Along with the upswing of Vietnam’s economy, when doing business in Vietnam, businesses have higher demand of capital in order to grow and expand. As foreign investors do not meet the requirements of most domestic capital, they require foreign loan for that matter.
On September 15, 2014, the State Bank of Vietnam (SBV) issued Circular 25/2014 in regards to the guideline for foreign loan registration. All foreign loans must register with the SBV. Though there is a procedure from SBV, the government still needs to expand foreign loan regulations to support foreign enterprises further.
You will read more information on how you can register foreign loans in Vietnam when doing business in Vietnam in this detailed guide.
Doing Business in Vietnam with Foreign Loans
Types of Foreign Loans:
There are several types of foreign loans in Vietnam:
Foreign Loans Guaranteed by the Vietnamese government
- Lending entrustment contract
- Borrowing contract
- Deferred payment contract (applies to import goods)
- Finance leasing contract
- Borrower’s debt instrument issuance (international market)
Foreign Loans not Guaranteed by the Vietnamese government
- Conventional loan
Foreign Loans Registration
Foreign loans that are subject to registration to SBV include the following:
- Long-term and mid-term foreign loans
- Short-term loans with no renewal contract, and remain outstanding for one year since its initial disbursement
- Renewed short-term loans with more than 1 year to maturity
Loan Changes Registration
Changes or modification of foreign loans must be registered with the SBV by the borrower as well. However, borrowers are only required to write in and notify the SBV for certain changes:
- Creditor’s information
- Commercial transaction name of the account service provider
- Borrower’s head office address
- Changes done within 10 days upon SBV’s approval on debt repayment, disbursement fund withdrawal plan and actual fee remittance
Three generic steps of foreign loan registration are document preparation, application and document submission, and application outcome.
The results of the loan application may be affected and foreigners may need to face certain penalties if the registration is delayed. To avoid negative outcome and unnecessary penalties, borrowers must submit required documents within 30 days. The start date of the 30 days vary and in accordance with the type of foreign loans.
Ways to Register
There are two ways you can use to register:
- Online registration
- Direct registration
Required Documents for Registration
- Foreign loan registration form
- Specified loan purposes in writing
- Business registration certificate or investment registration certificate
- Foreign loan agreement
- Written guarantee of loan in letter or contract
- Authority’s written approval
- Report of compliance in accordance to SBV’s regulations
- Confirmation of account service provider
- Invoice with profits in Vietnamese dong (VND)
- Explanatory statement on demands for foreign capital in VND
Borrowers will be informed by the SBV if their registration is successfully or not within the following periods, upon the receipt of complete and valid documents:
- 12 working day for online registration
- 15 working days for direct registration
- 45 working days for foreign loans that are denominated in VND
How Cekindo can Assist You in Doing Business in Vietnam
With the rise of capital demand and stringent and complex laws in foreign loans in Vietnam, an independent third-party agent can add real value to your foreign loan registration and compliance in Vietnam.
Cekindo has had vast experience throughout the years in the Vietnamese market, allowing us to provide specialised and first-class services for all enterprises in Vietnam. Get in touch with us today by filling in the form below.