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  Policy & Strategy

Government set to cut short investment incentives list

The Government has decided to reduce the list of investment activities entitled to direct preferential loans, while expanding assistance for investors to pay interests on loans.

The latest regulations on investment incentives, provided for in Ordinance 106, took effect on April 26, 2004.

According to the Finance Ministry, the list of investment activities entitled to direct preferential loans had become too long, rendering "preferential treatment" meaningless and creating pressure on the Development Support Fund's capital sources. In the long run, direct financial support to domestic production and export activities would not comply with the country's commitments in bilateral and multilateral agreements.

Interest rates for preferential loans will be adjusted to about 70 percent of the mid- and long-term rates fixed by State-run commercial banks. The newly-adjusted rates will be applied to all development projects with loans from the State.

Deputy Finance Minister Le Thi Bang Tam said the new interest rates on preferential loans would encourage businesses to seek loans from commercial banks and then receive support for interest payment on them from the State, instead of waiting for loans from the Development Support Fund. Tam added that procedures to gain interest payments would be simplified to back investors.

Also according to the new regulations, investment projects abroad using Viet Nam's ODA funds are entitled to preferential loans from the Development Support Fund, provided that they buy Viet Nam made products and equipment and/or employ Vietnamese experts or workers.

VNCG-VDC1 - (05/05/2004)

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