Decree No. 75/2011/NĐ-CP on State Investment Credit and Export Credit

DECREE

Regarding state investment credit and export credit

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THE GOVERNMENT

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Law on State Budget dated December 16, 2002;

Based on the Investment Law dated November 29, 2005;

Pursuant to the Law on Public Debt Management dated June 17, 2009;

Based on the Law on Credit Institutions dated June 16, 2010;

Considering the proposal of the Minister of Finance,

DECREE:

PART I

GENERAL PROVISIONS

Article 1. Scope and regulated subjects

1. The scope of regulation of this Decree includes:

a) Investment credit comprising: investment loans and post-investment support.

b) Export credit including: export loans (loans to domestic exporters and foreign importers).

2. Regulated subjects include:

a) Enterprises, economic organizations, public service units with revenue having projects listed in the Catalogue for Investment Credit Borrowing (hereinafter referred to as the project owner);

b) Domestic enterprises, economic organizations with export contracts or foreign organizations importing goods from Vietnam listed in the Catalogue for Export Credit Borrowing;

c) Vietnam Development Bank and other entities or individuals related during the implementation of investment credit and export credit.

Article 2. Principles of investment credit and export credit

1. Lending for investment projects, export contracts, import contracts of goods produced in Vietnam that can directly recover capital, are effective and have the ability to repay debt.

2. Investment projects, export contracts, import contracts when borrowing must be appraised by the Vietnam Development Bank regarding financial plans and repayment plans for borrowed capital.

3. Project owners, exporters, and foreign importers must use borrowed funds for their intended purposes; fully and timely repay principal and interest according to signed credit agreements; fulfill all commitments in the agreement and regulations stipulated in this Decree.

4. The Catalogue for Investment Credit Borrowing Projects and the Catalogue for Export Credit Borrowing Goods shall be prescribed by the Government.

Article 3. Definitions

In this Decree, the following terms are understood as follows:

1. "Exporter" refers to enterprises and economic organizations of Vietnam exporting goods produced in Vietnam.

2. "Foreign importer" refers to foreign organizations purchasing goods produced and exported from Vietnam.

3. "Loan term" is the period from the first withdrawal of funds by the borrower until the full repayment of the loan according to the credit agreement.

4. "Grace period" is the period from signing the credit agreement until the project owner, exporter, and foreign importer do not need to repay the principal but must pay interest.

5. "Repayment period" is the period from the first repayment of the loan until the full repayment of the loan according to the credit agreement.

6. "Repayment interval" is the specified period for each repayment within the repayment period.

7. "Lending" refers to the Vietnam Development Bank providing loans to project owners, exporters, or foreign importers to implement investment projects, export contracts, or import contracts of goods.

8. "Post-investment support" refers to the State's partial interest rate subsidy for project owners borrowing from credit institutions to invest in projects, after the projects have been completed and put into operation and able to repay the loan.

9. "Actual paid-in capital" is the amount of paid-in capital reflected in the accounting books of the Vietnam Development Bank.

Article 4. National Investment Credit and Export Credit Plan

1. The national investment credit and export credit plan is announced annually and includes the following indicators:

a) Total growth rate of national investment credit and export credit;

b) Sources of funds for implementing national investment credit and export credit;

c) State budget subsidies for interest rate differences and post-investment support.

2. When preparing the annual state budget estimate, the Vietnam Development Bank prepares and reports to the Ministry of Finance and the Ministry of Planning and Investment about the annual and long-term national investment credit and export credit plan.

3. The Ministry of Finance takes the lead and coordinates with the Ministry of Planning and Investment to review the national investment credit and export credit plan prepared by the Vietnam Development Bank. The Ministry of Planning and Investment compiles the report to submit to the Prime Minister for consideration and decision in the socio-economic development plan.

Chapter II

STATE INVESTMENT CREDIT

PART 1

INVESTMENT LOANS

Article 5. Borrowing Objectives

The borrowers are project owners with investment projects listed in the Catalogue of Investment Credit Borrowing Projects issued together with this Decree.

Article 6. Conditions for lending

1. Belonging to the target group specified in Article 5 of this Decree.

2. Fully comply with investment procedures as prescribed by law.

3. Project owners with effective production and business plans capable of repaying debts, whose financial plans and repayment plans are appraised and approved by the Vietnam Development Bank for lending.

4. Project owners must contribute at least 20% of their own capital to participate in the project and ensure sufficient sources of funds to implement the project, meeting specific financial conditions for the non-loaned investment portion outside of state investment credit.

