All enterprises and economic organizations to take investment and export credits

VNGOVNet – The Government has just issued Decree 151/2006/NĐ-CP on State investment and export credits. Accordingly, the Decree will be applied to all enterprises and economic organizations with the projects to be able to take investment loans, investment credit guarantees, and post-investment supports; Vietnamese ones with export contracts; foreign organizations importing goods will capital loans and export credit guarantees; and the Vietnam Development Bank (VNDB) and other relevant organizations and individuals in doing State investment and export credits.

December 23, 2006 8:00 AM GMT+7

The Decree clearly stipulates that, in case of the State investment credits, the maximum loan to each project can be 70% of its total investment capital. The VNDB will decide the loan and its term (12 years in maximum) on the basis of the project’s capital recovery and the investor’s debt payment ability. The lending term can be 15 years for some special projects (Group-A projects, and those on planting of pine and rubber trees).

The interest rate is fixed at the moment of signing the credit contracts for the first time and will not be changed during the entire term. The interest rate of investment loans is calculated by that of the Governmental five-year bond plus 0.5% per year (paid in Vietnamese currency); the interest rate of overdue debt is equivalent to 150% of the normal interest rate. The projects on socio-economic infrastructure construction; agricultural and rural development, and investments in disadvantaged localities will enjoy an interest rate equivalent to that of the Governmental five-year bond and post-investment support as well.

For export credits, the maximum loan will be 85% of the value of the signed contract or the letter of credit (in case of the loans before the goods delivery) or the value of the valid bill of exchange (in case of the loans after the good delivery). The loan term must not exceed 12 months. The interest rate will be decided by the Ministry of Finance in line with the market interest rate.

In case of force majeure (natural calamities, fire, unexpected accidents, political risks, wars) in which investors or exporters suffer heavy damages, go bankrupt or dissolved, the applicable solution is to readjust the term of payment, debt extension, debt quarantine and debt quittance.

The VNDB General Director will readjust the term, deadline and rate of debt payment in each term, and extend the debts (total time of extension not exceeds one-third of the loan term). The Minister of Finance shall decide the interest debt quarantine and quittance for investors or exporters on the proposal of the VNDB General Director. To absolve the original debt, the Ministry of Finance shall collaborate with the Ministry of Planning and Investment and the State Bank of Vietnam in inspecting and submitting to the PM for final decision.

By Hoàng Nguyên Hồ

(Source: Decree 151/2006/NĐ-CP)