[Code of Federal Regulations]
[Title 31, Volume 2]
[Revised as of July 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR500.413]

[Page 535]
 
                  TITLE 31--MONEY AND FINANCE: TREASURY
 
 CHAPTER V--OFFICE OF FOREIGN ASSETS CONTROL, DEPARTMENT OF THE TREASURY
 
PART 500_FOREIGN ASSETS CONTROL REGULATIONS--Table of Contents
 
                        Subpart D_Interpretations
 
Sec. 500.413  Participation in certain development projects in Vietnam.

    The following examples illustrate the scope of the authorization in 
Sec. 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 Sec. 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, Sec. 
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 
Sec. 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 
Sec. 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 Sec. 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 Sec. 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 Sec. 500.576, and violate Sec. 500.201, because they are not 
directly incident to the Qualified Project funded by the World Bank.

[58 FR 68530, Dec. 28, 1993]

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