Creating favourable conditions for enterprises to borrow foreign capital

Conditions for enterprises to borrow foreign capital have become more favourable consistent with current market requirements. Photo: Internet

In 2014, Circular 12/2014/TT-NHNN on conditions for foreign loans of enterprises not guaranteed by the Government (Circular 12) of the State Bank (SBV) was implemented. Experts said that Circular 12 had set a management framework on foreign loan conditions for enterprises without a government guarantee, suitable to the economic context.

However, after more than 9 years of implementation, self-borrowing and self-payment of foreign loans have been greatly affected by fluctuations in the international financial market. Many experts believe there have been many complex and unpredictable fluctuations in the recent domestic and international economic context, so adjusting regulations on foreign loan conditions is essential. Therefore, Circular 08/2023/TT-NHNN (Circular 08) regulating foreign loans not guaranteed by the Government was issued on June 30, 2023, with the spirit of focusing on solving problems arising during the implementation of Circular 12, which has created favourable conditions for enterprises when making foreign loans.

Accordingly, Circular 08 stipulates that the subjects applying the regulations on foreign loan conditions not guaranteed by the Government include residents being enterprises, cooperatives, cooperative s, credit institutions and foreign bank branches established and doing business in Vietnam are foreign borrowers (borrowers); credit institutions, foreign bank branches in Vietnam - where the borrower opens a loan account and repays foreign debt (bank providing account services).

Circular 08 also stipulates that foreign borrowers in the form of import of goods with deferred payment are not required to comply with the conditions for foreign loans specified in this Circular. Regarding the principle of using foreign loans, Circular 08 stipulates that the borrower is fully responsible for using foreign loans for the right purposes. If the loan has been withdrawn but temporarily not used for lawful foreign borrowing purposes, the borrower can deposit this money source at credit institutions and foreign bank branches operating in Vietnam. However, the maximum term of each deposit cannot exceed 1 month.

Ms Hoang Thi Huyen Trang, Deputy Head of the Foreign Loans and Loan Management Division, Department of Foreign Exchange Management (SBV), emphasized that, compared with Circular 12, Circular 08 created favourable conditions for enterprises when implementing foreign loans such as no requirement to compare loan costs when restructuring foreign debt; not requirement to foreign loans in the form of deferred import of goods to comply with loan conditions; Supplementing regulations on loan using plans and loan structuring plans; Exchange rate used for calculating foreign loan limit ...

In addition, Circular 08 does not change the management method for short-term and medium-long-term foreign loans; it Reduces 01 administrative procedure related to the approval of foreign loans in Vietnam Dong and does not give rise to any additional administrative procedures compared to Circular 12. Stipulating foreign loan conditions in the Circular supports enterprises in mobilizing foreign loans for production and business within a reasonable range and ensuring national foreign debt safety norms.

Recently, the SBV has urgently issued many legal documents, including documents on foreign exchange management, to create a complete legal framework that closely follows the market to ensure safe and adequate foreign exchange management. In the process of implementing these documents, the State Bank, as well as relevant state management agencies, will strengthen the inspection and examination of activities of credit institutions and enterprises related to foreign exchange activities.

Therefore, as an account service provider for customers and foreign borrowers, it is recommended that credit institutions should increase their responsibilities in properly grasping regulations, building a unified implementation process throughout the system, disseminating and guiding customers to understand and comply with regulations on foreign exchange management in general and regulations on self-borrowing and self-paying foreign loans in particular.

The representative of the Foreign Exchange Management Department requested credit institutions to raise the responsibility of the bank providing account services when performing payment and money transfer operations in current transactions and capital transactions, storing records and documents when providing account services, serving the inspection process of the management agencies; guide customers to comply with regulations on foreign exchange management, conduct money transfer transactions following regulations.