New decree clarifies State support for investment, contracts

The decree, which will take effect on October 20, states that the projects or contracts must be fruitful and solvent, and the lending must include finance and debt payment appraisals from the Vietnam Development Bank (VDB).

The maximum loan to an investment project will be restricted to 70 per cent of its total investment capital. The figure for an export or import contract is 85 per cent of the total value of the contract.

Under the decree, maximum lending to an investment project or an export-import contract may not exceed 15 per cent of VDB’s charter capital.

In special cases that require larger loans than permitted, the Prime Minister will make a decision after reviewing proposals from the Ministry of Finance.

The decree also states that borrowers, or project owners, must contribute at least 20 per cent of the total investment capital to the project in addition to ensuring the remaining necessary funding.

Loan duration will be calculated based on the payback and solvency of the project but it cannot exceed 12 years. The duration for export-import contracts is 12 months.

Investment credit interest rates will be announced after the VDB general director completes the necessary calculations based on the average interest rate of all VDB capital sources plus VDB operational costs, and receiving approvals from the Ministry of Finance.

The decree identifies 14 types of investment projects and four types of goods that are eligible for State credit.