Circular No. 02/2007/TT-NHNN dated May 21, 2007 of the State Bank on amendment of Paragraph 5 in the Circular No. 07/2006/TT-NHNN dated September 7, 2006 of the State Bank providing guidance on purchase and subleasing activity in form of finance leasing as provided for in the Decree No. 16/2001/ND-CP dated May 02,2001 and the Decree No. 65/2005/ND-CP dated May 19, 2005 of the Government

CIRCULAR

ON AMENDMENT OF PARAGRAPH 5 IN THE CIRCULAR NO. 07/2006/TT-NHNN DATED 7 SEPTEMBER 2006 OF THE STATE BANK PROVIDING GUIDANCE ON PURCHASE AND SUBLEASING ACTIVITY IN FORM OF FINANCE LEASING AS PROVIDED FOR IN THE DECREE NO. 16/2001/ND-CP DATED 02/5/2001 AND THE DECREE NO. 65/2005/ND-CP DATED 19/5/2005 OF THE GOVERNMENT

On 7 September 2006, the State Bank issued the Circular No. 07/2006/TT-NHNN providing guidance on purchase and subleasing activity in form of finance leasing as stipulated in Decree No. 16/2001/ND-CP dated 2 May 2001 and the Decree No. 65/2005/ND-CP dated 19 May 2005 of the Government (hereinafter referred to as Circular No. 07/2006/TT-NHNN). For the unanimous implementation, the State Bank amends the content of paragraph 5, Circular No. 07/2006/TT-NHNN as follows:

1. Paragraph 5 is amended as follows:

“5. Currency used in the purchase and subleasing transaction, purchase and subleasing transaction in foreign currency

5.1. Currency used in the purchase and subleasing transaction shall be Vietnamese Dong.

5.2. Purchase and subleasing transactions shall only be performed in foreign currency if they satisfy following requirements:

5.2.1. Conditions

a. The conditions as provided for in paragraph 2, Circular No. 05/2006/TT-NHNN dated 25 July 2006 of the State Bank guiding several contents relating to finance leasing activity and service of finance leasing entrustment in accordance with provisions in the Decree No. 16/2001/ND-CP dated 2 May 2001 and the Decree No. 65/2005/ND-CP dated 19 May 2005 of the Government.

b. For leasing assets: they must be machines, equipment, transport means and other immovable assets which were imported;

c. For finance leasing company: it must be the finance leasing company authorized to perform finance leasing operation in foreign currency in accordance with provisions of applicable laws on foreign exchange.

d. For lessee:

- The lessee must have legal income source in foreign currency or be entitled to buy foreign currency at credit institution which is authorized to engage in foreign currency trading;

- The lessee has outstanding foreign currency loans at bank for importing leasing assets, or the lessee imports or entrusts the import of leasing assets and has not yet made debt repayment to foreign party.

5.2.2. Making payment for the repurchase of leasing assets in foreign currency

a. Finance leasing company shall carry out the purchase and subleasing when the lessee presents full legal files relating to assets. Where bank or foreign party manages, keeps the file related to assets, finance leasing company shall make payment for purchase amount after having agreed with the bank or foreign party to take back the file of leased assets if it repurchases leasing assets.

b. Finance leasing company shall directly make payment for purchase amount of leasing assets in foreign currency to the bank or foreign party, equivalent to the value of purchased assets. Where the repurchase price of leasing assets is higher than outstanding bank loans or foreign debt, finance leasing company shall make payment for the difference in Vietnamese dong to the lessee under the exchange rate issued at the payment date by a commercial bank selected by the two parties.

c. After the finance leasing company makes payment for the purchase amount of leased assets and signs contract of finance leasing, the lessee shall acknowledge debt and make payment for lease amount in foreign currency or in Vietnamese Dong in accordance with current provisions on finance leasing.”

2. This Circular shall be effective after 15 days since its publication in the Official Gazette.

3. The Director of Administrative Department, Director of Banks and Non-Banking Credit Institutions Department, Heads of units of the State Bank of Vietnam, Managers of the State Bank branches in provinces, cities under the central Government’s management, Chairman of the Board of Directors, General Directors (Directors) of Finance Leasing Companies shall be responsible for the implementation of this Circular