The State Bank of Vietnam (SBV) has instructed credit institutions andbranches of foreign banks to report their lending to foreign directinvestment (FDI) businesses before March 16.
UnderDocument No1355/NHNN-CSTT, the central bank also asked creditinstitutions to provide an assessment of their lending and debtcollection to/from FDI businesses and to identify difficulties in theprocess of granting credit and collecting debts from FDI businesses.
In addition, credit institutions were asked to propose and recommendimprovements to the legal framework on borrowing by FDI enterprises,strengthening co-operation between ministries, sectors, and localities.
The central bank said the move was part of aGovernment project to improve the effectiveness of managing FDI capitalflows.
Recently, concerns about lending to FDIbusinesses intensified with the news that many FDI real estate projectswere using loans provided by Vietnamese banks.
Though there have been no official reports on lending by domestic banksto FDI firms to date, former deputy director of the State Committee forCo-operation and Investment Nguyen Mai told Dau Tu (Investment)newspaper that there was no concern about the issue because there wasonly a limited number of FDI firms taking out credit from domesticbanks.
To date, the Ministry of Planning andInvestment (MPI) had scrutinised 30 reports from cities and provinces,exclusive of leading FDI destinations with large real estate projectssuch as HCM City , Hanoi , Binh Duong and Da Nang , Mai said.Most of the reports showed that only a small number of FDI firmsreceived funding from domestic banks as most borrowed from foreign bankbranches in Vietnam .
Under current regulations,Mai said that FDI firms could borrow from domestic banks but the SBVshould instruct domestic commercial banks to restrict their lendingbecause the nation's capital was limited and Vietnamese production firmswere facing capital shortages for investment.
Echoing Mai, former director of the MPI's Foreign Investment Agency PhanHuu Thang said that though the country could not ban FDI firms fromborrowing from domestic banks, it should regulate the proportion ofloans that FDI firms could borrow domestically.
Domestic loans should only be given to FDI projects that neededcounterpart capital from Vietnam or those that Vietnamese firmscould not do, Thang said.-VNA