SBV Issues New Circular on Foreign Borrowing

On 30 June, the State Bank of Vietnam (“SBV”) issued a new circular on non-government guaranteed foreign borrowing. Set to enter into force on 15 August, Circular 08/2023/TT-NHNN (“Circular 08”) will replace Circular 12/2014/TT-NHNN. In doing so, it will introduce various changes to the current regulations affecting both bank and enterprise borrowers.

Permitted purposes

Circular 08 further introduces certain restrictions on short-term foreign loans. These are permissible in two cases: either to refinance the borrower’s foreign debts or to repay their short-term debts incurred from their investment project, business plan, or other projects (excluding the principal debt amount of a domestic loan). 

Meanwhile, borrowers are allowed to take out medium and long-term foreign loans in just three cases: (1) to implement their investment project; (2) to implement their business plan or other project; and, (3) to refinance their foreign debt.  

Current regulations do not require borrowers to register short-term foreign loans with the SBV. However, if the short-term loan is renewed so that the total loan term exceeds one year, it must be registered with the SBV. 

Subject to further guidance from the SBV, to mitigate the risk of SBV Registration rejecting the renewal registration, it would be advisable to match the use purposes of the short-term loan with those of medium or long-term loans.

For example, it should be acceptable to register a renewed short-term foreign loan with SBV if it was borrowed to refinance a foreign debt or to pay short-term debts incurred by an FDI borrower to implement its investment project which has been issued with an Investment Certificate (IC), Investment Registration Certificate (IRC), or an Investment Policy Approval (IPA). On the other hand, it may be challenging to register the renewal if the short-term loan was borrowed to finance the FDI enterprise’s business plan or another project without an IC, IRC, or IPA. 

Also, it remains unclear if the SBV would register the renewal of a foreign loan borrowed before the effective date of Circular 08 to finance a project of one of the applicant’s subsidiaries (permitted under the previous regulations). 

Borrowing limits

Circular 08 does not impose specific borrowing limits for short-term foreign loans. Instead, it requires justification that the short-term debts that the short-term loan finances meet regulations on the enterprise accounting regime. Nevertheless, borrowers are required to prepare a specific capital needs statement according to a standard form enclosed in Circular 08 to justify the short-term capital needs (other than for refinancing) before the drawdown date. 

For medium and long-term foreign loans, foreign borrowing thresholds cannot exceed the loan capital recorded in the enterprise’s IC, IRC, or IPA. In case of refinancing, the new borrowing amount will not exceed the total of the outstanding principal, accrued interest, and fees of the existing debt and fees of the new loan at the time of refinancing.


There are two notable formalities to be followed in loan agreements. First, these must be made in writing and – for those in electronic form – be compliant with the laws on electronic transactions. Second, the agreement must be dated on or before the drawdown date. There are two circumstances in which the agreement can be dated on the actual drawdown date: short-term foreign loan agreements, provided the drawdown is made after the parties have signed the loan agreement, or foreign loans incurred while preparing an investment project under a foreign direct investment project. 

Regarding medium and long-term loans, ‘plan for the use of foreign loans’ and a ‘foreign debt restructuring plan’ must be created to set out the purpose of the loan. For loans which will be used to finance an investment project, these plans must also include the borrower’s IC, IRC, and IPA. These three documents form part of the application file to register a foreign loan with the SBV.

Transitional provisions

Circular 08 includes transitional provisions. For instance, for foreign borrowing agreements signed before the new regulations entered into force, the borrower is entitled to continue as before according to the signed agreements, SBV registration, and SBV registration of change to foreign loans. However, subsequent amendments must be compliant with Circular 08 and other related laws and regulations. 

For more information about Circular 08, and how it could impact companies investing or doing business in Vietnam, just contact our team on:

Disclaimer: This article and its content are for information only and are not given as legal or professional advice. they do not necessarily reflect all relevant legal provisions with respect to the subject matter. Readers should seek legal or professional advice before taking or refraining to take any action.

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