Navigating Foreign Loans in Vietnam: Key Considerations

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Navigating foreign loans in Vietnam demands a nuanced grasp of regulations and key considerations. Here’s a short overview of what foreign firms should know.


Embarking on the journey of foreign borrowing in Vietnam requires a nuanced understanding of the regulatory landscape and essential considerations. In this article, we delve into noteworthy issues surrounding foreign loans, providing a comprehensive overview to help enterprises navigate some recurrent questions.

Types of foreign loans in Vietnam

What are the main types of “self-borrowed and self-paid” foreign loans in Vietnam?

In the sphere of foreign borrowing without a government guarantee in Vietnam, enterprises must categorize loans based on . This categorization is crucial for clarity and compliance.

These self-borrowed and self-paid loans generally fall into two categories:
  • Short-term loans: Defined as foreign loans with a term of up to one year, these loans are not guaranteed by the government. Short-term loan seekers need not register with the State Bank under normal circumstances.
  • Medium- or long-term loans: These encompass foreign loans with a term exceeding one year, also without a government guarantee. The registration obligations, however, differ based on the loan term, thereby influencing the borrower’s responsibilities.

The distinction between the two is crucial as it impacts the borrower’s registration obligations with the State Bank.

What are the registration obligations?

According to , borrowers opting for medium- or long-term loans are obligated to register these loans with the State Bank.

On the other hand, borrowers pursuing short-term loans are generally exempt from registration requirements.
  • Short-term loans eligible for extension: If a short-term loan qualifies for an extension, extending the principal repayment beyond one year, it requires registration.
  • Short-term loans with outstanding principals: Loans without extension agreements but with remaining principals (including accrued interest) one year from the first drawdown date also need registration. However, Borrowers can skip registration by settling outstanding principals within 30 working days from the specified date.

In simpler terms, for enterprises seeking short-term loans, if the specified loan term in the agreement is one year, and it expires with an outstanding principal, whether due to an extension or not, registration is mandatory. This is unless the borrower pays off the outstanding amount within 30 working days from the end of the loan term.

Maximum loan limits and regulations

How are maximum limits for self-borrowed and self-paid foreign loans determined in Vietnam?

Each year, the Prime Minister approves maximum limits for these loans within the country’s foreign commercial loan framework. These limits apply to both medium- and long-term loans and short-term loans subject to registration.

Various regulations also govern loan limits based on factors like the borrower’s capital contribution and investment project details.

What are the restrictions on medium- and long-term loans in Vietnam?

Medium- and long-term loans are subject to specific restrictions, such as the ratio of the foreign loan to the total value of loans for production and business plans or investment projects. This ratio must not exceed the capital contributed by the borrower. Similar constraints apply to borrowers with investment projects, ensuring that outstanding loans do not surpass the difference between total investment capital and contributed capital stated in the investment certificate.

Purposes and use of foreign loans

What are the permitted purposes for obtaining foreign loans in Vietnam?

In Vietnam, obtaining foreign loans is circumscribed by specific purposes outlined in Clause 1, Article 11 of Circular No. 12/2014/TT-NHNN. These two purposes, scrutinized by state agencies during various loan-related procedures, are:

  • Implementation of production and business plans or investment projects: For medium- or long-term foreign loans, borrowers can acquire funds to execute production and business plans or investment projects. This extends to both the borrower and an enterprise directly benefiting from the borrower’s capital contribution. Notably, plans or projects using medium- or long-term foreign loans must align with relevant Vietnamese laws and comply with the enterprise’s licenses and certificates.
  • Restructuring foreign debts without increasing loan costs: Borrowers are also allowed to use foreign loans to restructure their existing foreign debts. This action must adhere to conditions set by the Governor of the State Bank. It’s essential to highlight that borrowers and lenders can agree on loan costs in the contract. However, these costs are subject to specific conditions and caps announced by the State Bank’s Governor.

How is the use of foreign loans monitored in Vietnam?

State agencies rigorously assess and check the purpose of foreign borrowing during loan application, conversion, or repayment. Borrowers must adhere to the committed purpose stated in the loan agreement/contract. Deviation may lead to refusal by the State Bank during loan registration procedures.

Borrowing in foreign currency

Can borrowers in Vietnam obtain foreign loans in any currency?

Yes, borrowers in Vietnam have the flexibility to borrow in any foreign currency or Vietnam dong. However, borrowing in Vietnam dong is restricted to specific cases, including micro-finance institutions or foreign-invested enterprises taking loans in Vietnam dong from shared profits. Approval from the State Bank Governor is necessary for other cases, potentially leading to a prolonged borrowing process.

Reporting obligations for foreign loans

What reporting obligations do borrowers have when obtaining foreign loans in Vietnam?

Borrowers in Vietnam must submit monthly reports to the competent State Bank regarding the execution of short-, medium-, and long-term loans by the 5th day of the month following the reporting month. These reports can be submitted online through the State Bank’s website (), with provisions for paper reports in case of technical issues. Approval by the State Bank is essential for the completion of the reporting process. Any necessary adjustments or supplements are requested by the State Bank if required.

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