Project Funding Helps Accelerate the Transfer and Use of New Technologies

The initiators cannot be financed by credit institutions through traditional credit granting methods such as: the initiator's debt ratio is too high, the initiator's financial situation is unhealthy, etc. while the initiators' new investment projects are very feasible.

In addition to these reasons, TTDA is also implemented on the basis of risk sharing between credit institutions and project initiators or tax benefits that initiators can receive, thereby helping project initiators mobilize capital sources to implement investment projects, which creates investment demand contributing to economic growth in the present and future for countries once investment projects are put into operation.

On the other hand, TTDA also helps the national economy to have more facilities (factories, machinery, real estate, commercial centers, etc.) and important technical infrastructure for the economy, especially for developing countries, which are in dire need of attracting more investment capital from domestic and foreign economic sectors to improve the deteriorating infrastructure situation, as well as need to invest in many other important infrastructure projects to prepare for the take-off of the economy of developing countries in the future.

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1.3.3.3. Project funding helps the transfer and use of new technology more and more

With governments of countries encouraging foreign investors to implement investment projects in their countries by the TTDA method, the process of technology transfer from developed countries to developing countries will increase, especially in the fields of mineral exploitation and processing, power plants (thermal power, nuclear power), material manufacturing and new energy sources. Accompanying the transfer of new technology is the process of training highly qualified human resources and a team of skilled technical workers, with skills, knowledge and labor discipline of a public nature.

industry, thereby contributing to creating a quality human resource which is a necessary factor for the economic growth of countries.

1.3.3.4. Funding projects to provide essential goods and services to satisfy consumer needs and increase people's welfare

TTDA is also considered the best way for governments to encourage private sector participation in investing in infrastructure and public utilities for society (education, health, clean water supply, environmental treatment, amusement parks, public passenger transport, etc.), thereby helping the government reduce public investment pressure from the state budget and allowing the government to have more resources to invest more in social security programs aimed at increasing welfare and gradually raising the living standards of the people.

1.3.3.5. Project financing contributes to economic restructuring and promotes institutional reform

Finally, with governments encouraging the development of the PPP model (PPP is considered one of the forms of TTDA), it will require governments to increasingly improve their institutions, as well as change their thinking about economic management and operation, in order to create an attractive and competitive business environment, minimize and share risks with investors, enhance accountability, as well as provide necessary support and guarantees for investors, etc. On the other hand, it also helps governments have the opportunity to develop orientations, plans, and schemes to attract investment projects in fields, industries, and regions with the aim of promoting economic restructuring, towards a modern economic structure and ensuring balance between industries, sectors, and regions of the country, which are factors measuring the level of economic development of countries.

Chapter 1 Conclusion

In the first part of chapter 1, the author presented general issues about investment projects including the concept, characteristics, basic contents of an investment project and traditional credit granting methods for investment projects (loans according to investment projects, syndicated loans and CTTC). In the next part of this chapter, the author presented the theoretical basis for the TTDA method for investment projects including the concept of TTDA, the characteristics of a TTDA compared to traditional financing, participating entities, TTDA structures, the advantages and disadvantages of the TTDA method for initiators and participating credit institutions, the role of credit institutions when participating in TTDA loans. Most importantly, the author showed the necessity of applying and expanding the TTDA method at credit institutions to contribute to accelerating the economic development process of countries.

The basic theories are systematized with sufficient scientific content to form a theoretical framework to guide the research process to realize the research objectives of the topic.

CHAPTER 2

CURRENT STATUS OF APPLICATION AND EXPANSION OF PROJECT FINANCE METHODS AT CREDIT INSTITUTIONS IN VIETNAM

2.1. ANALYSIS OF THE POSSIBILITY OF APPLYING PROJECT FINANCE METHODS AT CREDIT INSTITUTIONS IN VIETNAM

2.1.1. Introduction to the credit institution system in Vietnam

The current system of credit institutions in Vietnam is established and organized to operate according to the Law on Credit Institutions 2010, including:

- Domestic commercial banks are established and organized in the form of joint stock companies;

- State-owned commercial banks are established and organized in the form of single-member limited liability companies with 100% charter capital owned by the State;

- Domestic non-bank credit institutions are established and organized in the form of joint stock companies or limited liability companies;

- Joint venture credit institutions and 100% foreign-owned credit institutions are established and organized in the form of limited liability companies;

- Cooperative banks and people's credit funds are established and organized in the form of cooperatives.

- Microfinance organizations are established and organized in the form of limited liability companies.

According to data compiled from the State Bank of Vietnam (SBV) website, as of June 30, 2013, Vietnam currently has 5 state-owned commercial banks, 34 joint-stock commercial banks, 5 100% foreign-owned banks, 4 joint-venture banks, 12 finance companies, 18 finance companies, 1 Social Policy Bank and 1 Vietnam Development Bank, 968 People's Credit Funds.

people, 50 foreign bank branches, 49 representative offices of credit institutions abroad.

From the above types of credit institutions, the types of credit institutions in Vietnam today can be divided into the following groups:

- Credit institutions are commercial banks;

- Non-bank credit institutions;

- Foreign credit institutions;

- Cooperating credit institutions;

- Government credit institutions.

The following are the charter capital scale and main fields of operation of each type of credit institution in Vietnam:

2.1.1.1. Commercial banks

According to Decree 59/2009/ND-CP dated July 16, 2009 on the organization and operation of commercial banks, a commercial bank in Vietnam is understood as a bank that is allowed to carry out all banking activities and other related business activities for profit purposes according to the provisions of the Law on Credit Institutions and other provisions of law.

