Foreign investors must have at least 30pct equity in FDI projects to prevent bad debts: FIA proposal

The Foreign Investment Agency or FIA (Ministry of Planning and Investment) is proposing to the Government to re-apply the provisions of the equity at 30% for foreign investors when participating foreign direct investment (FDI) projects in Vietnam in efforts to prevent large bad debts of FDI firms, Do Nhat Hoang, Director of FIA said on Tuesday.
On the issue that many FDI firms fled, leaving the bad loans amounting to US$80 million for Vietnamese banks, the Thoi Bao Kinh Te Saigon (Saigon Economic Times) newspaper quoted Do Nhat Hoang as saying that the high bad debt level of FDI firms was due to Vietnam’s regulation on 30% equity of FDI firms into Vietnam removed from 2005, so foreign investors could contact with local banks for borrowing loans when they entered Vietnam.

However, many banks were not careful in evaluating the loan applications, leading to lending with large amounts of capital into inefficient projects, Hoang said.

Hoang said FIA is proposing to the government to re-apply the provisions of the equity of a foreign investor at no less than 30% in a FDI project as previously defined in 2005.

According to Thoi Bao Kinh Te Saigon, Dr. Nguyen Dinh Cung, Vice Director of the Central Institute for Economic Management also said that the State Bank of Vietnam (SBV) should take strict controls over the loans of FDI enterprises.

Dr. Cung also suggested that, if a project has been licensed, but exceeding 12 months, it has yet to be deployed or is deployed behind schedule without a legitimate reason, state authorities should revoke the investment license.

Source: Vietbiz24.com

Tags: invest in Vietnam, Vietnam FDI, Vietnam FDI 2011, Vietnam investment

Posted by VBN on Oct 6 2011. Filed under Investment. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry