Credit Institutions in Vietnam Now Offering Foreign Currency Loans
May 14 – In a recent interview, Vice Director of the Central Institute for Economic Management Nguyen Dinh Cung said that the role of the State has to conform to the requirements of the market, the corporate sector, plus other stakeholders. In this way, the State would not be only build institutions and policies, but could also help the market work more efficiently – paving the way for economic restructuring.
The main target is to redistribute resources efficiently throughout the entire economy to achieve an economic structure which allows higher growth, greater competition, and a higher degree of sustainability.
Following this plan, Decision No. 857/QD has been enacted by the State Bank of Vietnam. According to this measure, credit institutions (including foreign bank branches) can now make loans in foreign currencies to customers residing in the country.
Credit institutions are authorized to engage in foreign exchange and may make short-term loans in foreign currencies to resident customers for use in business and export operations. The borrowers must prove that they are able to make repayments from their own foreign currency revenue streams. Credit institutions must then evaluate and assure that production plans are feasible and that borrowers fully satisfy conditions for borrowing as required by law.
The State Bank has also asked all resident borrowers to sell loans from foreign institutions to domestic banks at spot foreign exchange rates, unless such borrowers are allowed by law to make payments in foreign currency. This decision will remain in effect until the end of this year.
Dezan Shira & Associates is boutique professional services firm providing foreign direct investment business advisory, tax, accounting, payroll and due diligence services for multinational clients in Vietnam. To contact the firm, please email firstname.lastname@example.org, visit www.dezshira.com, or download the firm’s brochure here.