The move aims to reduce the cost of commodities and create new jobs in a move to alleviate the negative impact of the global recession.

The circular also stipulates the process by which borrowers and commercial banks will implement the interest-rate subsidy.

Borrowers must use loans for the purposes set forth in the loan contracts. If borrowers use the loans for other purposes, they must pay interest to commercial banks as dictated by the regulations.

Commercial banks have been asked to carry out the subsidised interest process in accordance with the Government’s decision and to ensure transparency.

CEOs of businesses and directors of commercial banks will be held responsible for any unlawful cases involving the subsidized interest. Any violations will be handled in accordance with the law and the banks will be reviewed annually thereafter.

The State Bank of Vietnam will be responsible for working with relevant agencies to conduct inspections and supervise the implementation of the regulations according to the law.

The supporting interest rate level is 4 percent for short-term dong loans for a maximum duration of eight months. The SBV will reimburse the deducted interest to credit institutions on the basis of their quarterly reports.

Industries and services ineligible for the subsidy include mining, finance, consulting, consumer goods, securities, land use rights and real estate-excepting the construction of low-income apartments.

Money for the subsidy will be drawn from the US$977 million stimulus package, which is projected to inject US$24 billion into the economy within a year.

Financial organisations providing the subsidised loans will include State-owned banks, joint stock banks, joint-venture banks, foreign bank branches, wholly foreign-owned banks and the central credit fund.