Legal Document Updates in English (19/2012)

SIX CASES ARE EXEMPTED FROM STATE INSPECTION ON FOOD SAFETY
 

The Government issued the Decree No. 38/2012/ND-CP dated April 25, 2011 detailing the implementation of a number of articles of the law on food safety. Under the Decree, all foods, food materials, food additives imported into Vietnam must be inspected at the competent state inspection agency.

However, six following cases are exempted from state inspection on food safety for imported food including food brought along with upon entry for private consumption within the norms is exempted from import duties; Food in diplomatic bags, consular bags; Food in transit and transshipment; Food sent in bonded warehouses; Food as the prototype or research sample; Food as samples displayed in the fairs, exhibitions.

Also under this Decree, The availably packaged foods are required to be labeled under the provisions of the law on food labeling. Information on the label must match the nature of the product, be honest, accurate, clear and not misleading to the users; Product’s name must be the clearest, largest font size and at least threefold of other font size on the label.Safety shelf life is required to be recorded as "Expiry date" or "Use date" for functional foods, food supplements, health protecting foods, medical nutritional food, food fortified nutrients and foods likely to be damaged by microorganisms. Safety shelf life for other foods could be recorded as "best use before date" suitable to food products.
This Decree takes effect as from June 11, 2012.

VIETNAM’S INSURANCE MARKET DEVELOPMENT STRATEGY BY 2020
 

On February 15, 2012, the Prime Minister issued the Decision No. 193/QD-TTg on Vietnam’s insurance market development strategy in the 2011-2020 period with the general objectives of accessing international standards and common practices on insurance business and gradually narrowing the development gap with other countries in the region.
The specific objective is to enhance the safety of the system, operational efficiency and competitiveness of the insurance enterprises; Developing insurers which having a strong financial capacity, a governance capacity reaching international standards, operating effectively and having a capacity to compete actively at the domestic and regional markets; Encouraging and supporting enterprises to diversify the insurance

products, ensuring satisfying the diverse insurance demands of organizations and individuals; Facilitating organizations and individuals, especially low-income subjects, to take part in insurance.
The Government set a number of specific targets such as total revenue of the insurance industry 3% - 4% of GDP by the year 2020; The size of the insurance professional reserve funds for fulfillment of the obligations of insurance and compensation payment to customers will increase 4.5 times and the contribution to the state budget of the insurance industry will increase 4 times by the year 2020 compared with that of the year 2010.

IMPOSING THE MAXIMUM SHORT-TERM LENDING RATE 15% IN FOUR SECTORS
 

From May 08, 2012, the maximum short-term lending rate in Vietnamese dong by credit institutions for borrowers is the maximum mobilizing rate in Vietnamese dong for over 1 month term set by SBV plus (+) 3% p.a. This is regulated in the Circular No. 14/2012/TT-NHNN dated May 04, 2012.

Currently, the maximum short-term lending rate in Vietnamese dong for over 1 month term is 12% per year. As a result, the lending rate mentioned above is only equal to 15% per year.

The VND short-term loans applied to charge the maximum lending rate as 15% are loans to meet the capital needs of such sectors as: serving agriculture and rural areas; Implementing plans and projects of production and business of exported goods specified in the Trade Law; In service of production and business of small and medium; Developing supporting industries.

Customers of credit institutions and foreign bank branches applied the interest rate as stipulated are the eligible customers under State Bank of Vietnam provisions on the credit extension of credit institutions for customers and these borrowers are rated as the financially transparent and healthy clients by credit institutions.

The borrowers are responsible for providing information and documents to clearly reflect the borrowing purposes as regulated and they are responsible for the accuracy of the provided information and documents.
At the Government press conference on the same day of issuing this Circular, representatives of the State Bank of Vietnam – Deputy Governor Nguyen Dong Tien said that, the administrative solution of setting the ceiling rate has been considered thoroughly and is only applied in a particular context for a particular time

Agreeing with the viewpoints of the State Bank of Vietnam, the specialists say that imposing the short-term lending rate and applying the output amplitude is the best way in the current situation, the capital flow will be opened after the ceiling lending rate is imposed at 15% per year, the inflation rate is not affected because the money supply is unchanged, but it can reduce the marginal profit of banks to help enterprises and promote the growth. However, the economic specialists also warn that, without tight management, the market will appear the problem of bending the rules.
This Circular shall take effect on May 08, 2012.

NOT ALLOWED TO USE MOBILIZED GOLD FOR MORTGAGE AND DEPOSIT
 

In order to strictly comply with the current regulations and ensure the operation of credit institutions, foreign bank branches to be safe ((hereinafter referred to as banks), the Governor of the State Bank issued the Directive 05/CT-NHNN dated April 27, 2012 on regulating the implementation of provisions on gold mobilization, gold keeping and using mobilized and kept gold of banks.
Under this Directive, the Governor requires that banks have to publicly quote the fees for management, storage and keeping gold services; and they are not allowed to pay the interest rate, dividend rate or other forms for the customers; correctly value the nature of keeping gold account as regulated.

Banks must strictly implement the regulations on termination of mobilization of deposits and provision of loans in gold; and they are not allowed to use mobilized or kept gold to mortgage and deposit at other banks.

The Banking Inspection and Supervision Department and State Bank’s branches in provinces, cities must timely detect and deal with all cases of violation of banks; Report and propose the measures to stabilize the gold and foreign exchange market to the Governor of the State Bank of Vietnam.

REGULATIONS ON CLASSIFICATION OF RESCHEDULED LOANS
 

The Governor of the State Bank of Vietnam issued the Decision No. 780/QD-NHNN dated April 23, 2012 on classification of rescheduled loans.

Under this Decision, the Governor requires, to reflect the objective repayment capacity of customers in the current context, and on the basis of the assessment by credit institutions and foreign bank branches that their customers are doing well

their business and have good debt repayment capacity after being restructured or adjusted for repayment periods, these rescheduled loans are kept in their pre-rescheduled classification groups.

This Decision takes effect on May 23, 2012.