5. Project owners must provide collateral for loans in accordance with the provisions of this Decree and relevant laws.

6. Project owners must purchase insurance for assets formed from borrowed funds that are mandatory insurance targets throughout the loan period from a legally operating insurance company in Vietnam.

7. Project owners must maintain accounting records and financial statements in accordance with the law; annual financial statements must be audited by an independent auditing agency.

8. In cases of overseas investment projects under bilateral agreements between two governments and overseas investment projects decided by the Prime Minister, they shall be implemented in accordance with Article 11 of this Decree.

Article 7. Loan Amount

1. The maximum loan amount for each project is 70% of the total investment capital of the project (excluding working capital), while ensuring that the maximum loan amount for each project owner does not exceed 15% of the actual paid-in capital of the Vietnam Development Bank.

2. The loan amount for each project and project owner is determined by the General Director of the Vietnam Development Bank in accordance with Clause 1 of this Article.

3. In special cases where projects or project owners must borrow at a higher amount than the maximum prescribed above, the Vietnam Development Bank shall report to the Ministry of Finance for submission to the Prime Minister for consideration and decision.

Article 8. Loan Term

1. The loan term is determined based on the project's ability to recover capital and the borrower's ability to repay debt, consistent with the project's production and business characteristics, but not exceeding 12 years.

2. The General Director of the Vietnam Development Bank decides the loan term for each project in accordance with Clause 1 of this Article.

Article 9. Currency for Loans

The currency for loan shall be the Vietnamese Dong.

Article 10. Interest Rate for Loans

1. The interest rate for investment loans shall not be lower than the average interest rate of all sources of capital plus the operating fee of the Vietnam Development Bank.

2. The General Director of the Vietnam Development Bank shall calculate the average interest rate of all sources of capital and operating costs, report to the Chairman of the Management Board of the Vietnam Development Bank for submission to the Ministry of Finance to announce the interest rate for investment credit loans. In cases where there is a significant fluctuation in the average deposit interest rate, the Chairman of the Management Board of the Vietnam Development Bank shall report to the Ministry of Finance to adjust the interest rate accordingly.

3. The interest rate for loans shall be recorded in the credit contract. The loan interest rate may be adjusted according to each disbursement based on the announced interest rate.

4. The overdue interest rate for each disbursement shall be 150% of the interest rate for on-time loans for each disbursement.

Article 11. Investment loans shall be provided for projects implemented under Government Agreements and overseas investment projects pursuant to the Prime Minister's Decision.

1. The conditions, interest rates, terms, loan amounts, and other related contents of the project loan shall be carried out in accordance with the provisions stipulated in the Agreement.

2. Where the Agreement does not specify the conditions, interest rates, terms, loan amounts, and loan guarantees, they shall be implemented in accordance with the provisions on investment lending set forth in this Decree.

3. Overseas investment projects pursuant to the Prime Minister's Decision shall be implemented in accordance with the provisions on investment lending set forth in this Decree.

PART 2

POST-INVESTMENT SUPPORT

Article 12. Post-investment support recipients

1. Post-investment support recipients are investors with projects listed in the Project List eligible for investment credit loans, excluding projects financed under Government Agreements and overseas investment projects pursuant to the Prime Minister's Decision.

2. A project is determined to be a post-investment support recipient at the time of the first approval decision issued by the competent authority.

Article 13Conditions for post-investment support

1. The project must be a post-investment support recipient as prescribed in Article 12 of this Decree.

2. It must be appraised and have a post-investment support contract signed by the Vietnam Development Bank.

3. The investment project must be completed and put into operation, with an approved final settlement decision from the competent authority, and the borrower must have repaid the loan.

Article 14. Post-investment support amount

1. The Ministry of Finance shall decide the post-investment support amount based on the difference between the interest rate of investment loans from credit institutions and the State's investment credit loan interest rate, and the proposal of the Chairman of the Management Board of the Vietnam Development Bank. The announcement of the post-investment support amount shall be made simultaneously with the announcement of the investment credit interest rate.

2. The Vietnam Development Bank shall consider and decide to provide post-investment support based on the repayment results of the investor.

Chapter III

EXPORT CREDIT

Article 15. Forms of export financing

1. Financing exporters, including pre-shipment or post-shipment financing.

2. Financing foreign importers.

Article 16. Borrowing Objectives

Exporters must have export contracts, and foreign importers must have import contracts for goods listed in the Export Credit Loan Goods List promulgated together with this Decree.

Article 17. Conditions for lending

1. They must meet the borrowing conditions stipulated in Article 16 of this Decree.

2. Exporters must have export contracts. Foreign importers must have export contracts signed with Vietnamese enterprises or economic organizations.

