A foreign lender Vietnam borrowers approach faces a regulatory framework designed around the borrower rather than the lender. The loan must fit within the borrower’s registered capital envelope, the registration is filed by the borrower, and the security package available is narrower than in most regional markets.
This guide sets out the six rules that determine whether a cross-border facility is bankable in Vietnam.
Foreign Lender Vietnam: Registration With the State Bank
Medium and long term offshore loans, meaning those with a term of more than one year, must be registered with the State Bank of Vietnam before the first drawdown. Short term loans are not registered but must be reported, and a short term loan that is extended beyond twelve months becomes registrable.
Registration is the borrower’s obligation, but a foreign lender Vietnam facility should make it a condition precedent, because drawdown and repayment through the direct investment capital account depend on it. Our note on offshore loan registration sets out the filing.
Foreign Lender Vietnam: The Borrowing Limit
A foreign-invested borrower may not borrow offshore beyond the difference between total investment capital and charter capital recorded in its investment registration certificate. This is a hard ceiling and it is checked at registration.
Where the facility exceeds it, the borrower must first amend the certificate to increase total investment capital, which is a separate process with its own timeline. Lenders should diligence the certificate before credit approval rather than at signing. See our guide to total investment capital.
Foreign Lender Vietnam: Permitted Security
Security over movable assets, receivables, bank accounts, shares and contractual rights is available and is registered at the national registration agency for secured transactions. Mortgages over land use rights and assets attached to land are registered with the land registration office.
The constraint that surprises foreign lenders most is that land use rights may generally be mortgaged only in favour of credit institutions licensed in Vietnam. Offshore lenders therefore take security over the shares in the land-holding company, or use an onshore security agent structure, rather than a direct land mortgage.
Foreign Lender Vietnam: Share Security and Change of Control
A pledge over shares in a Vietnamese company is enforceable but requires registration to be effective against third parties, and enforcement transferring the shares to a foreign lender is itself subject to the ordinary approvals, including M&A approval where thresholds are crossed.
The practical consequence is that share security delivers leverage rather than a quick route to ownership. Facilities should therefore build in step-in rights, account control and a pre-agreed sale process rather than relying on enforcement alone. Our note on share transfers by foreign investors explains the approval path.
Foreign Lender Vietnam: Interest, Fees and Withholding
Interest and certain fees paid offshore are subject to foreign contractor tax, and treaty relief depends on beneficial ownership and substance in the lender’s jurisdiction. Gross-up clauses are standard, and the tax cost should be modelled into pricing rather than assumed away.
The borrower’s interest deduction is also capped by reference to earnings under Decree 132/2020/ND-CP as amended by Decree 20/2025/ND-CP where the lender is a related party, which affects the after-tax economics of shareholder funding in particular.
Foreign Lender Vietnam: Repayment and Foreign Exchange
Principal and interest are repaid through the borrower’s direct investment capital account in accordance with the registered schedule. Prepayment, rescheduling, capitalisation of interest and changes to the lender or the account bank all require an amendment to the registration.
Facilities should therefore anticipate registration amendments in the mechanics clauses rather than treating them as administrative. A prepayment made before the amendment is registered is a transfer the bank cannot process. Our guide to the DICA account covers the account rules.
Frequently Asked Questions
Can a foreign lender take a mortgage over Vietnamese land?
Generally no. Land use rights are mortgageable in favour of credit institutions licensed in Vietnam, so offshore lenders use share security or onshore agent structures.
Is a security agent recognised?
Agency and trust concepts are not developed in the same way as in common law markets, so structures are typically built around an onshore secured party and parallel debt style arrangements.
Does the borrower need approval to borrow?
Registration rather than approval for medium and long term loans, but the borrowing limit operates as a substantive constraint.
How long does registration take?
Several weeks from a complete filing, longer where the investment registration certificate must be amended first.
Structure a Bankable Facility
IVLF Advisors advises lenders and borrowers on cross-border facilities, registration, security packages, enforcement strategy and tax. See also our project finance practice and guidance from the State Bank of Vietnam. Contact our team.
This article is provided for general information only and does not constitute legal advice for any specific case. Regulations may change – please consult a qualified professional before acting. Should further analysis be required, please contact one of our lawyers below.
