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Official Gazette

Saturday, January 18, 2020

Policy digest July 2013

Updated: 16:55’ - 29/07/2013

* DATC empowered to propose restructuring plans of ailing businesses: The Ministry of Finance (MOF) is expected to guide in detail the operation of the Debt and Asset Trading Company of Vietnam (DATC) to make it conformable with international practice.

Accordingly, DATC may only decide to purchase debts of wholly state-owned enterprises for their restructuring after it obtains a competent authority’s written approval of restructuring or equitization plans and results of debt purchase negotiations with creditors of these enterprises.

However, DATC may take the initiative in negotiating with non-performing enterprises for debt purchase and putting forward restructuring plans for them.

The MOF is ready to allow DATC to decide on write-off of part of the debt payment obligation of to-be-restructured enterprises which is at most equal to the negative difference between their equity and non-performing loans (NPL) owed to other creditors.

At the time of conversion into joint-stock companies, if indebted state enterprises still have an accumulative loss, DATC would coordinate with creditors involved in the restructuring in considering further write-off of debts at most equal to such accumulative loss. 

MOF will soon formulate a mechanism to compel commercial banks to sell NPLs or hand over indebted state enterprises to DATC.-

* State-owned businesses to disclose audited financial statements within ten days: In guiding Government Decree No. 61/2013/ND-CP of June 25, MOF is expected to require state-owned enterprises (SOEs), including the State Capital Investment Corporation (SCIC), to make public their annual financial statements on their websites and publications and in the mass media within ten days after independent audit firms certify them.

All material information included in a financial statement must be disclosed within 90 days after the end of the fiscal year.     

The Members Council chairpersons of SOEs will be totally responsible for the disclosure of financial information to their state owner, financial management agencies, creditors and investors.

SOEs will also be required to provide their employees with sufficient information on average income, and setting up and use of reward and welfare funds.

SOEs which have no website yet will have to set up within six months a website containing a section for displaying financial information and statements. 

* Government becomes prudent about large foreign-invested projects: The Ministry of Planning and Investment (MPI) has recently asked the Prime Minister to implement an independent evaluation of large-sized foreign-invested projects, especially those with national spillover impacts, before officially licensing them.

Agencies in charge of licensing foreign investment will have to send reports to the Prime Minister and MPI for independent evaluation, which is necessary to help scrap projects which might have negative impacts on the economy and environment, and prevent waste.

A set of evaluation standards will be completed soon to ensure both feasibility and efficiency of each project.

MPI last month asked local administrations to report on the implementation of foreign-invested projects with registered capital of over USD 100 million or occupying an area of over 50 hectares each. Local administrations will still have full power to license projects capitalized at no more than USD 100 million or using 50 hectares of land at most each.

The investment license will be issued to investors only when the requirements on facilities, technological and environmental protection infrastructure are fully satisfied as committed. Capital disbursements and construction progress of their projects should also be closely monitored right after being licensed.

* More public information on export credit insurance needed: Financial benefits of export credit insurance should be widely advertised among exporters and insurance companies should have policies to make export insurance more attractive to domestic companies. These were among noteworthy suggestions of insurance experts at a conference on export credit insurance held on July 18 in Ho Chi Minh City.

The export credit insurance protects exporters’ foreign receivables against commercial and political risks that could result in foreign buyers’ non-payment for exports.

The number of exporters buying this insurance has remained low despite a national trial program to promote its use simply because they did not know such insurance was available and that the Government subsidized 20 percent of the premium rate.

According to an official from Bao Viet Tokyo Marine Insurance, Ho Chi Minh City branch, only 50-70 businesses had bought the insurance in the past three years. Most of them were foreign businesses.

The conference participants also suggested a lower premium rate which is equal that of other common insurance policies and propose mechanisms which should be adopted to help insurers better communicate with exporting businesses about the export credit insurance benefits and protect insured businesses’ vital information from being abused by insurers.        

* Non-voting share holding by foreign investors to be uncapped: The State Securities Commission is looking forward to obtaining the Prime Minister’s approval of a new regulation on holding rate of foreign investors on Vietnam’s securities market which may lift on a trial basis the 49 percent share holding cap for foreign strategic investors in some types of Vietnamese listed companies and securities trading organizations.

Shares to be unlimitedly held by foreign investors must be non-voting ones of businesses engaged in non-conditioned business lines.

Foreign investors in some new types of investment funds (open funds, real estate investment funds), securities investment companies, voluntary pension funds would be entitled to new tax incentives.

* PPP regulations to be consolidated to suit international practice: Regarded as the most effective form of mobilizing investors to build infrastructure in the country, public-private partnership should be further promoted with more specific regulations of higher legality.   

MPI is expected to issue in the year a document consolidating Prime Minister Decision No. 71/2010/QD-TTg, on the Regulation on PPP investment on a trial basis, and Government Decree No. 108/2009/ND-CP, on BOT, BTO and BT (variations of PPP investment form), in order to make domestic law on this form of investment conformable with international practice, guarantee a more favorable environment, provide more effective protection for investors, and help them quickly retrieve their investment, especially in transport and energy infrastructure facilities.   

The Ministry is also proposing the Government to earmark a total amount of around USD one billion as domestic capital for foreign-invested PPP projects and projecting to raise a fund to support investors in preparing for PPP projects. 

* Legal framework improvements to address pollution in industrial parks: The situation of water, soil and air pollution with the accumulation of hazardous solid wastes in industrial parks is alarming and can be partially attributed to the lack of specific regulations guiding the Environmental Protection Law, according to deputy director of the Vietnam Environment Administration (VEA) Le Ke Son.

He urged responsible agencies to provide detailed guidance on methods of determining the environmentally safe distance from industrial parks, hi-tech parks, industrial complexes to surrounding residential areas and nature reserve zones. At present, such a method is only provided for establishments producing or storing dangerous chemicals in Article 22 of the Chemical Law and Articles 13, 14 and 15 of Decree No. 108/2008/ND-CP.

Industrial parks which are likely to cause environmental harms should be clearly specified.

He also proposed the environmental law compel related agencies, including VEA, provincial-level Natural Resources and Environment Departments, district-level People’s Committees, industrial park management boards and anti-environment crime police at ministerial and provincial levels, to jointly manage and supervise environmental issues of industrial parks, in order to improve environmental management and surveillance results.   

The power and responsibility of management boards of industrial parks, when authorized by environmental administrations, to appraise and approve environmental impact assessment reports and certify environmental protection commitments of investment projects in these parks should also be consistently provided in relevant legal documents. At present, such power and responsibility are provided in Decree No. 21/2008/ND-CP revising Decree No. 80/2006/ND-CP, detailing the Environmental Protection Law, but cannot be found in Decree No. 29/2011/ND-CP on strategic environmental assessment, environmental impact assessment and environmental protection commitments.-

VNL_KH1 

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