3. The business plan must be effective and approved by the Vietnam Development Bank for financing.

4. Exporters and foreign importers must have full legal capacity and civil conduct capacity.

5. In addition to the conditions specified in Clauses 1, 2, 3, and 4 of this Article:

a) Exporters must comply with the loan guarantee regulations stipulated in this Decree; must purchase insurance for assets forming part of the loan from a legally operating insurance company in Vietnam throughout the loan period for assets that are required to be compulsorily insured;

b) Foreign importers must be guaranteed by the Government or central bank or financial organizations performing investment credit and export credit functions in their home country.

6. Exporters must comply with accounting and financial reporting regulations; annual financial reports must be audited by an independent auditing agency.

Article 18. Loan Amount

1. The maximum loan amount shall be 85% of the value of the signed export or import contract or the Letter of Credit value for pre-shipment financing or the value of a valid bill of exchange for post-shipment financing, while ensuring that the maximum loan amount for each exporter or foreign importer does not exceed 15% of the Vietnam Development Bank's actual paid-in capital.

2. The loan amount for each case shall be decided by the General Director of the Vietnam Development Bank in accordance with Clause 1 of this Article.

3. In special cases, if the exporter or foreign importer must borrow at a higher rate than the above limit, the Vietnam Development Bank shall report to the Ministry of Finance for submission to the Prime Minister for consideration and decision.

Article 19. Loan Term

1. The loan term shall be determined based on the ability to recover funds in line with the characteristics of each export contract and the ability to repay of the exporter or foreign importer, but the loan term for each loan shall not exceed 12 months.

2. The maximum loan term for exported ships shall be 24 months.

3. The General Director of the Vietnam Development Bank shall decide the loan term for each commodity in accordance with Clauses 1 and 2 of this Article.

Article 20. Currency for Loans

The currency for loan shall be the Vietnamese Dong.

Article 21. Interest Rate for Loans

1. The export loan interest rate shall be reported by the Chairman of the Management Board of the Vietnam Development Bank to the Ministry of Finance for announcement in accordance with market principles.

2. The overdue interest rate for each disbursement shall be 150% of the interest rate for on-time loans as stipulated in the signed credit contract with the Vietnam Development Bank.

3. Interest rates for loans designated or under Government Agreements shall be implemented in accordance with the provisions of the competent authority.

Article 22. Implementation of disbursement and collection

1. The Vietnam Development Bank shall directly disburse and collect payments or entrust domestic and foreign financial and credit organizations to carry out disbursement and collection.

2. The lending to foreign importers by the Vietnam Development Bank must be carried out in accordance with the regulations of the State Bank of Vietnam.

Chapter IV

GUARANTEE OF LOANS, REPAYMENT OF LOANS AND MANAGEMENT OF INVESTMENT CREDIT AND EXPORT CREDIT RISKS

Article 23. Guarantee of loans

1. Project investors and exporters when borrowing state investment credit and export credit must implement loan guarantee measures at the Vietnam Development Bank in accordance with the provisions of the law on secured transactions. Loan guarantee measures include: pledging assets, mortgaging assets, using future formed assets and other guarantee measures (if any) as prescribed by the law on secured transactions.

2. The Vietnam Development Bank may handle collateral assets in accordance with the provisions of the law on secured transactions; may renovate, repair, upgrade assets for sale, lease, exploitation or contribute capital in joint ventures with collateral assets in accordance with the law for economic organizations to recover debts.

Article 24. Repayment of loans

1. Project investors, exporters, and foreign importers have the responsibility to fully and timely repay loans to the Vietnam Development Bank in accordance with signed credit contracts.

2. During the grace period, project investors do not need to repay principal but must pay interest according to the signed credit contract, except in cases where the Prime Minister has different regulations.

3. From the due date of repayment, if project investors, exporters, and foreign importers who borrow funds cannot repay the loan of that period, the overdue principal and interest will bear the late payment interest rate as prescribed.

4. In case foreign importers cannot repay the debt or repay insufficiently, the Vietnam Development Bank is responsible for recovering debts from the guarantors of the importing country in accordance with the guarantee contract.

Article 25. Classification of debts, establishment of risk reserve fund

1. The Vietnam Development Bank is allowed to establish a Risk Reserve Fund to handle risks caused by project investors, exporters, and foreign importers failing to repay debts.

2. The classification of debts by the Vietnam Development Bank shall be implemented in accordance with the regulations of the State Bank of Vietnam.

3. The amount allocated to the Risk Reserve Fund shall be recorded as operating expenses of the Vietnam Development Bank.

