The FIEs’ borrowing and debt payment has not been put under the state management, because management agencies believe that borrowing money and paying debts are the FIEs’ business and no need for them to intervene. However, some economists have recently warned that the failure to control the FIEs’ borrowing from foreign sources would lead to many bad consequences.
The latest local reports have shown the growing tendency of FIEs borrowing capital from foreign sources with the foreign loans much higher than the loans from domestic banks.
The three FIEs in Dong Nai province, for example, have been found as borrowing 10.4 million dollars. The FIEs in Thai Binh province have borrowed 52 million dollars. In Vinh Phuc, the loans in US dollar alone have been worth 41 million dollars.
However, analysts have noted that these are just the preliminary statistics, and that the actual figures could be much higher.
Meanwhile, a report by the State Bank of Vietnam has pointed out that in 2009-2011, the medium and long term loans of FIEs accounted for 50-60 percent of the total medium and long term loans from foreign sources with no government’s guarantee of businesses. The figure accounted for 87-97 percent of the total medium and long term loans from foreign sources with no government’s guarantee of non-state owned enterprises.
FIEs have been mostly borrowing money from their parent groups and foreign banks or finance groups.
The State Bank’s report showed that the FIEs’ outstanding loans from foreign sources in 2009 reached 4275 million dollars. The figure was 4545 million dollars in 2010 and then jumped to 4800 million dollars just in the first nine months of 2011.
Experts believe that the actual foreign loans of FIEs would be much higher. The State Bank of Vietnam has admitted that it only can get the information about the foreign debts incurred by the businesses of all economic sectors, while it does not have concrete figures for different groups of enterprises. Besides, the released figures are just the ones analyzed from the information sources the State Bank can have.
Dr Nguyen Mai, a well known economist in Vietnam, when commenting about the figures, once more said that there’s no need to worry about the FIEs’ foreign loans. He believes that no need to discuss about the issue, because borrowing capital is the right of investors, affirming that the borrowing from foreign sources would in no way affect Vietnam, provided the investors strictly follow the laws and the investment policies in Vietnam.
However, other experts do not think the same way. They have pointed out that there are some FIEs which organize their production and business with nearly 100 percent of capital from the loans. The State Bank has also expressed its worry over the legal regulations relating to the FIEs’ foreign borrowing and debt payment.
The current regulations do not clearly stipulate the exact ratios of the borrowed capital and the contributed capital in FIEs. There is also no regulation about the volume of capital FIEs can borrow depending on the capital contribution process. Therefore, it happened that FIEs registered low capital contribution, or they were very slow in making capital contribution. As a result, the foreign direct investment has been heavily depending on foreign loans.
“If FIEs’ operation heavily depends on the loans, the FIEs, the Vietnamese legal entities, would have to bear all the risks. Meanwhile, the foreign investors would only take responsibility for the debts and other asset obligations within their contributed capital,” an expert said.
Sharing the same view, Phan Huu Thang, Director of Center for Foreign Investment Research, said that it is necessary to set up the requirements on the capital contribution progress in order to strengthen the management over FIEs’ foreign debt management.
Some days ago, SBV has instructed Vietnamese credit institutions and branches of foreign banks to report their lending to FIEs before March 16.
Source: TBKTVN
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