Opportunities for Vietnam Businesses to Access Soft Loans

Under this programme, both new and existing joint ventures in Vietnam will be financially supported (in cash) if the Vietnamese party holds no less than 25 percent. The Italian party may receive a credit facility equalling 70 percent of its stake in the joint venture and the maximum amount may reach 5 million euro. Supported interest rate is equivalent to commercial rates (15 percent per annum) and the maximum term is 10 years.

Mr Massimiliano Bertollo, Programme Coordinator, said the programme was carried out in accordance with the Law 49/87 dated February 26, 1987 of the Italian Government. Accordingly, preferential loans aim to create public - private partnership to promote sustainable and inclusive development (including poverty alleviation); support job creation and local added value associated with other activities as stipulated by the Law 49/87; mobilise additional financial resources, resources and valuable contributions of Italian companies for development.

 

Italian Ambassador to Vietnam Lorenzo Angeloni said recent legislation reforms enable the Government of Italy to change credit subsidisation rules for mixed businesses (joint ventures between Italian businesses and foreigners) with a total fund of some 100 million euro in three years from 2010 to 2013 in several developing countries. Vietnam is one of the nations chosen for carrying out the programme. Fields selected for financing consideration include agriculture, animal husbandry, commercial fishing, seafood processing, handicraft, public services (energy, communications, irrigation, transport and waste treatment), micro-finance, services for micro enterprises, local trade, fair trade, sustainable tourism, cultural preservation, and environmental protection.

 

Italian businesses shall submit a request of the credit facility to the Italian Ministry of Foreign Affairs - Directorate General for Development Cooperation (MAE - DGCS). MAE - DGCS carries out an economic technical appraisal of the initiative and transmits the dossier to the Italian Agent Bank (Artigiancassa SpA). Artigiancassa carries out a financial appraisal of the Italian enterprise and disburse the funds to the latter after the approval of an interdepartmental committee (Board of Directors of the Italian Cooperation). Since then, joint venture companies between Italy and Vietnam will enjoy concessional loans transferred directly to the Italian party in joint ventures.

 

In recent years, this form of credit facility has been successfully applied to a seafood processing joint venture in Ba Ria - Vung Tau province between PanaPesca SpA and Indochine Eximfood Corp Vietnam Company. The total investment capital of this joint venture amounts to US$1.85 million (1.293 million euro), of which PanaPesca keeps 75 percent while the remainder is held by Indochine Eximfood Corp Vietnam. This joint venture gets concessional loan of over 600,000 euro. Currently, the model is being expanded with two new projects, IMOLA and My Son, which is engaged in sustainable tourism and aquaculture.

 

VCCI President Vu Tien Loc said credit access is now a tough job for Vietnam because of credit growth controlling and high lending rates. Mobilising external capital sources for development is a necessary and important for Vietnam. The Government of Vietnam is raising funds by means of the public private partnership (PPP).

 

He said Italy is a leading PPP partner of Vietnam and the credit facility for its joint ventures in Vietnam is an example. VCCI is ready to work closely with the Italian Embassy to implement this programme in Vietnam, especially in the areas of energy, environment, tourism, transport, trade and agriculture. Through this programme, Vietnamese enterprises not only take advantage of partners’ capital strengths but also acquire knowledge, experience in corporate governance, and advanced technologies from Italy.

 

At the end of 2010, Italy invested US$187 million in 39 projects in Vietnam. For the past three years, more and more Italian companies have made investment in Vietnam, including Dalogic (scanner), Piaggio, Bonfiglioli and Carvivo. Most of investment capital was channelled into manufacturing and a small amount was spent on services, shipping and insurance.

 

Mr Lorenzo Angeloni said Italian companies highly rate the business environment in Vietnam and the current development of Vietnamese small and medium-sized enterprises (SMEs) is similar to the previous start-up of Italian businesses. “Vietnamese businesses in joint venture with Italy will take advantage of capital strengths powered by this programme. Notably, they can also have the opportunity to expand their presence in Italy and other EU nations and Italian companies, in return, can increase their presence in Vietnam and its regional countries,” he concluded.