Currently, the need for foreign loans to implement investment projects is not uncommon in society. When conducting foreign loans, in addition to having to register loans in accordance with the law on foreign exchange, investors are also interested in the limit of foreign loans. Understanding the problems of customers, we would like to send Clients advice on the limit of foreign loans to implement investment projects.

Legal grounds

• Circular No. 12/2014/TT-NHNN

Purposes of borrowing foreign loans

Borrowers are permitted to borrow foreign loans for the following purposes:

• Implement production, business and investing projects using foreign loans of the following subjects:

• • Borrowers;
  • Of the enterprise to which the borrower contributes direct investment capital (only applicable to medium and long-term foreign loans). In this case, the borrower’s loan limit on the total loan turnover in service of the production and business plan or such investment project must not exceed the capital contribution ratio of the borrower in the enterprise to which the Borrower contributes capital. These production and business plans and investment projects using foreign loans must be approved by competent authorities in accordance with relevant provisions of Vietnamese law and in accordance with the scope of establishment licenses, enterprise registration certificates, investment registration certificates, registration papers of cooperatives or cooperative associations of borrowers or enterprises to which the borrower contributes direct investment capital.
• Restructuring the borrower’s foreign debts without increasing borrowing costs.

Foreign loan limit

If the purpose of borrowing foreign loans is in accordance with the law, the borrower must pay attention to the foreign loan limit. The foreign loan limit is specified at Point (i) Clause 2, Article 11 of Circular No. 12/2014/TT-NHNN. Accordingly, the limit of foreign loans for the implementation of investment projects shall be applied to medium and long-term loans. According to regulations, the borrower having an investment project using foreign loans that have been granted the investment certificate, the medium and long-term loan balance (including domestic loan balance) of the borrower serving such project must not exceed the difference between the total investment capital and contributed capital recorded in the investment certificate.

Above are some advice on the issue that Clients are interested in. Hopefully, our sharing based on the above practical experience will help foreign investors to enter the Vietnamese market conveniently and quickly.

If you need advice, for more detailed information and how to use this service, please contact the Deputy director in charge of business directly: Nhat Nam Lawyer via hotline: 0912.35.65.75, 0912.35.53.53 or call hotline 1900.6575 for the free legal advice or send a service request via email: lienheluathongbang@gmail.com

Wish you and your family health, peace and success!

Best regards!