31 C.F.R. § 500.413 Participation in certain development projects in Vietnam.
Title 31 - Money and Finance: Treasury
The following examples illustrate the scope of the authorization in §500.576 for dealings in property in which Vietnam or a Vietnamese national has an interest with respect to development projects in Vietnam formally proposed or approved for execution, funding or sponsorship by a qualified international institution listed in appendix A to this part (“Qualified Projects”). Example # 1: The Government of Vietnam (“Vietnam”) approaches a U.S. financial consulting firm (the “U.S. Consulting Firm”) for advice on building cement plants in Hanoi and Ho Chi Minh City. The project might be eligible for funding by the Asian Development Bank (the “ADB”), and Vietnam wants the U.S. Consulting Firm's assistance in conducting a feasibility study for submission to the ADB. Since the project has not yet been formally proposed or approved for funding by the ADB, no involvement of the U.S. Consulting Firm is authorized pursuant to §500.576. However, had the ADB formally proposed the project in its monthly ADB Business Opportunities as a project being considered for funding, or had it funded the feasibility study, §500.576 would authorize the U.S. Consulting Firm's transactions. Example # 2: Upon ADB approval of funding for the cement plant project, a U.S. company (the “U.S. Company”) forms a joint venture with a Vietnamese company to bid on construction of the cement plants in Hanoi and Ho Chi Minh City. The joint venture's bid is successful, and it purchases construction equipment from the United States, financed by a U.S. bank and insured by a U.S. company. Several items are sourced from the United States during construction, including cement equipment, which is covered by a ten-year service and maintenance agreement. The joint venture agreement calls for the continued management and operation of the plants by the U.S. Company after completion, and for the insurance of the plants by a U.S. insurance company. Each of these transactions with respect to the Qualified Project is authorized by §500.576. Example # 3: The International Finance Corporation (“IFC”) offers equity investment in a Vietnamese company to finance environmental safeguards for drilling operations in offshore oil fields. Various U.S. investors, including venture capital companies, brokerage firms, and investment banks contribute capital and receive shares in the Vietnamese company. This equity investment in a Qualified Project is authorized by §500.576. The U.S. companies purchasing these shares as part of the IFC-sponsored development project may hold or resell them, including resale to other persons subject to U.S. jurisdiction. Shares acquired by entities not subject to U.S. jurisdiction may not then be purchased or repurchased by a person subject to U.S. jurisdiction. Example # 4: (a) An Indonesian company (the “Contractor”) is a successful bidder on a Qualified Project, and hires a U.S. law firm to represent it in contract negotiations with Vietnam to build a fish processing and canning facility in Vietnam funded by the World Bank. The law firm may represent the Contractor throughout the course of the project pursuant to §500.576, once the project has been formally proposed or approved for funding by the World Bank. (b) Once the Qualified Project is underway, the Contractor purchases equipment manufactured in France by a French company. The long-term servicing of the equipment, however, will be provided by the French company's U.S. subsidiary. The service transactions are authorized pursuant to §500.576. (c) After the processing facility is completed, Vietnam hires a U.S. marketing firm to develop marketing strategies for the product worldwide. It further asks the marketing firm to execute the strategies it devises and to represent the product in South-East Asia, including the domestic market in Vietnam. The marketing firm in turn would hire the brokerage services of a U.S. citizen domiciled in Thailand for the sale of the product to that country. These transactions are outside the scope of §500.576, and violate §500.201, because they are not directly incident to the Qualified Project funded by the World Bank. [58 FR 68530, Dec. 28, 1993]
Title 31: Money and Finance: Treasury
PART 500—FOREIGN ASSETS CONTROL REGULATIONS
Subpart D—Interpretations
§ 500.413 Participation in certain development projects in Vietnam.