4. The level of allocation and use of the Risk Reserve Fund is stipulated in the financial mechanism of the Vietnam Development Bank decided by the Prime Minister.

Article 26. Risks, management of risks

1. Risks considered for handling investment credit and export credit debts include:

a) Force majeure risks: natural disasters, epidemics, fires, unexpected accidents, political risks, direct war causing asset losses to investors or exporters; investors or exporters being declared bankrupt or dissolved;

b) Financial difficulties of wholly state-owned limited liability companies when implementing the transition to a multi-shareholder model;

c) Other risks determined by the Prime Minister.

2. Measures to manage risks considered for application include: extending the repayment period, writing off debts (principal, interest) and selling debts.

3. The regulation on managing risks of state investment credit and export credit at the Vietnam Development Bank is regulated by the Prime Minister.

Article 27. Authority to manage risks

1. The General Director of the Vietnam Development Bank reviews and decides on adjustments to the repayment period, extension of debts for investment and export credit projects.

2. The Minister of Finance decides on debt write-offs for investors and exporters based on the proposal of the Chairman of the Management Board of the Vietnam Development Bank.

3. The Prime Minister decides on cases of debt write-offs (principal, interest) and selling debts proposed by the Ministry of Finance based on the proposal of the Chairman of the Management Board of the Vietnam Development Bank and the review opinion of the Ministry of Finance - Planning and Investment - State Bank of Vietnam.

Chapter V

SOURCES OF FUNDS FOR IMPLEMENTATION OF STATE INVESTMENT CREDIT AND EXPORT CREDIT

Article 28. Sources of funds from the state budget

1. Charter capital and funds of the Vietnam Development Bank.

2. Funds for investment development loans and implementation of government and local authority target programs.

Article 29. Official development assistance (ODA) and concessional loan funds

ODA and concessional loan funds from foreign countries assigned by authorized agencies to be relended or lent under targeted credit programs.

Article 30. Capital mobilization

1. Issuing government-guaranteed bonds in accordance with the law on bond issuance and government-guaranteed bonds.

2. Issuing domestic currency bonds, bills, and securities of the Vietnam Development Bank in accordance with the law.

3. Borrowing from financial and credit institutions both domestically and internationally.

4. Borrowing from the Vietnam Social Security.

5. Borrowing from the State Bank (refinancing or collateralizing, discounting securities through open market operations).

6. Borrowing from other organizations and individuals both domestically and internationally.

Article 31. Entrusted capital

Entrusted capital from local authorities, organizations, and individuals both domestically and internationally to lend to investment development projects and export goods programs as required by the entrusting agency.

Chapter VI

RESPONSIBILITIES OF THE AUTHORITIES

Article 32. Ministry of Finance

1. To take the lead and coordinate with relevant ministries and agencies to submit to the Government for promulgation of mechanisms and policies related to state investment credit and export credit; supplement and amend the list of investment credit loan projects and the list of export credit loan items when necessary.

2. To guide or promulish within its authority mechanisms and policies related to state investment credit and export credit for the Vietnam Development Bank to implement.

3. To take the lead and coordinate with the Ministry of Planning and Investment and the State Bank of Vietnam to annually assess the implementation of state investment credit and export credit policies and the results of the Vietnam Development Bank's activities, report to the Prime Minister through the regular and ad hoc reporting system of the Vietnam Development Bank.

4. To take the lead and coordinate with the Ministry of Planning and Investment to review the annual and long-term state investment credit and export credit plans prepared by the Vietnam Development Bank.

Article 33. Ministry of Planning and Investment

1. Consolidate the annual and five-year credit investment plans and export credit plans of the State and submit them to the Prime Minister for consideration and decision.

2. Coordinate with the Ministry of Finance to develop policies, monitor, and evaluate the implementation of the State's credit investment and export credit policies and the operational results of the Vietnam Development Bank.

Article 34. Ministry of Industry and Trade

1. Develop and submit to the Government and the Prime Minister strategies and programs for the development of export goods during each period; coordinate with the Ministry of Finance to develop the State's credit investment and export credit policies.

2. Publicize widely information about the export market; propose solutions and guidance on implementing measures to expand and develop the export market for Vietnamese goods.

Article 35. State Bank of Vietnam

1. Perform state management functions related to currency, banking activities concerning State credit investment and export credit, guide the Vietnam Development Bank to provide foreign exchange services and other activities.

2. Coordinate with the Ministry of Finance to develop policies, monitor, and evaluate the implementation of the State's credit investment and export credit policies and the operational results of the Vietnam Development Bank.

