HANOI – From July 2017, Vietnam would no longer receive preferential loans in the form of official development assistance (ODA), a finance department official said at a conference yesterday.
Instead, the country could be provided only preferential loans and gradually market-based financing, Truong Hùng Long, head of the Ministry of Finance’s Department of Debt Management and External Finance said at the conference on the ODA relending polices.
Vietnam was working with the World Bank and other organisations on the roadmap of repayment of official development assistance (ODA) to prevent “shocks” to the State budget when interest rates on existing ODA increased or repayment period was shortened, heard a conference yesterday.
Long said that concessional terms of preferential loans provided to Vietnam gradually became stricter as the country turned into a middle-income country since 2010.
Long said that interest rates on existing ODA would be increased to between 2 per cent and 3.5 per cent, from below 1 per cent per year or the repayment period should be shortened by half as the country needs to implement rapid debt repayment obligation after providing of the ODA.
Before 2010, average repayment period was around 30 years to 40 years with borrowing costs between 0.7 and 0.8 per cent per year, including a grace period. In comparison, the average repayment period was between 10 years and 20 years and borrowing cost was from 2 per cent during the 2011 to 2015 period.
The finance ministry said it was working with the World Bank, a major donor to Vietnam, and other organisations about ODA repayments to prevent negative impacts to the State budget. “The negotiations are underway,” Long said.
As negotiations for ODA repayment were underway, Long said that he could not give an exact amount of the public debts Viêt Nam had to pay by 2020.
He said that debt repayment pressure would be the heaviest in 2022 to 2025 period, so the pressure would not be huge in the next four years.
Long said that payables this year would account for around 14.7 per cent of the total budget collection, or VND150 trillion (US$6.7 billion).
Statistics from the finance ministry showed that Vietnam received US$45 billion worth of ODA between 2005 and 2020.
The finance ministry said that ODA contributed to the country’s socio-economic development and on improving the infrastructure system. However, while the credit risks were still put on the shoulder of the State budget, the management and use of ODA sometimes were inefficient.
Long said that from now to July 2017, Vietnam must take advantage of the ODA to invest in development of the infrastructure system.
In order to enhance the efficiency of the ODA management and use, Long said that the relending mechanism might be applied at localities with a better financial situation to share the public debt pressure with the State budget.
SINGAPORE – Singapore has moved quickly to sign an investment treaty with oil-rich Iran to support Singapore firms investing in an economy that is emerging after the recent lifting of global sanctions.
The treaty offers a legal framework to protect investors and promote bilateral investments.
Minister for Trade and Industry S. Iswaran signed an Agreement on Reciprocal Promotion and Protection of Investments, also known as a bilateral investment treaty, with Iran’s Minister of Finance and Economic Affairs Ali Tayyebnia in Teheran yesterday (February 29).
Singapore is the second country, after Japan, to sign a bilateral investment treaty with the Middle Eastern nation after international sanctions were lifted in mid-January.
“We are here now to deepen the economic collaboration between our two countries,” Iswaran told the media after the ceremony.
“We see significant opportunities to do so because of the size of the market in Iran and in the region, and the capabilities of the people.
“For Iranian businesses, there are interesting opportunities in Singapore and through Singapore into Southeast Asia and the larger market of Asia,” he added.
Iswaran arrived in Teheran on Sunday for a three-day visit to explore new business and investment opportunities. His trip coincides with a one-week mission by the Singapore Business Federation (SBF) to the Iranian capital.
Iswaran also met Iranian Minister of Industries and Business Mohammad Reza Nematzadeh and Minister of Cooperatives, Labour and Social Welfare Ali Rabiei.
With this agreement, Singapore investments will be treated as favourably in Iran as any other investments – foreign or local. And businesses can transfer capital and returns between the two countries without obstacles.
The treaty also provides Singapore investors with the option to resolve investment disputes through international arbitration.
The Ministry of Trade and Industry said Singapore’s bilateral trade with Iran was S$6.6 billion (US$4.70 billion) in 2011, before the sanctions were imposed. It fell to S$2.6 billion in 2012, after the sanctions kicked in. Last year, trade stood at S$171.4 million, with Singapore exporting S$158 million worth of goods to Iran, while imports from Iran to Singapore amounted to S$13.4 million.
Singapore firms have shown renewed interest in the oil-rich country, which is just re-opening its doors after a prolonged period of under-investment.
A total of 51 firms from various sectors, including oil and gas, petrochemicals, logistics and information communications technology, have been in Teheran since last Friday, gaining first-hand knowledge about the business environment and investment opportunities.
This is the SBF’s fifth delegation to Iran, and the largest group that it has taken to the Middle East so far.
The delegation comprises two main groups – companies that were previously doing business in Iran and are now seeking to re-establish dealings after the lifting of the sanctions, and companies that are completely new to the market.
“Singapore companies are known for our quality, reliability and the service we deliver… but competition is greater than before and others are running very fast,” said Teo Siong Seng, SBF chairman and leader of the business mission.
Singapore businesses are facing stiff competition from South Korean and European companies, which are pursuing deals in Iran, he noted.
According to the Teheran Times, South Korea on Sunday signed a memorandum of understanding with Iran to provide 5 billion euros (US$5.44 billion) in financing for infrastructure, development and manufacturing projects in the country.
Many of these businesses tend to be bold and are willing to put in huge investments. Singapore companies, however, tend to be more careful, said Teo.
SINGAPORE – The Ministry of Home Affairs (MHA) has assured Singaporeans that the country remains one of the safest cities in the world.
In today’s press release summarising Singapore’s safety and security situation in 2015, MHA said law and order in the country continued to be favourable.
Although there was a slight increase in crime from the previous year due to a sharp rise in online crime – a trend since 2013 – almost all other crime classes registered a fall.
For instance, housebreaking and related crimes dropped to their lowest levels in 20 years, while the number of unlicensed moneylending harrassment cases continued to decline.
The drug situation was also stable and there was a decrease in fire incidents, with fire fatalities remaining low. On the road safety front, the drop in fatalities from road traffic accidents was tempered by a slight increase in the number of injuries.
MHA, however, highlighted four trends of concern: the spike in online crime; a continued rise in new drug abusers especially those aged 30; an increase in the number of arrested harbourers and employers of immigration offenders; as well as how the unauthorised change of use of premises and illegal fire safety works continue to cause the highest number of fire safety violations.
It also warned that Singapore still faces various threats, chief among them terrorism.
The Home Team is ready to respond decisively in the event of a terrorist attack, MHA said, but the public also plays a major role by being alert to potential dangers and warning signs of terrorism.
“We must stay united if a terrorist attack were to happen, and be able to recover as one people,” MHA added.