Pursuant to …;

 

Regarding the issuance of the Export Credit Support Regulation

____________________

 

PRIME MINISTER

Pursuant to the Government Organization Law dated September 30, 1992;

Based on the Law on Encouraging Domestic Investment (amended) No. 03/1998/QH dated June 1, 1998;

Based on the Government's Decree No. 50/1999/NĐ-CP dated July 8, 1999 on the organization and operation of the Development Support Fund;

Based on the Government's Resolution No. 05/2001/NQ-CP dated May 24, 2001;

At the proposal of the Minister of Finance,

DECISION:

Article 1. The Export Credit Support Regulation is hereby issued together with this Decision. The Development Support Fund shall implement the export credit support tasks according to the provisions of this Regulation.

Article 2. Increase the charter capital of the Development Support Fund to 50,000 billion VND.

This Decision shall take effect fifteen days from the date of signature.

Article 4. Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of People's Committees of provinces and centrally governed cities, Chairpersons of the Management Board and General Directors of the Development Support Fund are responsible for implementing this Decision.

 

 

REGULATIONS

EXPORT CREDIT SUPPORT REGULATION
(Issued together with Decision No. 133/2001/QĐ-TTg dated September 10, 2001 of the Prime Minister)

Chapter 1

GENERAL PROVISIONS

Article 1. Export credit support is a preferential measure of the State aimed at assisting enterprises, economic organizations, and individuals in developing production and business activities for export goods in accordance with the State's export promotion policy.

Article 2. Forms of export credit support include:

1. Medium and long-term export credit support, including:

a) Medium and long-term investment loans;

b) Post-investment interest rate support;

c) Investment loan guarantee.

2. Short-term export credit support, including:

a) Short-term loans (including loans for export enterprises with deferred payment terms up to 720 days);

b) Bid guarantee and contract performance guarantee.

Article 3. Applicability

1. State-owned enterprises.

2. Joint-stock companies.

3. Limited liability companies.

4. Partnership companies.

5. Private enterprises.

6. Cooperatives and cooperative federations.

7. Households and individuals registered for business.

(Hereinafter referred to collectively as units).

Article 4. Loan currency and repayment currency

1. Loan currency: Vietnamese Dong.

2. Repayment currency: Units repay in Vietnamese Dong. Units with freely convertible foreign currencies may repay in foreign currency at the buying rate of the Vietnam Foreign Trade Bank at the time of repayment.

Article 5. The Development Support Fund shall carry out the export credit support tasks according to the provisions of this Regulation. The Development Support Fund and units have the responsibility to manage and use the export credit support funds for their intended purposes effectively.

Chapter 2

MEDIUM AND LONG-TERM EXPORT CREDIT SUPPORT

PART I. MEDIUM AND LONG-TERM INVESTMENT LOANS

Article 6. Borrowing entities

1. Units with production, processing, and manufacturing projects for export goods where the sales plan of the project achieves an export turnover of at least 30% of annual revenue.

2. Units requiring capital to invest in joint venture production, processing, and manufacturing projects for export goods of Vietnamese enterprises where the sales plan of the joint venture project achieves an export turnover of at least 80% of annual revenue.

Article 7. Conditions for lending

1. Belonging to the borrowing entities specified in Article 6 of this Regulation.

2. Having been reviewed by the Development Support Fund on financial plans and loan repayment plans before making investment decisions.

3. The project has completed investment and construction procedures in accordance with regulations.

4. The investor has the financial capacity to ensure repayment within the committed period.

5. Complying with the provisions on loan security under Article 12 of this Regulation.

Article 8. Loan Capital Amount

1. Group A projects shall be implemented according to the Prime Minister's decision.

2. Group B and C projects shall be implemented according to investment decisions of competent authorities but not exceeding a maximum of 90% of the project's investment capital.

The annual loan amount shall be carried out in accordance with the project's progress.

Article 9. Interest Rate for Loans Shall Be Applied According to the State's Development Credit Interest Rate.

Article 10. Maximum Loan Term Is 10 Years. In special cases, if the loan term exceeds 10 years, it shall be decided by the Minister of Finance upon the proposal of the Fund for Development's General Director..