Article 36. Vietnam Development Bank

1. Organize the implementation of the State's credit investment and export credit policies in accordance with the provisions of this Decree.

2. Propose to competent authorities to amend and supplement the State's credit investment and export credit policies.

3. Handle risks within their authority and be responsible for the accuracy and transparency in risk handling proposals submitted to competent authorities for consideration and decision.

4. Inspect and supervise project sponsors, exporters, and foreign importers in the use of borrowed funds to ensure proper purpose, effectiveness, full repayment of principal and interest to the Vietnam Development Bank on time.

5. Collect principal and interest on investment credit and export credit.

6. Issue lending regulations and provisions on capital safety and credit safety for the operations of the Vietnam Development Bank.

7. Develop annual credit investment and export credit plans and report to the Ministry of Finance and the Ministry of Planning and Investment for submission to competent authorities for consideration and decision.

8. Report to competent authorities on matters related to the implementation of the State's credit investment and export credit policies.

Article 37. Ministries, ministerial-level agencies, government agencies, provincial People's Committees, and centrally governed city People's Committees shall implement according to their functions and authorities.

1. Announce planning, plans, development orientations, and procedures, norms, standards, economic-technical quotas of industries, sectors, products, and regions as the basis for implementing the State's credit investment and export credit policies.

2. Direct, inspect, and supervise to ensure that project sponsors implement investments in accordance with State regulations on investment; resolve issues related to the implementation of the State's credit investment and export credit policies within their management scope.

Article 38. Project sponsors, exporters, and foreign importers

1. Provide accurate, complete, and timely information and documents related to borrowing and the use of borrowed funds to the Vietnam Development Bank.

2. Use borrowed capital for the intended purpose, repay the full amount of debt on time, and fulfill all commitments stipulated in credit contracts.

3. Enterprises receiving loans from the Vietnam Development Bank when undergoing ownership conversion must notify the Vietnam Development Bank in writing to settle the loan debt under the investment credit and export credit policies in accordance with the law.

Chapter VII

REPORTING, INSPECTION, AUDIT AND VIOLATION HANDLING

Article 39. Inspection, audit, reporting

1. All credit investment and export credit activities as stipulated in this Decree must be subject to inspection and audit by competent state agencies in accordance with the law.

2. The inspection and audit can be carried out at any stage or throughout the entire process of investment construction, production, business operation, and loan repayment.

3. Heads of ministries, ministerial-level agencies, government agencies, and Chairmen of provincial and centrally governed city People's Committees shall inspect and supervise the implementation of the State's credit investment and export credit policies within their management scope.

4. Quarterly or at any time, the Vietnam Development Bank shall compile and report to the Prime Minister on the implementation of credit investment and export credit, while sending reports to the Ministry of Finance, the Ministry of Planning and Investment, the State Bank of Vietnam, and the General Statistics Office.

Article 40. Handling of violations

1. Organizations and individuals borrowing funds who violate the provisions of this Decree and cause damage to assets or capital must compensate and be dealt with in accordance with the law.

2. The Vietnam Development Bank shall be responsible under the law for implementing the State's credit investment and export credit policies; all violations of the provisions of this Decree shall be dealt with in accordance with the law.

Chapter VIII

IMPLEMENTING PROVISIONS

Article 41. Effectiveness

This Decree takes effect from October 20, 2011, and replaces Decree No. 151/2006/NĐ-CP dated December 20, 2006, of the Government on State credit investment development and export credit, and Decree No. 106/2008/NĐ-CP dated September 19, 2008, amending and supplementing certain articles of Decree No. 151/2006/NĐ-CP dated December 20, 2006, of the Government on State credit investment development and export credit.

Article 42. Cases where contracts have been signed

1. For projects that have signed credit investment loan contracts, credit investment guarantee contracts, and post-investment interest support contracts with the Vietnam Development Bank before the effective date of this Decree, they shall continue to be implemented according to the commitments recorded in the signed contracts.

2. Export credit loan contracts, export credit guarantee contracts, bidding guarantee contracts, and performance guarantee contracts signed with the Vietnam Development Bank before the effective date of this Decree shall continue to be implemented according to the commitments recorded in the signed contracts.

Article 43. Responsibility for guiding implementation

The Ministry of Finance, the State Bank of Vietnam, and relevant ministries and sectors shall guide the implementation of this Decree based on their functions and authorities.

Article 44. The Ministers, Heads of ministerial-level agencies, Heads of government agencies, Chairpersons of provincial People's Committees under the central government, Chairpersons of Management Boards and General Directors of the Vietnam Development Bank shall be responsible for implementing this Decree./.