Vietnam's Government has released new regulations on overdue debtcollections at State-owned enterprises (SOEs), which underline a messagethat SOEs must be more responsible in collecting their loans.
Pursuant to Decree N°206/2013/ND-CP that takes effect beginningFebruary 2014, SOEs must identify the responsibilities of individuals orgroups in wrongdoings related to overdue debts, and to ask wrongdoersfor compensation in line with legal regulations.
Ifcompulsory compensation and debt sales do not fill the loss, SOEs areto use risk provision funds or to calculate enterprises' expenditureallowances.
Regulations call for SOEs that are inthe process of transferring ownership must exclude overdue debts invaluing enterprises. Recipients of those SOEs must take responsibilityto monitor and collect overdue debts from performing debtors.
Amid rising pressure to revive the economy, the new debt collectionguide makes clear Vietnam's vow to reform SOEs and their deep-seateddebt diseases that, according to observers, turn the economy from beingan Asian tiger into an unstable economy with serious threats to itsfinancial security.
"The decision is definitely agood move," said Nguyen Hoang Hai, Secretary General of the VietnamAssociation of Financial Investors (VAFI). "The State should no longerbe responsible for financial problems of SOEs whose ineffectivebusinesses become horrendously burdensome to the State budget."
As of October 2013, SOEs held 60 percent of total social capital, or900,000 trillion VND (42.70 billion USD), and also incurred a domesticdebt of about 145 trillion VND (6.9 billion USD).
This group, which occupies a strong position in many areas, enjoyspreferable access to capital, land and other resources, and operatesunder soft budget constraints, contributing a modest 33 percent toeconomic growth and 30 percent of the State budget.
State coffers remain limited, despite the large need for publicspending and investment. The government has recently extended the statebudget over-expenditure cap from 4.8 percent of GDP to 5.3 percent.-VNA
Pursuant to Decree N°206/2013/ND-CP that takes effect beginningFebruary 2014, SOEs must identify the responsibilities of individuals orgroups in wrongdoings related to overdue debts, and to ask wrongdoersfor compensation in line with legal regulations.
Ifcompulsory compensation and debt sales do not fill the loss, SOEs areto use risk provision funds or to calculate enterprises' expenditureallowances.
Regulations call for SOEs that are inthe process of transferring ownership must exclude overdue debts invaluing enterprises. Recipients of those SOEs must take responsibilityto monitor and collect overdue debts from performing debtors.
Amid rising pressure to revive the economy, the new debt collectionguide makes clear Vietnam's vow to reform SOEs and their deep-seateddebt diseases that, according to observers, turn the economy from beingan Asian tiger into an unstable economy with serious threats to itsfinancial security.
"The decision is definitely agood move," said Nguyen Hoang Hai, Secretary General of the VietnamAssociation of Financial Investors (VAFI). "The State should no longerbe responsible for financial problems of SOEs whose ineffectivebusinesses become horrendously burdensome to the State budget."
As of October 2013, SOEs held 60 percent of total social capital, or900,000 trillion VND (42.70 billion USD), and also incurred a domesticdebt of about 145 trillion VND (6.9 billion USD).
This group, which occupies a strong position in many areas, enjoyspreferable access to capital, land and other resources, and operatesunder soft budget constraints, contributing a modest 33 percent toeconomic growth and 30 percent of the State budget.
State coffers remain limited, despite the large need for publicspending and investment. The government has recently extended the statebudget over-expenditure cap from 4.8 percent of GDP to 5.3 percent.-VNA
