14:36 | 08/05/2016 Finance - Banking
(VEN) - France intends to increase the amount of support it will provide for Vietnamese state-owned enterprises (SOEs). In an interview with Vietnam Economic News’ Nguyen Huong the French Development Agency (AFD)’s Asia Department Deputy Director Francoise Chalier said, “The AFD has pledged to provide a €200 million loan without government guarantee for Vietnamese SOEs. They will earmark more capital to promote the development of its kind of loans.”
Could you tell us more about loans without government guarantee?
This remains official development assistance (ODA) capital that the AFD finances businesses, especially SOEs. Regarding old kind of loans, sponsors will provide loans for the government, and then they implement capital allocation to beneficiaries. These loans will make an increase in the government’s public debts.
Supporting for key economic projects and not increasing the government’s public debt are seen as advantages of loans without government guarantee. Regarding these kind of loans, the AFD will directly work together with beneficiaries, contributing to enhancing their responsibility, while requiring businesses to actually be responsible in their financial management.
How many projects have received these loans? How do you assess its efficiency?
The AFD has pledged to provide a €200 million loan without government guarantee for SOEs in energy and urban development. Lai Chau Province’s Huoi Quang Hydropower Plant construction project valued at US$100 million by the Vietnam Electricity completed, while the remainder is getting the paper work done.
We want to promote the development of its kind of loans in Vietnam focusing on urban development, production modernization associated with strengthening corporate social responsibility, and climate change mitigation.
These projects receiving loans without government guarantee will prove their efficiency through helping businesses become stronger as they adapt to the equitization process, while being taking increasing responsibility for their financial management.
The AFD will also provide grants in order to promote ability and limit risks in operations of some projects. Loans without government guarantee are seen as a positive sign that businesses want to send to partners in order to underline their capacity to run autonomously and make most of opportunities.
SOEs need to meet corresponding capital of around 10-15 percent of loans. AFD loans usually last for 12-20 years, creating engine for businesses to improve their ability.
What conditions do SOEs need to receive loans?
Vietnamese SOEs are main objects receiving loans without government guarantee, even private businesses if they have special projects with social benefits or provide environmental protection. Projects resolving sustainable development problems in accordance with AFD strategies and playing a key role in environmental protection are suitable with conditions to enjoy loans without government guarantee. In addition, these projects need to be suitable with Vietnam’s development plans, directions and policies. The AFD will base on the government’s socioeconomic development planning during the five-year period to consider the appropriate level. In particular, businesses need to be able to prove their administrative and financial management capacity.
Governmental agencies in localities are also eligible to receive these kinds of loans with the same conditions to SOEs in terms of the appropriate level, management capacity and strong financial resources.