How May Vietnamese Enterprises Borrow from Abroad? What Is Self-Borrowed, Self-Repaid Foreign Debt?

How may Vietnamese enterprises borrow from abroad? What is self-borrowed, self-repaid foreign debt?

How may Vietnamese enterprises borrow from abroad?

Under clause 1, Article 3 of Decree 219/2013/ND-CP:

1. Foreign borrowing means the Borrower receives credit from a Non-resident through the signing and performance of foreign borrowing agreements in the form of loan contracts, deferred-payment goods purchase contracts, entrusted lending contracts, financial leasing contracts, or the issuance of debt instruments by the Borrower.

Accordingly, Vietnamese enterprises may borrow from abroad from non-residents of Vietnam through the following forms:

• Loan contracts;
• Deferred-payment import contracts for goods;
• Entrusted lending contracts;
• Financial leasing contracts;
• Issuance of debt instruments (notes, promissory notes, bonds) on the international market.

What is self-borrowed, self-repaid foreign debt?

Under clause 2, Article 3 of Decree 219/2013/ND-CP, self-borrowed, self-repaid foreign borrowing — also known as foreign borrowing not guaranteed by the Government — is borrowing by the Borrower from a foreign lender on a self-borrowed, self-responsible basis for debt repayment.

In addition, self-borrowed, self-repaid foreign debt (hereinafter “self-borrowed, self-repaid foreign debt”) means the amounts to be repaid, including principal and interest arising from the Borrower’s self-borrowed, self-repaid foreign borrowing as prescribed by Vietnamese law.

When may the Prime Minister decide to activate appropriate measures to manage self-borrowed, self-repaid foreign borrowing and repayment?

Under Article 4 of Decree 219/2013/ND-CP on management principles for foreign borrowing and repayment of enterprises not guaranteed by the Government:

Management principles

1. The Government manages self-borrowed, self-repaid foreign borrowing within the framework of national foreign debt management, ensuring debt safety within limits approved by the competent authority, ensuring national financial security and the macroeconomic balance of the economy.

3. Self-borrowed, self-repaid foreign borrowing in the form of deferred-payment imports must be consistent with foreign exchange management policies, trade policies and other relevant legal provisions.

4. The Borrower is responsible before the law for signing and performing self-borrowed, self-repaid foreign borrowing contracts. The Government is not responsible for the Borrower’s self-borrowed, self-repaid foreign borrowing and repayment.

5. The management policy for self-borrowed, self-repaid foreign borrowing and repayment must be coordinated with domestic credit management policies to ensure the objectives of monetary policy and foreign exchange management policy in each period.

6. Where necessary, to ensure national financial and monetary security and maintain debt safety indicators, the Prime Minister decides to apply appropriate measures to manage self-borrowed, self-repaid foreign borrowing and repayment.

Accordingly, where necessary, to ensure national financial and monetary security and maintain debt safety indicators, the Prime Minister decides to apply appropriate measures to manage self-borrowed, self-repaid foreign borrowing and repayment.

Is organizing training on management of self-borrowed, self-repaid foreign borrowing part of state management?

Under Article 5 of Decree 219/2013/ND-CP on state management of self-borrowed, self-repaid foreign borrowing and repayment:

State management of self-borrowed, self-repaid foreign borrowing and repayment

1. Developing, issuing and organizing the implementation of legal normative documents on management of self-borrowed, self-repaid foreign borrowing and repayment.

2. Monitoring cash flows related to self-borrowed, self-repaid foreign borrowing and repayment serving the compilation of the international balance of payments, the administration of monetary policy and foreign exchange management.

3. Compiling and reporting information on self-borrowed, self-repaid foreign borrowing.

4. Propagating and disseminating policies and laws on management of self-borrowed, self-repaid foreign borrowing.

5. Inspecting and supervising compliance with laws on management of self-borrowed, self-repaid foreign borrowing.

6. Organizing training on management of self-borrowed, self-repaid foreign borrowing.

7. Handling violations and resolving complaints and denunciations in the implementation of laws on management of self-borrowed, self-repaid foreign borrowing.

Accordingly, organizing training on management of self-borrowed, self-repaid foreign borrowing is part of state management of self-borrowed, self-repaid foreign borrowing and repayment as prescribed.

Notes on applying current legal provisions

This article belongs to the Enterprise & M&A Knowledge group and is presented for reference, helping readers understand the legal issue at an overview level before preparing dossiers or conducting transactions.

Legal provisions may change depending on timing, locality, dossier type and specific circumstances. Where it is necessary to determine the exact legal basis applicable to your dossier, you should contact an ANT Legal lawyer at 0966.475.966 for review and advice before proceeding.

Common risks to note

• Applying legal texts that have been amended, supplemented or replaced.
• Preparing incomplete dossiers, documents or evidence.
• Misunderstanding the applicable conditions, procedures, time limits or competent authority.
• Signing, filing or conducting transactions without fully assessing legal risks.

How can ANT Legal help?

ANT Legal assists in reviewing specific situations, checking dossiers, identifying the applicable legal basis, advising on handling plans, and representing you in working with individuals, organizations or competent authorities when necessary.

For quick advice, you may contact a lawyer at 0966.475.966.

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