VietNamNet Bridge – It’s highly possible that big successful
joint ventures which commit to do long term business in Vietnam would be allowed
to mortgage land and the assets built on the land at foreign banks for loans.
If this comes true, this would
have big influences to the foreign direct investment (FDI) panorama in Vietnam,
because the new regulation would cover thousands joint ventures operational in
the country. This would also keep the foreign banks’ doors open to joint
ventures and give them more opportunities to access bank loans.
The draft of the amended land law
has caught the special attention from the public as soon as it was opened for
public opinions. One of the most important articles is the right of businesses
to mortgage the land use right and the assets built on the land at foreign
banks.
The article No. 119 of the 2003
Land Law stipulates that the Vietnamese people settling overseas, and the
foreign individuals and institutions can contribute capital to legal economic
entities with their assets associated with the leased land, or mortgage the
assets at the credit institutions licensed to operate in Vietnam.
Meanwhile, the draft of the
amended 2003 Land Law proves to be more open, stipulating that joint economic
institutions between Vietnamese and foreign partners not only can enjoy the
above said right, but can also mortgage land and the assets at foreign banks,
with the approval of the government for every specific case.
If the proposal comes true, big
enterprises with long term commitments in Vietnam would get the go-ahead to
mortgage land at foreign banks for loans – the matter which has been always a
big obstacle for foreign invested enterprises so far.
The draft of the amended law also
shows a new provision relating to the rights and duties of joint economic
institutions. The provision said that the joint ventures which use the land
contributed by the partners in the joint ventures would be able to continue
using the land without having to pay land use fees or land leasing fee.
More and more voices have been
raised to support the idea that foreign invested enterprises can mortgage the
land use right and the assets built on the land at foreign banks for loans.
The land working group of the
Vietnam Business Forum has repeatedly, representing the business circle, asked
the government to allow foreign invested enterprises to mortgage land at
foreign banks in order to pave the way for enterprises to have more
opportunities for bank loans access.
Lately, the issue was once again
put on the agenda of the business forum gathered on the threshold of the
mid-term Consultative Group Meeting held in May 2012.
The current laws still do not
allow foreign banks to accept the collaterals which are the land use right and
the assets on the land. At present, the mortgage with land can be done only at
the credit institutions operational in Vietnam. As such, the current
regulations have been hindering investors to mobilize finance from different
sources.
The HCM City Real Estate
Association HOREA has also recently proposed the State Bank to allow to
mortgage land at foreign banks, provided that if the land and the assets on the
land are sold by bankers to take back capital, the process must go in
accordance with the Vietnamese laws.
In July 2012, the State Bank
organized a seminar on mortgaging land use rights and assets on the land at
foreign banks, which has raised a high hope that this would come true.
Compiled by Thu Uyen
Business & Investment Opportunities
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