Also according to Decree 59/2009/ND-CP, commercial banks in Vietnam include:

including:

State commercial bank

Is a commercial bank in which the State owns more than 50% of the charter capital. Commercial bank

State-owned banks include commercial banks with 100% state-owned charter capital and joint-stock commercial banks with more than 50% state-owned charter capital.

According to statistics updated to June 30, 2013 from the SBV's website, Vietnam currently has 5 state-owned commercial banks: Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Joint Stock Commercial Bank for Industry and Trade of Vietnam (Vietinbank), Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), Mekong Delta Housing Development Bank (MHB) and Vietnam Bank for Agriculture and Rural Development (Agriabank). Of which, there are 2

State-owned commercial banks with 100% state capital include the Vietnam Bank for Agriculture and Rural Development (Agribank) and the Mekong Delta Housing Development Bank (MHB). Three state-owned commercial banks with more than 50% state capital include: Vietnam Joint Stock Commercial Bank for Industry and Trade

Vietnam Joint Stock Commercial Bank for Investment and Development (BIDV), Vietnam Joint Stock Commercial Bank for Foreign Trade (Vietcombank) 3 .

Regarding charter capital, as of June 30, 2013, the total charter capital of the 5 state-owned commercial banks mentioned above was up to 111,055 billion VND. State-owned commercial banks play the role of providing medium and long-term credit capital mainly for state-owned corporations, groups and enterprises in the private economic sector at home and abroad.

Joint Stock Commercial Bank

Is a commercial bank organized in the form of a joint stock company. This is the type of credit institution that currently accounts for the largest number in the commercial banking sector in Vietnam.

Also according to official data from the SBV's website, as of June 30, 2013, Vietnam has 34 joint stock commercial banks. Vietnam's joint stock commercial banks currently own a total charter capital of up to 177,773 billion VND and play the role of providing medium and long-term credit capital mainly for the domestic and foreign private economic sectors including limited liability companies, joint stock companies and private enterprises, foreign-invested enterprises, etc.

Joint venture commercial bank

Is a commercial bank established in Vietnam, with capital contributions from the Vietnamese Party (including one or more Vietnamese banks) and the foreign Party (including one or more foreign banks) on the basis of a joint venture contract. Commercial Bank

3 Specifically, by the end of 2012, the State still held controlling shares at Vietcombank at 77.11%, BIDV at 95.76% and Vietinbank at 64.2% [ 74]

A joint venture is established in the form of a limited liability company with two or more members, is a Vietnamese legal entity, and has its headquarters in Vietnam.

As of June 30, 2013, Vietnam has 4 licensed joint venture banks with a total charter capital of approximately 458.5 million USD, including: VID PUBLIC Bank, INDOVINA BANK LIMITED, VINASIAM BANK and Vietnam-Russia Joint Venture Bank. Joint venture banks also operate mainly in providing credit and banking services to foreign-invested enterprises in Vietnam. However, they have also participated in co-financing or syndicated lending for investment projects with other credit institutions in Vietnam such as Indovina Bank and Vinasiam Bank.

100% foreign-owned commercial bank

A commercial bank established in Vietnam with 100% foreign-owned charter capital; in which there must be a foreign bank owning more than 50% of the charter capital (parent bank). A 100% foreign-owned commercial bank is established in the form of a limited liability company with one member or two or more members, is a Vietnamese legal entity, and has its head office in Vietnam.

As of June 30, 2013, SBV has licensed the establishment of 5 100% foreign-owned banks in Vietnam operating under the LLC model, including: HSBC, Standard Chartered, Shinhan Vietnam, ANZ and Hong Leong. 100% foreign-owned banks in Vietnam currently own a total charter capital of approximately VND 19,547.1 billion. The strategic orientation of these banks in the Vietnamese market is retail banking. However, they have also participated in providing credit or financing for large investment projects in Vietnam such as HSBC and ANZ.

2.1.1.2. Non-bank credit institutions

According to the Law on Credit Institutions 2010 of Vietnam, a non-bank credit institution is a type of credit institution that is allowed to perform one or several banking activities as prescribed by this Law, except for activities of receiving deposits from individuals and providing financial services.

providing payment services through customer accounts. Non-bank credit institutions in Vietnam currently include financial companies and financial companies:

Finance companies

According to Decree 79/2002/ND-CP dated October 14, 2002 of the Government on the organization and operation of financial companies, a financial company is a type of non-bank credit institution, with the function of using its own capital, mobilized capital and other capital sources to lend and invest; providing financial and monetary consulting services and performing a number of other services as prescribed by law, but not providing payment services, not accepting deposits of less than 1 year.

As of June 30, 2013, there were 18 financial companies nationwide with a total charter capital of VND 20,317.9 billion. Financial companies are operating mainly in the field of consumer lending, however, they are also participating in medium and long-term loans for investment projects, especially the Petroleum Finance Company (PVFC) which has provided loans or syndicated loans for many investment projects in the fields of petroleum and real estate.

Financial leasing companies

A financial leasing company is a type of financial company whose main activity is financial leasing. While commercial banks are allowed to provide medium and long-term credit for customers' investment projects through investment project loans and syndicated loans, financial leasing companies (FIs) in Vietnam are allowed to provide medium and long-term credit for customers' investment projects through financial leasing services.

Currently, according to official statistics from the SBV's website, as of June 30, 2013, Vietnam has 12 CTTC companies currently operating with a total charter capital of about 3,650 billion VND and 13 million USD. Vietnamese CTTC companies are playing the role of providing medium-sized credit capital.

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