The Vietnamese government has issued a decree, primarily to support export credits for both domestic and foreign businesses.

The decree will particularly help enterprises and businesses based in Vietnam whose overseas trade and investments require loans or guarantees for credit, but both importers and exporters writing letter of credit (L/C) business appear to benefit from the legislation.

Export support

Domestic and foreign businesses requiring credit or guarantees for exports may be eligible for a maximum state investment credit of 70 per cent of the total cost of an export deal.

The deal, however, would have to be approved by the Vietnam Development Bank.

Terms

The interest rate on the credit would remain unchanged for the whole term and would be calculated in Vietnamese dong on interest rates 0.5 per cent higher than those applied to five-year government bonds.

Businesses that fail to make payments in time will have to pay 150 per cent of the lending interest rate on overdue debts.

L/Cs specified

The legislation appears to encourage two-way cross border trades, because both importers and exporters appear to be eligible for up to 85 per cent of the value of some deals.

Specifically, these must be deals involving signed import and export contracts, L/Cs or any other valid bills of exchange.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.