Service on registration of foreign loans in Vietnam

Registration of foreign loans is one of the advantage service of Viet An Law in Vietnam. According to a report from the Ministry of Finance, by the end of 2023, public debt will be controlled within safe limits. Specifically, public debt is about 4 million billion VND, about 39-40% of GDP, down from 42.7% of GDP in 2021. Government debt is about 3.7 million billion VND, about 36-37% of GDP, down from 38.7% of GDP in 2021. Regarding the Government’s debt structure: by the end of 2023, domestic debt accounts for 73% of outstanding Government debt, up from 67% in 2021. The country’s foreign debt is about 3.8 million billion VND, about 37-38% of GDP, equivalent to 38.1% of GDP in 2021. In the structure of the country’s outstanding foreign debt, a self-borrowed debt of businesses and credit institutions increased from 61% of GDP. 4% in 2021 to 70.7% in 2023, Government debt and government guaranteed foreign loans decrease from 38.6% in 2021 to 29.3% in 2023.

According to Decision 260/QD-TTg approving the Plan for borrowing and repaying public debt in 2024 and the 3-year public debt management program for the period 2024-2026 issued by the Prime Minister: Medium foreign commercial loan limit, long-term of businesses and credit institutions by self-borrowing and self-payment method is about 6,599 million USD; The growth rate of short-term foreign debt is about 18 – 20% compared to the outstanding debt as of December 31, 2023.

Foreign loans registration obligation in Vietnam

According to current law, the following foreign loans require submission of foreign loan registration documents at the State Bank:

Medium and long-term foreign loans

All foreign loans have a term of 01 year or more calculated according to the term determined in the Foreign Loan Agreement and Foreign Loan Contract.

Short-term foreign loans

Short-term loans have an extension contract or no extension contract, but at the end of 01 year from the date of the first capital withdrawal, the borrower has not paid off all debt to the foreign party according to the time limit agreed upon. Except in the case of a short-term loan contract without an extension contract the borrower has paid within 1 year and 10 days from the date of first capital withdrawal.

Components of foreign loan registration documents

• Application form as prescribed;
• Copy of the borrower’s legal documents: Establishment license, Business registration certificate, Cooperative registration certificate, Cooperative Union and amendments and supplements (if any) or other equivalent documents.
• Copy or original document proving loan purpose;
• Foreign language copy and Vietnamese translation of foreign loan agreement and agreement to extend short-term loans to medium or long-term (if any).
• Foreign language copy and Vietnamese translation of the guarantee commitment document (letter of guarantee, guarantee contract, or other form of guarantee commitment) in case the loan is guaranteed.
• A copy of the document of the competent authority approving and approving foreign loans according to the provisions of the law on assignment and decentralization of rights, responsibilities, and obligations of state owners and representative agencies. representative of the state owner according to regulations on management and use of state capital at enterprises for borrowers that are state-owned enterprises (not applicable to commercial bank loans because the State Bank is the owner’s representative agency and has been approved by the State Bank according to regulations on management and use of state capital at enterprises).
• Report on compliance with the State Bank’s regulations on limits and safety ratios in the operations of credit institutions and foreign bank branches according to regulations on conditions for self-borrowed foreign loans, self-pay at the end of the 03 most recent months before the date of signing the loan agreement to the end of the latest month before the time of sending the complete foreign loan registration dossier according to the form specified in Appendix 02 issued herewith. This Circular or documents proving non-compliance with the provisions of the law on credit limits and safety ratios have been approved by the Prime Minister or the Governor of the State Bank according to regulations. of law (if any) for borrowers who are credit institutions or foreign bank branches.
• Confirmation from the bank providing account services on the situation of capital withdrawal and debt repayment (principal, interest) up to the time of loan registration.
• Documents and documents proving legally distributed profits in Vietnamese Dong from direct investment activities of the lender being a foreign investor contributing capital to the borrower and confirmation from the service providing bank account on the situation of division and transfer of profits to the country of the lender to prove the disbursement of the loan in case of foreign loans in Vietnam Dong according to regulations on conditions for foreign loans in Vietnam Dong.
• A document explaining the need for foreign loans in Vietnamese Dong, in case of foreign loans in Vietnamese Dong, must be approved by the Governor of the State Bank according to the State Bank’s current regulations on conditions for foreign loans. in addition to Vietnamese Dong.
• Power of Attorney for Viet An Law.

Number of documents: 01 set of documents;

Receiving and processing agency:

• State Bank branch in the province or city where the borrower is headquartered: for loans with loan under 10 million USD (or other currency of equivalent value);
• State Bank (Foreign Exchange Management Department): for loans with a loan amount of over 10 million USD (or another currency of equivalent value);

Procedure for registering foreign loans in Vietnam

Step 1: The borrower sends 01 set of foreign loan registration documents to the competent authority within the prescribed time limit.

Deadline for submitting foreign loan registration application within:

• 30 working days from the date of signing the medium and long-term foreign loan agreement;
• 30 working days from the date of signing the agreement to extend short-term foreign loans to medium or long-term for short-term loans whose principal repayment period is extended with a total loan term of over 01 year and the date of signing an extension agreement within 01 year from the date of first capital withdrawal;
• 30 working days from the date the borrower is granted an Enterprise Registration Certificate, License for establishment and operation according to specialized laws, and date of signing an investment contract according to the public-private partnership method (PPP contract), the date the parties sign a foreign loan agreement to convert the amount of investment preparation into loan capital (depending on which day comes later), applicable to foreign loans arising from the transfer of the amount of preparation investment of projects that have been granted Investment Registration Certificates into foreign loans.
• 60 working days from the date of 1 year from the date of the first capital withdrawal for:
  • Short-term to medium or long-term foreign loans with the date of signing the extension agreement after 01 year from the date of first capital withdrawal;
  • Short-term loans do not have an extension agreement but have outstanding principal (including interest) at 1 year from the date of first capital withdrawal.

Step 2: The State Bank issues a written confirmation of foreign loan registration within the following period:

• 12 working days from the date of receipt of complete and valid documents from the borrower in case the borrower has declared loan information on the website;
• 15 working days from the date of receipt of complete and valid documents from the borrower in case the borrower does not declare loan information on the website; In case of refusal to confirm foreign loan registration, the State Bank shall issue a document clearly stating the reason.

Service on registration of foreign loans in Vietnam by Viet An Law Firm

• Consulting on foreign loan conditions for businesses.
• Consulting on foreign loan contracts.
• Review and draft foreign loan registration documents.
• Consulting on converting foreign loans into enterprise capital contributions;
• Consulting on converting foreign loans for businesses;
• Comprehensive consulting and support to help businesses carry out foreign loan registration procedures with the State Bank.
• Enterprise representatives submit applications, monitor and complete foreign loan registration procedures;
• Consulting on statistical reporting procedures on foreign loans;
• Comprehensive consulting on arising issues related to foreign loans of businesses.

Clients who need to use the service on registration of foreign loans in Vietnam, please contact Viet An Law for timely support.

Disclaimer: This article was last updated in April 2024. Laws may have changed since then. Please contact Viet An Law to confirm the information in this article is current and for any legal assistance.