[Code of Federal Regulations]

[Title 31, Volume 3]

[Revised as of July 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 31CFR500.413]



[Page 21]

 

                  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]



[[Page 22]]