Article 11. Debt Repayment

1. The project investor shall be responsible for repaying the loan according to the signed credit contract. The investor may use the following sources to repay the debt:

a) Depreciation of fixed assets or revenue from fees for using assets formed with borrowed funds;

b) Post-tax profits and other lawful sources of the investor.

2. Upon the maturity date for repayment, if the debt cannot be repaid, the unpaid debt will be transferred to overdue debt, and the investor must bear the interest rate for overdue debt.

Article 12. The investor may use assets formed from borrowed funds to secure the loan. When the debt has not been fully repaid, the investor shall not transfer, sell, give, donate, mortgage, pledge, or guarantee for borrowing elsewhere.

PART II. INTEREST SUBSIDY AFTER INVESTMENT

Article 13. Subjects Eligible for Interest Subsidy After Investment

Units having projects as stipulated in Clause 1, Article 6 of this Regulation, which have not yet received preferential investment loans or state development credit guarantees, and who borrow from credit institutions legally operating in Vietnam.

Article 14. Conditions for Receiving Interest Subsidy After Investment

1. Units having projects as specified in Article 13 of this Regulation have completed their use and can repay the loan according to the credit contract.

2. Approved by the Fund for Development and signing an interest subsidy contract after investment.

Article 15. The level of interest subsidy after investment for each project is the difference between the interest rate on borrowed funds from credit institutions and the state development credit interest rate at the time of withdrawing the loan. The Minister of Finance shall guide specific matters regarding interest subsidies after investment.

PART III. CREDIT GUARANTEE FOR INVESTMENT

Article 16. Subjects Eligible for Guarantee

Projects as stipulated in Clause 1, Article 6 of this Regulation when borrowing from credit institutions legally operating in Vietnam and requiring a guarantee.

Article 17. Conditions for Guarantee

1. Belonging to the category of credit investment guarantee as stipulated in Article 16 of this Regulation, but have not yet received or only partially received state development credit investment.

2. Have been appraised by credit institutions and approved for lending, with a request letter for the Fund for Development to provide a guarantee.

3. The Fund for Development agrees to provide a guarantee based on the appraisal results of the credit institution.

Article 18. The guarantee level for each project shall be decided by the Fund for Development, up to a maximum of 100% of the loan amount from credit institutions within the total investment capital as prescribed by law.

Article 19. Units receiving credit investment guarantees must pay a guarantee fee of 0.3% per year based on the guaranteed amount.

Article 20. Financial Responsibility When the Investor Cannot Repay the Debt

In case the project investor cannot repay the loan according to the signed credit contract, then:

1. The lending credit institution and the Fund for Development shall share equal financial responsibility for the guaranteed amount.

2. The investor must accept compulsory debt with the Fund for Development for the amount the Fund for Development repays on behalf of the investor, with a penalty interest rate of 130% of the current lending interest rate of the credit institution.

3. When there is a source of repayment, the investor must repay the debt simultaneously in equal proportions to the credit institution and the Fund for Development.

Chapter 3

SHORT-TERM EXPORT SUPPORT CREDIT

PART I. SHORT-TERM LOANS

Article 21. The subjects eligible for short-term loans include units engaged in export activities, including:

1. Units producing, processing, and trading goods prioritized under the annual export promotion program prescribed by the Prime Minister.

2. Export contracts entering new markets or maintaining traditional markets as stipulated by the Prime Minister.

3. Units with projects specified in Clause 1 of Article 6 of this Regulation, which have been granted short-term loans for investment credit from the Development Support Fund upon signing their first export contract within one year after project completion and commencement of production.

Article 22. Loan Conditions

1. Belonging to the category of short-term loan recipients as defined in Article 21 of this Regulation.

2. Having a business plan and ability to repay debt.

3. Possessing an export contract.

4. Complying with the provisions on loan security set forth in Article 26 of this Regulation.

Article 23. Interest Rates for Loans

The interest rate for short-term loans shall be 80% of the State's development investment credit interest rate at the time of signing the credit agreement and shall remain fixed throughout the loan period. The overdue interest rate shall be 150% of the current interest rate.

Article 24. Term of Short-Term Loans

The term of short-term loans shall depend on the need for capital to fulfill export contracts but shall not exceed 12 months. In cases where loans are provided for delayed payment exports up to 720 days, they shall be implemented according to the list of goods prescribed by the Prime Minister.

