Currently, foreign-invested enterprises want to borrow capital from foreign investors (foreign organizations) to have access to many sources of capital to expand production scope. Therefore, Government in Vietnam allows small and medium-sized enterprises, as well as FDI companies, can take foreign loans.

1. FOREIGN DIRECT INVESTMENT(FDI)

FDI (Foreign Direct Investment) is a form of long-term investment by individuals or organizations from one country to another by setting up factories and business establishments. The aim is to achieve long-term benefits and take control of this property.

There are two main types of FDI enterprises:

• Enterprises with 100% foreign capital.
• Joint venture between foreign and domestic partners.  

​​​​GENERAL OVERVIEW OF LEGAL REGULATIONS ABOUT FOREIGN LOANS VIETNAM  

Types of foreign loans

There two typical types of foreign loans in Vietnam, including:

* Foreign Loans Guaranteed by the Vietnamese government

• Lending entrustment contract
• Borrowing contract
• Deferred payment contract (applies to import goods)
• Finance leasing contract
• Borrower debt instrument issuance (international market)

* Foreign Loans not Guaranteed by the Vietnamese government

• Conventional loan
• Foreign Loans Registration
• Foreign loans that are subject to registration to SBV include the following:
• Long-term and mid-term foreign loans
• Short-term loans with no renewal contract, and remain outstanding for one year since its initial disbursement
• Renewed short-term loans with more than 1 year to maturity

​REQUIREMENTS APPLIED TO CREDITORS

• Requirements for taking short-term foreign loans: Creditors must not take short-term loans to serve mid-term and long-term purposes.
• Requirements for taking mid-term and long-term foreign loans: If the creditor has a project of investment funded by foreign capital that has a certificate of investment, the total midterm or long-term loan (including the domestic loans) taken by the creditor to serve the project must not exceed the difference between the total capital and the contributed capital in the certificate of investment.
• If the creditor takes the foreign loan to execute a business plan or project of investment that does not have a certificate of investment, the total midterm or long-term loans (including the domestic loans) taken by the creditor must not exceed the need for loans serving business plan or project of investment, which has been approved by a competent authority.
• A foreign loan agreement must be made in writing before the loan is released.

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