large-scale natural disaster or an epidemic or force majeure event or other causes not by faults of such customers as prescribed in Clause 3 Article 14 and Clause 3 Article 15 herein and is considered not yet or not capable to repay debts to the credit institution, such credit institution shall consider to charge-off debts without interest payment within 2 years upon consideration of the consolidated report on customer’s losses submitted to the Prime Minister, State Bank of Vietnam and the Ministry of Finance by People’s Committees of provinces and centrally-affiliated cities (hereinafter referred to as “provinces”). As for cases specified in Clause 3 Article 14 and Clause 3 Article 15 herein, the charge-off duration must not exceed 3 years.

In order to be considered for debt freezing, the damage sufferers need to make a dossier of request for debt freezing, the composition of which is as follows:

- A written notification of the large-scale natural disaster prepared by provincial People’s Committee in case natural disasters;

- An application form for debt charge-off prepared by the customer;

- Documents proving the customer has an outstanding loan, including a copy of loan agreement and loan note;

-  A record on customer’s loss of loans and loan-derived assets which specifies the rate of loss due to the large-scale natural disaster or epidemic, force majeure event or other causes not by faults of the customer and is signed by the credit institution, the customer and competent authority (provincial People's Committees for enterprises and cooperative alliances, district-level People’s Committees for household businesses, cooperatives and farm owners and commune-level People’s Committees for individuals, family households and artels);

A report on appraisal of loss, solvency of the customer, business plan, debt repayment plan after charge-off period and proposal of debt charge-off period made by the branch of credit institution and people's credit funds.

Natural disasters raging in the Central and Central Highlands provinces in recent days have caused a lot of damage to people and property. Households and individuals that are eligible for policies to support agricultural and rural development affected by rains and floods should pay attention to the above 03 support policies to ensure their interests and overcome these difficulties.

Phuong Thanh

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