Article 25. Forms of Loans

1. Pre-Shipment Loans

Units may borrow short-term funds to purchase raw materials and production factors to implement export contracts.

The loan amount shall not exceed 80% of the Letter of Credit value or 70% of the export contract value. For goods exported under quotas, the maximum loan amount shall equal the remaining quota value at the time of borrowing.

2. Post-Shipment Loans

Post-shipment loans shall be provided when the unit presents valid bills of exchange.

a) Valid bill of exchange: A bill of exchange issued by a Vietnamese exporting unit in accordance with international practices regarding bills of exchange, accompanied by export documents consistent with the terms of the Letter of Credit issued by a foreign bank or accepted for payment by a foreign bank.

b) Loan amount: Up to 90% of the value of the valid bill of exchange.

Article 26. Loan Security

1. For pre-shipment loans, the borrowing unit must provide collateral or mortgage assets valued at least 30% of the loan amount.

2. For valid bills of exchange, the unit must present the valid bill of exchange along with the export documents to substantiate the loan.

PART II. BID GUARANTEES AND CONTRACT PERFORMANCE GUARANTEES

Article 27. Units falling under the categories defined in Article 21 of this Regulation may obtain bid guarantees or contract performance guarantees if needed.

1. Maximum guarantee level: Not exceeding 3% of the bid price (for bid guarantees) or 10% of the contract value (for contract performance guarantees).

2. Guarantee period: Corresponding to the duration of the unit's obligation.

3. Units obtaining bid guarantees and contract performance guarantees do not have to pay guarantee fees.

4. If the Development Support Fund has to pay the importing party the guaranteed amount, the guaranteed unit must accept compulsory debt obligations towards the Development Support Fund for the amount paid on behalf of them, with a penalty interest rate of 150% of the short-term loan interest rate for export support credit.

Chapter 4

RISK MANAGEMENT

Article 28. When units encounter risks of being unable to repay loans according to credit contracts, they shall be handled as follows depending on the cause and degree:

1. Due to objective reasons, force majeure: natural disasters, unexpected fires causing loss of assets; due to adjustments in state policies; significant fluctuations in domestic and international market prices affecting commercial activities; bankruptcy of importers or banks serving importers who cannot pay to the units, then the extension of debt repayment period, exemption, reduction of interest on loans, and write-off of debts may be considered. In special cases, part or all of the loan debt may be waived.

2. Other cases shall be handled in accordance with the provisions of the law.

Article 29. Authority to handle risks:

1. For projects borrowing funds and credit guarantees for medium and long-term export support.

a) Extension of debt repayment period shall be decided by the General Director of the Development Support Fund;

b) Exemption and reduction of interest on loans shall be decided by the Minister of Finance based on the proposal of the General Director of the Development Support Fund;

c) Write-off of debts shall be decided by the Prime Minister based on the proposal of the General Director of the Development Support Fund and the opinion of the Ministry of Finance.

2. For units borrowing short-term funds guaranteed for bidding and performance of export contracts.

a) Extension of debt repayment period and exemption and reduction of interest on loans shall be decided by the General Director of the Development Support Fund;

b) Write-off of debts shall be decided by the Minister of Finance based on the proposal of the General Director of the Development Support Fund.

Article 30. Establishment of a risk reserve fund

Annually, the Development Support Fund shall establish a risk reserve fund to address risks arising from units' inability to repay loans according to credit contracts.

1. The establishment of risk reserves for medium and long-term investment projects shall be carried out in accordance with the Government's regulations on state credit for development investment.

2. The establishment of risk reserves for short-term loans, bidding guarantees, and performance guarantees for export contracts shall be carried out as follows:

a) Deduct 10% based on the outstanding balance of overdue short-term loans under 181 days and the amount the Development Support Fund has paid on behalf of the unit guaranteed by the Fund but has not recovered within less than 61 days;

b) Deduct 20% based on the outstanding balance of overdue short-term loans from 181 to under 361 days and the amount the Development Support Fund has paid on behalf of the unit guaranteed by the Fund but has not recovered within 61 to under 181 days;

c) Deduct 30% based on the outstanding balance of overdue short-term loans from 361 days and above and the amount the Development Support Fund has paid on behalf of the unit guaranteed by the Fund but has not recovered from 181 days and above.

