From January 1, 2010, people in rural areas can access interest-subsidised loans for purchasing housing construction arterials. The lending is exclusive for buying made-in-Vietnam goods in 2010. These are new points in providing interest-subsidised loans for buying machinery, equipment and materials for agricultural production and housing construction materials in rural areas under Decision 2213/QD-TTg issued by the Prime Minister.
According to this decision, Vietnamese goods which can be bought by interest-supported lending in 2010, include machinery and mechanical equipment for production and processing of agricultural products; light truck with an individual loading capacity of less than five tonnes; desktop computers; materials for agricultural production (chemical fertiliser of all types like urea fertiliser, fused phosphate fertiliser, super phosphate, NPK and DAP); pesticides permitted for use in Vietnam; primarily building materials like cement, construction steel, brick, tile and roofing sheets.
Beneficiary products must satisfy following conditions: produced, assembled and trademarked by organisations and individuals (with production facilities located in Vietnam and established and operated under the laws of Vietnam) as stipulated in the Decree 89/2006/ND-CP.
Lending conditions are basically unchanged from the old mechanism but there are changes in the loaning value and the rate of interest subsidy. Specifically, regarding the rate of lending value, banks will finance the entire value for machinery, mechanical equipment and other facilities for agricultural production and processing; computers and building materials; but the lending value will not exceed VND5 million for computers and VND50 million for building materials. The rate of interest subsidy for purchase of materials for agricultural production and construction materials will be reduced from 4 percent per annum to 2 percent. For other goods, the rate of interest support is still 100 percent.
Regarding the period on interest rate support, loans under the credit contract signed and disbursed from January 1, 2010 to December 31, 2010 to purchase machinery, mechanical equipment and other facilities for agricultural production and processing, and computers have a maximum supporting period of 24 months while other agricultural materials and materials for housing construction will have a support term of at most 12 months.
In the spirit of the abovementioned decision, the State Bank of Vietnam (SBV) has issued the Circular No. 27/2009/TT-NHNN to specify the implementation of interest rate support for organisations and individuals borrowing medium and long-term bank loans in 2010 for production and business development investment.
According to this circular, interest rate-subsidised lending is medium and long-term loans in Vietnamese dong for investment in production and business development in line with credit contracts signed before and after January 1, 2010 and specified disbursement from January 1, 2010 to December 31, 2010.
The subsidised rate is 2 percent per annum out of a loan, calculated on the actual loan amount and duration. The maturity of subsidised loans is 24 months, starting from the date of disbursement. In case, these loans which are overdue, rescheduled or excessive of 24 months will not be allowed to get the interest rate subsidy for the overdue, rescheduling and excessive duration.
According to the Circular 27, borrowers have deposit account balance at credit institutions; lenders have to exclude the outstanding balance when they sign credit agreements. Borrowers are responsible for reporting their deposit account balances and the value of valuable papers in Vietnam dong and foreign currencies at other credit institutions to commercial banks and finance companies. Borrowers are responsible for the legality and accuracy of their reports.
Hai Hang
Vietnamese
