Decree promotes investing abroad
14 August 2006
The Prime Minister has issued a decree, providing a legal framework and streamlining procedures for domestic investments abroad, said the Ministry of Planning and Investment (MPI).
Under the decree, domestic businesses, both public and private sector enterprises, can automatically invest overseas if they fail to receive any response from relevant management agencies 15 days after fully submitting the required documents.
The decree approves of overseas investments in banking, insurance, finance, mass media and telecommunication projects by enterprises receiving State budget funds of VND150 billion and upwards or VND600 billion from other sources.
The MPI is authorised to license overseas investment projects after they are ratified by the Prime Minister, under the decace.
Investors are required to report the progress of projects to the MPI and the State Bank of Viet Nam (SBV) 60 days after receiving approval from the investing countries, the decree said.
According to the ministry, many domestic businesses that wanted to invest abroad had failed earlier as the country lacked a legal framework.
Though domestic businesses have complained of difficulties in borrowing and investing capital abroad, banking officials maintained that current regulations on managing investment capital overseas were adequate and concrete. Under the current rules, besides deposits in credit institutions, investors can also buy or borrow foreign currencies from commercial banks without any permission from the SBV.
The country’s draft decree on foreign currency management also allows both organisations and individuals to borrow foreign capital. However, in principle, businesses are subject to close supervision from relevant authorities to avoid negative impacts on the domestic foreign currency market.
SBV’s deputy director of the currency policies department Nguyen Ngoc Bao said the supervision was an obligatory requirement for any economy. But the SBV, according to Bao, only examined and approved requests, while commercial banks, in fact, took concrete decisions.
Bao said though domestic businesses had complained about difficulties in getting bank loans, commercial banks cannot delay lending if businesses meet all conditions required for borrowing capital.
However, Bao admitted that commercial banks were sometimes cautious in lending for overseas investment projects as they lack experience and information in controlling lending risks.
Moreover, high costs involved in appraising, supervising and retrieving loans given to overseas investment projects were also reasons for stopping commercial banks from lending.
Vietnamese businesses have so far invested over US$660 million in nearly 160 projects in 33 nations and territories worldwide, with Laos accounting for the lion’s share of nearly $364 million, according to the ministry.
Investments in the neighbouring country has risen sharply in recent times and have gone mainly into infrastructure, energy, and agriculture. Iraq is the second most popular destination with $100 million, followed by Russia with $38 million.
Vietnamese investments abroad are mainly in heavy industry ($289 million), oil and gas ($161 million), agriculture ($81.9 million) and services ($67.9 million). — VNS
Source: www.vietnamnews.com.vn