3. The amount deducted for establishing the risk reserve fund shall be recorded as operational business expenses of the Development Support Fund.

Chapter 5

SOURCES OF EXPORT CREDIT SUPPORT FUNDS

Article 31. Sources of funds for implementing export credit support are balanced in the annual plan for state credit investment and development assigned by the Prime Minister to the Development Support Fund, including:

1. Registered capital provided by the state budget.

2. Annual direct state budget funding for export support tasks.

3. Funds raised domestically by the Development Support Fund.

4. Funds raised from abroad by the Development Support Fund.

5. Other lawful sources of funds.

Article 32. The State budget shall compensate for the interest rate differential to enable the Development Support Fund to carry out its export credit support mission.

The Minister of Finance shall provide detailed guidance on the compensation for the interest rate differential.

 

Chapter 6

RIGHTS AND RESPONSIBILITIES OF THE STATE MANAGEMENT AUTHORITIES AND THE DEVELOPMENT SUPPORT FUND

Article 33. The Ministry of Finance has the authority and responsibility to:

1. Guide, inspect, and supervise the Development Support Fund's implementation of export credit support in accordance with this Regulation.

2. Coordinate with the Ministry of Planning and Investment to submit to the Prime Minister for decision on the capital plan and sources of funds to implement export credit support.

3. Allocate state budget capital annually; guide the Development Support Fund to mobilize capital to fulfill the export credit support mission.

4. Handle risks within its authority or report to the Prime Minister for handling according to Article 29 of this Regulation.

5. Report to the Prime Minister on the implementation of export credit support; propose financial solutions to promote export credit support activities.

Article 34. The Ministry of Planning and Investment has the authority and responsibility to:

1. Based on export development goals and directions, build and submit to the Prime Minister for assignment annual plans to the Development Support Fund regarding export credit support capital, categorized by types of support.

2. Coordinate with the Ministry of Finance to recommend to the Prime Minister measures to promote export credit support activities.

Article 35. The Ministry of Trade has the authority and responsibility to:

1. Lead and coordinate with the Ministries of Finance and Planning and Investment to develop and submit to the Government for approval annual or periodic programs for export product development and priority encouragement for export products.

2. Report to the Prime Minister for decisions on cases eligible for short-term loans as stipulated in Clause 1 and Clause 2 of Article 21 of this Regulation.

3. Publicly announce information about export markets; inspect and guide export units in their export activities; propose solutions to expand and develop markets.

Article 36. The State Bank of Vietnam has the authority and responsibility to:

1. Direct commercial banks to cooperate with the Development Support Fund to organize the implementation of export credit support tasks.

2. The Development Support Fund may conduct domestic and international payment transactions and organize payment services to fulfill the export credit support mission. The State Bank of Vietnam shall provide guidance on this.

Article 37. Ministries, ministerial-level agencies, government-affiliated agencies, provincial people's committees under the central government, and General Corporation 91 have the authority and responsibility to:

1. Publicly announce development planning for industries, sectors, products, and regions during each period as a basis for formulating and implementing export credit support policies.

2. Coordinate with the Ministry of Finance and the Development Support Fund to resolve issues arising during the implementation of export credit support when units fail to repay debts.

Article 38. The Development Support Fund has the authority and responsibility to:

1. Develop and report to the Ministry of Planning and Investment and the Ministry of Finance the following plans:

a) Total amount of export credit support capital by types of support;

b) Plan for capital mobilization and solutions for mobilizing capital to fulfill the export credit support mission.

2. Organize and implement the export credit support mission in accordance with the provisions of this Regulation.

3. Guide the operational procedures for export credit support.

4. Handle risks as prescribed in Article 29 of this Regulation.

5. Regularly report quarterly and annually to the Prime Minister, the Minister of Finance, and the Minister of Planning and Investment on the implementation of export credit support.

Chapter 7

IMPLEMENTING PROVISIONS

Article 39. The Minister of Finance, the Minister of Planning and Investment, the Minister of Trade, the Governor of the State Bank of Vietnam, the General Director of Total Company 91, the Chairman of the Management Board and the General Director of the Development Support Fund shall guide the implementation of this Regulation.