8 January 2014
On 26 December 2013 the government issued Decree No. 219/2013/ND-CP on the management and repayment of offshore loans that are not guaranteed by the government (Decree 219).
Scope of Application
Decree 219 applies to all businesses that are incorporated under the Enterprises Law, including foreign-invested enterprises, credit institutions, foreign bank branches, etc.
Offshore loans that fall under the regulation of Decree 219 include loans from non-residents under loan agreements, deferred payment commodities sale and purchase agreements, entrusted loan agreements, and debt instruments issuance agreements that are not guaranteed by the government.
Main Principles Applicable to Offshore Loans
Under Decree 219, a borrower must comply with the borrowing and repayment conditions as agreed with the offshore lender. The borrower must also register the offshore loan with the State Bank of Vietnam. Unlike its preceding Decree, Decree 219 does not provide for what types of loans should be registered or what the registration procedures involve. It is expected that these issues will be addressed by further guidelines from the State Bank of Vietnam.
Decree 219 comes into force from 15 February 2014, replacing Decree 134/2005/ND-CP on the same subject.