Earlier this month (December 2012), the Prime Minister issued Directive 32 to various ministries to instruct the ministries to remove obstacles to increase investment efficiency. The Prime Minister instructed the State Bank to focus on developing a mechanism to monitor the total amount of domestic and foreign loans in comparison with the total investment capital of foreign direct investment projects. It seems that the Prime Minister now wants to re-introduce debt-equity ratio control for foreign-invested enterprises. Before 2006, under the old Foreign Investment Law, a foreign invested enterprise’s owner equity must be at least 30% of the total investment capital of a project.
On 28 December 2018, the State Bank of Vietnam (SBV) issued Circular 42 amending current foreign currency borrowing regulations (in Circular 24 of the SBV dated 8 December 2015, as amended from time to time (Circular 24/2015)) (Circular 42/2018). Circular 42/2018 will take effect from 1 January 2019.
Changes to permitted lending purpose
Vietnamese banks only lend in foreign currency for a few limited purposes. Circular 42/2018 has following changes to these purposes: