On July 09, 2018 the State Bank of Vietnam released Decision No.417/QĐ-NHNN to approve the plan on simplification of business conditions under the management capacity of the State Bank of Vietnam. The Decision take effected from issuance date.
Accordingly, Decision No.1417/QĐ-NHNN assigns specific tasks to units implementing the simplification of business conditions as follows:
1. The focal units shall have to take responsible for accepting the contents of the approved plan when drafting the Decree, Circular of the State Bank of Vietnam in the process of amending, supplementing or replacing them (planned to submit to the Government or submit to the Governor for issuance in the third quarter of 2018).
2. For simplification of business conditions plan related to credit institutions’ ranking results, the Banking Inspection and Supervision Agency shall have to adopt the approved plan in the draft legal documents concerned after the Circular on Credit Institutions and Branches of the Foreign Bank in addition to being issued.
3. For simplification of business conditions plan that is not in the above cases, assigning to the Legal Department to act as the principal body in elaborating 01 Decree and 01 Circular in the form of a document amending many documents to implement the plan on simplification of business conditions. The term of submit to the Government to release Decrees and the term to release Circulars of the State Bank which is directed by the Government and the Prime Minister.
4. During development of Decrees, Circulars to implement the simplification of business conditions, units continue to proactively review to propose additions and adjustments to the simplified contents in line with the management requirements and the actual law-making work at the time of elaboration of documents.
Therefore, it can be seen that Decision No.1417/QĐ-NHNN is expected to help establishment and activities process of banks become simpler when minimizing the current complex business conditions.
On June 30, 2018, the Government issued Decree No.94/2018/ND-CP regulating on public debt management. This Decree took effect since July 1, 2018.
Accordingly, Decree No.94/2018/ND-CP specifies a number of specific contents as follows:
1. The public debt security index is formulated on the basis of the orientation on the five-year socio-economic development plan; the implementation of public debt safety targets over the last 5 years; growth rate and internal saving rate of the economy; the State budget revenue and expenditure balance. When the public debt safety index meets the public debt safety warning threshold, the Ministry of Finance shall submit to the Government or the National Assembly Standing Committee for measures to ensure that public debt safety targets do not exceed the public debt ceiling.
2. Risks for public debt include the risk of interest rates, foreign exchange rates due to fluctuations in the financial market; liquidity risk due to the lack of liquid financial assets to fully and timely fulfill the debt obligations as committed, including repayment capacity of the central budget and local budgets; risks due to fluctuations in the financial market affect the mobilization of capital leading to high debt repurchase or loss of debt; credit risk is due to re-borrowers, guaranteed subjects can not pay debts in full and on time; other types of risk can affect public debt safety.
The risk assessment is carried out periodically in association with the five-year loan and repayment plan, the three-year public debt management program and the annual plan for borrowing and repaying the public debt. Based on the risk assessment, the Ministry of Finance shall propose solutions to prevent risks to public debts; provincial People’s Committees propose solutions to prevent risks to local government debt.
Basing on the risk assessment and the level of risk effect for each debt or list of debts, the Ministry of Finance shall elaborate the debt restructuring plan and submit it to the Prime Minister for decision and organize the implementation thereof. The Provincial-level People’s Committees shall report to the People’s Councils of the same level for decision the debt restructuring plans of local administrations and implement.
Through detailed and specific regulations on public debt management, Decree No.94/2018/ND-CP is expected to enhance the sense of responsibility, professional skills, as well as improve the effectiveness of state management of competent agencies and individuals.
On June 06, 2018 the government issued Decree No.86/2018/NĐ-CP provides on cooperation and investment of foreign investor in education field. This Decree takes effect from August 01, 2018.
Accordingly, Decree No.86/2018/NĐ-CP regulates on investment in the field of education, as follows:
1. Type of educational establishment with foreign owned capital
– Short-term training and fostering establishments.
– Pre-school education institution.
– General education establishments (primary schools, junior high schools, upper secondary schools, multi-level general education schools).
– Higher education institution.
– Branches of foreign-invested higher education institutions in Vietnam.
2. Operation duration: Project implementation time is not exceeding 50 years, counting from the date of issuance of the investment registration certificate but not longer than the land lease term.
3. Conditions of capital for establishing education institution with foreigner owned capital
– Investment project of establishing a pre-school education institution has to have amount of invested money is 30 million Vietnam dongs/a child at least (exclude land using fees). Total of investment capital is counted base on the time of the highest expected scale. The plan of investment capital must be fit with the expected scale of each period.
– Investment project of establishing a general education institution has to have amount of invested money is 50 million dongs/student at least (exclude land using fees). Total of investment capital is counted base on the time of highest expected scale, but it is not lower than 50 billion dongs.
– Investment project of establishing a short-term training and fostering institution must has to have amount of invested money is 20 million dongs/leaner at least (exclude land using fees). Total of investment capital is counted base on the time of highest expected scale.
– Investment project of establishing a higher education institution has to have total of investment capital is 1.000 billion dongs at least (exclude land using fees). Foreign-invested economic organizations being project investors shall prove their financial capability according to the provisions of the Investment Law. By the time of appraisal, universities must be allowed to invest more than 500 billion VND.
– Investment project of establishing branches of foreign-invested higher education institutions in Vietnam have to amount of invested money is 250 billion dongs at least (exclude land using fees). By the time of appraisal, branches must be allowed to invest more than 250 billion VND.
– For foreign-invested educational establishments which do not build new material foundations but they are only sub-lease or contribute by the Vietnamese parties with material facilities available for operation, the minimum investment level must meet 70% of the above levels.
Thus, compared with period document, Decree No.86/2018/NĐ-CP sets higher requirements for investment capital, in order to improve the stability of foreign investment projects in the field of education.
On May 24, 2018 the Ministry of Finance promulgated Circular No.52/2018/TT-BTC amending and supplementing some of articles of Circular No.08/2016/TT-BTC on January 18, 2016 on management and payment of investment capital funded with the state budget capital, the Finance Ministry Circular No.108/2016/TT-BTC dated 30/06/2016 amending and supplementing some of articles of the Circular No.08/2016/TT-BTC dated 18/01/2016.
Accordingly, Circular No.52/2018/TT-BTC has had noteworthy amendment and supplement such as:
1. Expanding the scope and object of regulation:
Formerly, some projects have special qualities (namely: Investment projects on construction of socio-economic infrastructure works of poor districts; Investment projects belonging to communal budgets and projects invested by the commune level; Investment projects under forest protection and development plans and investment projects using government bond capital) which are the Government and the Prime Minister shall apply the specific management mechanism according to the provisions of separate circulars. However, at present, all investment projects funded by the state budget are subject to uniform management regulations.
2. Supplement provisions with specific construction, namely:
Circular No.52/2018/TT-BTC regulates investment projects of state secret works managed by ministries, branches and localities, the State Treasury shall only control the appropriateness and adequacy of the capital withdrawal vouchers and the money transfer at the request of the investor. Agencies and investors are responsible for controlling the payment content and the project file.
3. Amendment regulations on management, payment public investment capital:
Circular No.52/2018/TT-BTC provides to add some principles of advance capital to strengthen controlling of advance recovery, because of in case, the contractor does not return to carry out the procedures for recovering the advanced capital and closing the accounts at the State Treasury due to the fact that the value of payment for completed volumes has not reached 80% of the contract value.
It can be seen that Circular No.52/2018/TT-BTC has been important amended and supplemented, this will facilitate the implementation of the policy of speeding up the disbursement of public investment capital of the Government and at the same time contributing to ensuring transparency in the operation of financial agencies from central to local level.
On June 30, 2018 the government issued Decree No.96/2018/NĐ-CP regulating the prices of irrigation products and services and the support for the use of irrigation water products and services. This Decree takes effect from July 01, 2018
According to Decree No.96/2018/NĐ-CP, the objects entitled to support the use of irrigation water product or service including:
1. Households and individuals using agricultural land for growing food crops include:
– The whole area for growing food crops, include land inherited, donated, transferred land use rights;
– All of area agricultural land serve for researching, test production; The area of annual crop land has at least one rice crop per year. The area of annual crop land has at least one rice crop per year include planned land, plan on planting at least one rice crop in the year or planned land plot and annual planting plan, but actually plant at least one rice crop in the year
2. The poor households and individuals are assigned agricultural land by the State according to regulations.
3. Households and individuals using land for salt production.
4. Households and individuals using agricultural land within the quota for vegetable growing, coloring and plating; Long-term industrial plants, short-term industrial plants including winter crops; fruit trees; flower; medicinal plants; aquaculture (except for aquaculture in lakes, dams, rivers, streams, lagoons …); breed.
5. Households and individuals are farmers who received land within the fixed quotas allocated by agricultural companies and forestry companies (state-run agricultural and forestry farms) for agricultural production according to the provisions of law.
6. Organizations and individuals performing the task of draining and draining water in rural and urban areas, except for inner cities.
7. Organizations and individuals performing the task of flood drainage, flood prevention, tide prevention, salinity prevention, saline water drainage, alum washing, and sweet keeping in localities.
Therefore, it can be seen that in comparison with previous documents, Decree No.96/2018/NĐ-CP has added to the list of subsidized irrigation service providers. This Decree is expected to further promote the development of applying irrigation water in agriculture, forestry and salt production.
On June 12, 2018, National Assembly promulgated Competition Law No.23/2018/QH14 with many new features compared to the Competition Law in 2004. Law on Competition 2018 takes effect on July 01, 2019.
Accordingly, Law on Competition 2018 provides some new noteworthy content as follows:
1. National Competition Committee shall assess the impact or likelihood of significantly restricting competition from a competition restriction agreement based on such factors as: Enterprises market share that participate the agreement; Barriers to entry, expansion of the market; Limited research, development, innovation technology or technology quality restriction; Reduce the accessibility, and holding essential infrastructure; Obstructing competition in the market by controlling specific factors in the sector or sector related to the enterprises participating in the agreement; etc.
2. Duration of exemption for competition restriction agreement: 05 years from exemption decision being promulgated.
3. The National Competition Committee positively assesses the economic concentration which based on one of the factors or a combination of factors such as: Positive evaluation to sector development, field and science, technology according to strategy, planning of the State; Positive impact on the development of small and medium enterprises; To increase the competitiveness of Vietnamese enterprises on the international market.
Thus, it can be seen, Law on Competition 2018 clearly provided factors which are the basic for the National Competitive Committee accesses competitive effects, positively evaluate of economic concentration, and it also clearly regulated about duration of exemption for competition restriction agreement.
On June 30, 2018 the government promulgates Decree No.95/2018/NĐ-CP on regulating on the issuance, registration, depository, listing and transaction of debt instruments of the government on the stock market. This Decree takes effect from July 01, 2018.
Accordingly, Decree No.95/2018/NĐ-CP provides on a new bond, it is named green bond as follows:
1. Definition: The green bonds are bonds that are released by the government to invest in projects related environment protecting activities according to the provisions in Law on Environment protection (green project) and in the project list that is divided capital investment in accordance with the Law on Public Investment and the State Budget Law.
2. Regarding to construction responsibility: The Ministry of Finance shall coordinate with the Ministry of Planning and Investment and the Ministry of Natural Resources and Environment in elaborating schemes on issuance of green government bonds and report to the Prime Minister for approval before implementation. The content of the project includes:
– Purpose of release;
– Mass of release;
– Conditions and terms of bonds;
– Buyer of bonds;
– Method of issuance;
– Registration, depository, listing and transaction;
– List of projects using capital from bond issuance.
3. Regarding to process of issuing and trading: Similar to government bonds, green bond will be issued and traded through three major forms:
– Bidding of bonds;
– Guaranting of bonds;
– Individual issuance of bonds;
– Trading bonds on the securities market through ordinary purchasing, re-purchasing, combined selling and re-buying, and other types of transactions in accordance with the law on securities.
With detailed and specific regulations, Decree No. 95/2018 / ND-CP is expected to promote green bond issuance, listing and trading activities – a new type of bonds are being seen as an effective channel to attract capital for environmental protection projects, thereby reducing the impact of climate change in Vietnam.
On June 30, 2018 the government issued Decree No.93/2018/NĐ-CP regulates on debt management of local authorities. This Decree takes effect from 01/07/2018.
Accordingly, Decree No.93/2018/NĐ-CP regulates on implementation borrowing and repaying of local authority debt as follows:
1. Bases for borrowing and debt repayment by local administrations
– Base on local budget estimates, total of annual borrow level and the policy of issuance of local authority bonds that is decided by Provincial People’s Councils and assumed the prime responsibility by the Finance Department.
– Base on the local budget estimates on the repayment of principals and sources of principal repayment; paying interest, fees and costs of loans that is decided by Provincial People’s Councils and assumed the prime responsibility by the Finance Department.
2. Organizing to borrow according to release local authority bonds
– Base on budget estimates, borrowing plan, annual payment, plan of releasing local authority bonds that is decided by Provincial People’s Councils and borrowing plan of local authority, Provincial People’s Committees release bonds.
