Oversight Content of State Capital of Enterprises Investing Abroad

1. Situation of overseas capital investment and capital recovery brought back to Vietnam, progress of project implementation overseas

- Enterprises shall base on the Overseas Investment Certificate issued by the competent authorities of Vietnam and report the pre-feasibility study report, the total registered investment capital of the project overseas (detailed by equity contributions, loans) and the total registered overseas investment capital (detailed by equity contributions, loans, loan guarantees - if any).- Enterprises shall base on the explanatory notes of the financial statements and the detailed accounting books of the enterprises in Vietnam to report the situation of implementing overseas capital investment (detailed by equity contributions, loans, loan guarantees - if any); movements of overseas invested capital compared to the previous reporting period; sources of capital for overseas investment (owner’s equity, borrowed capital); the situation of recovering investment capital to Vietnam including profits repatriated to Vietnam, interest received from loans to projects abroad, capital recovery from depreciation of fixed assets of projects abroad or recovery due to resale or liquidation of investments in overseas projects and other recoveries.

For projects that have been fully liquidated or had to be terminated early, enterprises need to clearly state the reasons, assess the degree of investment capital loss, responsibilities of the relevant parties, and remedy measures.- Enterprises report the issuance and implementation of regulations on operations and management, use of capital, and assets of enterprises overseas, monitor the compliance of overseas projects according to these regulations.- Enterprises report the progress of project implementation overseas, the disbursement progress; in case the implementation progress is slower than planned, the enterprise reports to the agency representing the owner the reasons, assesses the impact on the project efficiency, the responsibility of the collective or individuals involved in delaying the project for subjective reasons, remedial measures, and plans for capital contribution, construction progress, and plans to put the project into operation.

2. Financial situation and business performance of overseas investment projects

- Enterprises shall base on the financial statements (audited - if any) of the overseas investment projects; regulations on operations, management, and use of capital, assets of enterprises overseas; business plans and legal regulations on overseas investment to analyze and assess:- Asset management: The authority to decide on investment projects and purchase assets of projects abroad; the situation of depreciation, liquidation, and transfer of assets;- Management of payables up to the reporting period: Total payables, due debts, overdue debts, ability to pay due debts; clearly stating borrowings, overdue debts from domestic enterprises and parent companies, stating reasons and repayment plans.- Management of receivables up to the reporting period: Total receivables including bad debts (making provision, handling bad debts in the reporting period).- Fluctuations in owner’s equity of the overseas project: owner-invested capital, cumulative profit or loss. For projects with a cumulative loss exceeding 50% of the owner-invested capital, or losses for two consecutive years (outside the planned loss period), enterprises must report to the agency representing the owner on the causes and remedial measures.- Business performance of overseas projects: Monitoring fluctuations in revenue and post-tax profit, profits to be divided to the domestic enterprises (comparison between the actual indicators in the reporting period and the planned indicators of the year and the actual indicators of the same reporting period of the previous year).- The situation of using divided profits and fulfilling obligations to the state budget: Assess compliance with legal regulations on repatriating profits, regulations on fulfilling financial obligations concerning profits divided from overseas investment projects.- Enterprises shall base on market developments in the host country and global product consumption markets, and the political and legal situation in the host country to assess risk levels. For projects with potential risks affecting the production and business situation, enterprises must promptly report to the agency representing the owner to have a handling plan or submit to the Prime Minister for consideration and resolution if beyond authority.

More details can be found in Circular 200/2015/TT-BTC effective from February 1, 2016.

- Ngoc Duyen -

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