Debt trading decree in effect

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A transaction is carried out at VPBank. Banking authorities will accelerate steps to form a market for debt trading, as part of national efforts to restructure the credit institution system. — Photo vtc.vn

Decree No 69/2016/NĐ-CP, which took effect last Friday, stipulates the following major conditions for enterprises dealing in the debt trading business:

-  The companies must have at least VNĐ100 billion, or US$4.4 million, in charter capital. Firms dealing in debt trading floor services must have at least VNĐ500 billion in equity.

-   Agreements in documents do not state that the debts cannot be transferred; the debts are not used as a mortgage for a civil duty at the time that transactions take place; debt buyers and sellers are not related parties in accordance with regulations of the Enterprise Law.

-   Debt transactions must be contracted in documents based on agreements of relevant parties, guaranteeing their legal rights and interests. The documents are to specify the rights and responsibility of debt buyers and sellers.

-   Debt trading companies must not use loans of credit institutions and foreign bank branches to buy debts from other borrowers of these lenders. Also, the firms are not to use a guarantee of credit institutions and foreign bank branches to buy debts from customers of the lenders.

-   Debt buyers and sellers and relevant parties must obey current regulations on foreign exchange management in case debt trading forms a foreign lending/borrowing relation and requires foreign exchange in the debt transactions.

-   Managers of debt trading firms must have adequate civil capacity and are not banned from corporate management in accordance with regulations of the Enterprise Law. They must have a bachelor’s degree or higher degrees either in economics, business management, laws or a certain field that they are going to assume in their jobs. They are to have at least five years working directly in areas such as banking and finance, accounting, auditing, laws, asset evaluating or debt trading.

Persons who already worked for a debt trading firm, whose business registration certificates were revoked, can become managers of another debt trading company if they did not manage the old firm in the last three consecutive years.

Đậu Anh Tuấn, head of the Việt Nam Chamber of Commerce and Industry (VCCI)’s legislation department, said debt trading remained on a list of business areas where enterprises must satisfy specific conditions, as attached in Appendix 4 of the Investment Law.

 “I think debt trading should not be on this list. It should be developed widely,” Tuấn told Việt Nam News in a phone call yesterday.

“I have no specific idea about developments in the domestic debt trading market, but activities here apparently remain feeble,” he said.

State Bank of Việt Nam (SBV) Governor Lê Minh Hưng said last week that banking authorities would accelerate steps to form a market for debt trading, as part of national efforts to restructure the credit institution system and settle bad debts.

This was also part of an action plan of the banking sector to support the domestic business environment and national competitiveness with a vision towards 2020.

SBV circulars

The SBV has also issued 14 circulars, and it reportedly abolished many business conditions in the banking area.

According to Government portal chinhphu.vn, the new circulars simplify administrative procedures related to activities such as lending abroad, mandating and payment for credit institutions, and foreign bank branches in Việt Nam.

Việt Nam International Bank Deputy General Director Lê Quang Trung told Đầu tư (Vietnam Investment Review) that simpler procedures would help banks cut time and costs to improve their business efficiency.

Cấn Văn Lực, director of the BIDV training centre under the Bank for Investment and Development of Việt Nam, agreed, saying that this would create conditions for banks to lower interest rates.

Decree No 69/2016/NĐ-CP is one of about 50 decrees that have become effective and provided guidelines for the enterprise and investment laws. These laws took effect last Friday.

As of yesterday, the contents of fewer than 10 decrees were posted on the Government portal. The available ones include decrees on business conditions related to credit intelligence, maritime navigation, agriculture and automobile transportation.

Tuấn from the VCCI said he expected the other decrees to be published in the next few days.

He said these documents had been built based on “quite a lot” of suggestions from the VCCI, which represents the domestic business community.

“The decrees provide clearer and more transparent regulations, yet greater changes are needed,” he said.

Phan Đức Hiếu, deputy director of the Central Institute for Economic Management, said last Friday was not a “dead-end” for Vietnamese business conditions reforms.

Legal revisions would go on, said Minister of Planning and Investment Nguyễn Chí Dũng.