– Procedures: Provincial People’s Committees shall send written requests to the Ministry of Finance for comments on conditions and terms of local administrations’ bonds within 15 days after receiving the written requests of localities.
3. Re-lending from ODA (Official Development Assistance), foreign preferential loans:
– Basic of re-lending agreement between Ministry of Finance and Provincial People’s Committee of each project; the number of re-lending that shall be assigned by the Prime Minister in the annual local budget estimates; The form of capital withdrawal and disbursement of ODA capital, foreign preferential loans within the scope of assigned estimates.
4. Organizing to borrow from other domestic sources such as: Borrowing from provincial financial reserve fund, credit organization in the country.
Therefore, Decree No.93/2018/NĐ-CP specifically regulated on management principles, forms and condition for borrowing, annual payment and borrowing plan of authorities local, this will facilitate the management and development of financial plans of state management agencies.
On June 30, 2018 the government issued Decree No.97/2018/NĐ-CP regulates on re-lending ODA (Official Development Assistance – ODA) capital, foreign preferential capital of the government. This Decree takes effect from July 01, 2018.
Accordingly, Decree No.97/2018/NĐ-CP provides the rate of re-lending of ODA and preferential loans capital, as follows:
1. For People’s Committee of province.
– The re-lending rate is 30% of ODA loan capital, preferential loan capital to the locals which have rate of the central budget compared with the local budget balance from 70% or more.
– The re-lending rate is 40% of ODA loan capital, preferential loan capital to the locals which have balanced ratio of the central budget compared with the total local budget balance from 50% to under 70%;
– The re-lending rate is 50% of ODA loan capital, preferential loan capital to the locals which have balanced ratio of the central budget compared with the total local budget balance to under 50%;
– The re-lending rate is 50% of ODA loan capital, preferential loan capital to the locals which are with the balanced central budget (exclude Hanoi City and Ho Chi Minh City);
– The re-lending rate is 100% of ODA loan capital, preferential loan capital to Hanoi City and Ho Chi Minh City;
– The Minister of Finance shall announce the rate of re-lending of ODA loan capital and preferential loan capital for each province or centrally run city for each period of budget stabilization before January 1 of the first year of the period stabilize the budget.
2. For public non-business units:
– The re-lending rate is 100% of ODA loan capital, preferential loan capital use for investment projects for public non-business units shall self-finance all regular expenditures and investment funds;
– The re-lending rate is 100% of ODA loan capital, preferential loan capital use for investment projects for public non-business units shall self-finance all regular expenditures and a part of investment funds;
3. For enterprises
Enterprises that are enough conditions to re-lending all ODA loan capital, preferential loan capital to use for investment project, but not exceed 70% of the total investment approved by competent authorities.
By specific regulations on re-lending rates for each target group, Decree No.97/2018/NĐ-CP is considered as a basis for state agencies as well as enterprises to carry out ODA re-lending procedures for preferential loans, thereby reducing the negative issues arising in the allocation of local concessional loans.
On March 12, 2018, the Governor of the State Bank of Vietnam issued Circular No.04/2018/TT-NHNN amending and supplementing Circular No.08/2017/TT-NHNN on banking supervisory processes and procedures. This Circular took effect since July 1, 2018.
Accordingly, Circular No.04/2018/TT-NHNN provides some new highlights as follows:
– Recommendations and warnings.
– Administrative penalties prescribed by laws.
– Early intervention action.
– Other banking supervisory actions that are suggested to competent authorities in accordance with laws
– Banking Inspection and Supervision Chief, and Directors of State Bank Branches of centrally-affiliated cities and provinces where the Banking Inspection and Supervision Department is not located, shall request the State Bank’s Governor to consider issuing the written document on imposition of early intervention action on entities subject to banking supervision;
– Banking Inspection and Supervision Chief shall consider issuing the written document on imposition of early intervention action on entities subject to banking supervision, including people’s credit funds and microfinance institutions within local subdivisions under the control of the Banking Inspection and Supervision Department;
– Directors of State Bank Branches of centrally-affiliated cities and provinces where the Banking Inspection and Supervision Department is not located shall consider issuing the written document on imposition of early intervention action on entities subject to banking supervision, including people’s credit funds and microfinance institutions within these local subdivisions
Thus, with the specific regulations on banking supervisory processes and procedures, Circular No.04/2018/TT-NHNN is expected to be a legal framework to ensure accuracy, objectivity, honesty, timely and uninterrupted operation of this activity, at the same time, does not obstruct the normal operation of entities subject to banking supervision.
