The State Bank of Vietnam (SBV) has instructed credit institutions and branches of foreign banks to report their lending to foreign direct investment (FDI) businesses before March 16.
Under a recently released document, the central bank also asked credit institutions to provide an assessment of their lending and debt collection to/from FDI businesses and to identify difficulties in the process of granting credit and collecting debts from FDI businesses.
In addition, credit institutions were asked to propose and recommend improvements to the legal framework on borrowing by FDI enterprises, strengthening co-operation between ministries, sectors, and localities.
The central bank said the move is part of a Government project to improve the effectiveness of managing FDI capital flows. There is growing concern that many FDI businesses intensified with the news that many FDI real estate projects are allegedly using loans provided by Vietnamese banks.
Though there have been no official reports on lending by domestic banks to FDI firms to date, former deputy director of the State Committee for Co-operation and Investment Nguyen Mai told Dau Tu (Vietnam Investment Review) newspaper there is only a limited number of FDI firms taking out credit from domestic banks.
To date, the Ministry of Planning and Investment (MPI) has scrutinized 30 reports from cities and provinces, exclusive of leading FDI destinations with large real estate projects such as HCM City, Hanoi, Binh Duong and Danang, Mai said. Most of the reports showed that only a small number of FDI firms received funding from domestic banks as most borrowed from foreign bank branches in Vietnam.
Under current regulations, Mai said that FDI firms could borrow from domestic banks but the SBV should instruct domestic commercial banks to restrict their lending because the nation's capital is limited and Vietnamese production firms are facing capital shortages for investment./.