Rule to limit foreign currency loans

Rule to limit foreign currency loans

Individuals, along with co-operatives and other economic institutions which are not enterprises, would no longer be allowed to borrow from foreign sources under the provisions of a draft regulation newly released by the State Bank of Viet Nam.

The State Bank said it was consulting with Prime Minister Nguyen Tan Dung, along with relevant agencies and institutions, about the proposed regulation, which was intended to replace current Ordinance on Foreign Currency passed in 2006.

Under the draft ordinance, an individual needing to mobilise foreign financial resources to carry out an investment project would have to set up an enterprise and borrow in accordance with current laws and regulations.

The restriction would be aimed at enabling the State to maintain stricter controls over foreign exchange, State Bank Governor Nguyen Van Binh said in a statement sent to the Prime Minister. It would help gradually limit the use of foreign currency domestically and lure foreign currency sources out of general circulation and into the nation's credit institutions, he said.

The draft would also stipulate that, within Vietnamese territory, every contract or agreement related to payments, transactions, and setting and quotation of prices must be conducted in the domestic currency, except for specific exceptions approved by the State Bank.

An increased incidence of contracts and agreements with their terms set in foreign currencies have had a negative impact on the Government's monetary and exchange rate policies and interfered with its anti-dollarisation target, the central bank said.

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