CIRCULAR

GUIDING THE FOREIGN EXCHANGE MANAGEMENT FOR THE FOREIGN DIRECT INVESTMENT IN VIETNAM

Pursuant to the Law on the State Bank of Vietnam No.46/2010/QH12 dated June 16, 2010;

Pursuant to the Law on Credit Institutions No.47/2010/QH12 dated June 16, 2010;

Pursuant to the Ordinance on Foreign Exchange No.28/2005/PL-UBTVQH11 dated December 13, 2005; the Ordinance No.06/2013/UBTVQH13 dated March 18, 2013 on amending several provisions of the Foreign Exchange Ordinance No.28/2005/PL-UBTVQH11 dated December 13, 2005;

Pursuant to the Decree No.70/2014/ND-CP dated July 17, 2014 of the Government detailing the implementation of several articles of the Ordinance on Foreign Exchange and the amended Ordinance on Foreign Exchange;

Pursuant to the Government's Decree No. 156/2013/ND-CP dated November 11, 2013 defining the functions, tasks, entitlements and organizational structure of the State Bank of Vietnam (hereinafter referred to as State Bank);

At the request of the Director General of Foreign Exchange Management Department;

The Governor of the State Bank hereby promulgates the Circular on the foreign exchange management for the foreign direct investment in Vietnam.

Chapter I

GENERAL PROVISIONS

Article 1. Governing scope

This Circular provides instructions on the foreign exchange management for the foreign direct investment activities in Vietnam, including invested capital contribution; opening and use of foreign currency and Vietnamese dong accounts of direct investment; transfer of invested capital, profits and legal revenues to foreign countries; transmission of investments in the pre-investment stage.

Article 2. Applicable entities

This Circular shall be applied to the following entities:

1. Residents who are enterprises receiving the direct foreign investment;

2. Non-residents involved in the business cooperation agreement in Vietnam;

3. Non-residents who are foreign investors of FDI enterprises;

4. Organizations, individuals regarding the foreign direct investment in Vietnam.

Article 3. Interpretation of terms

In this Circular, terms shall be construed as follows:

1. “Foreign investor” includes non-residents as organizations, individuals who perform their investment activities in Vietnam in the form of foreign direct investment according to current laws on investment.  

2. “Foreign direct investment enterprise” means enterprises that foreign investors contribute their capital to establish and take their role in the management as well as carry out their investment activities in Vietnam (hereinafter referred to as FDI enterprise).

3. “Authorized bank" consists of commercial banks, foreign banks' branches that are eligible for the foreign exchange business and supply of foreign exchange services as stipulated by laws.

4. “Authorized credit institution" consists of authorized banks, non-bank credit institutions who are eligible for the foreign exchange business and supply of foreign exchange services as stipulated by laws.

5. “Direct investment account” means foreign currency or Vietnamese dong demand accounts opened by FDI enterprises and foreign investors involved in the business cooperation agreement (hereinafter collectively referred to as foreign investment entity) at authorized banks to perform transactions regarding the foreign direct investment in Vietnam under the regulations stated in Article 6, 7 and 8 of this Circular.

Article 4. General rules

1. FDI enterprises and foreign investors must abide by investment laws, current regulations on the foreign exchange management and this Circular.

2. The invested capital contribution of foreign and Vietnamese investors into an FDI enterprise must be performed in the form of money transfer to the direct investment accounts.  

3. The use of foreign investors’ dividends in the territory of Vietnam must comply with current regulations on the foreign exchange management and other Vietnam laws.

4. Transfer of the ownership of invested capital in foreign investment enterprises and investment projects of foreign investors must comply with the Investment Law, Enterprise Law, Personal Income Tax Law, Corporate Income Tax Law, guiding documents of these laws, current regulations on the foreign exchange management and other relevant laws. 

5. Payment for the ownership transfer of the value of invested capital and investment projects through money transfer process must ensure the compliance with current regulations on foreign exchange management and other relevant laws. 

6. Foreign investors are entitled to use their legal revenues in Vietnamese dong or foreign currency generated from their foreign direct investment activities in Vietnam to serve the reinvestment purpose in Vietnam.

Chapter II

SPECIFIC PROVISIONS

Article 5. Invested capital contribution

1. Foreign and Vietnamese investors in an FDI enterprise are eligible to contribute their invested capital in foreign currency or Vietnamese dong with an amount specified in the Investment Certificate.

2. Residents as Vietnamese investors in an FDI enterprise are allowed to contribute their invested capital by means of their legal sources of personal foreign currency.

Article 6. Opening of foreign currency and Vietnamese dong accounts of direct investment

1. In order to perform the foreign direct investment activities in Vietnam, foreign investment entities are entitled to open their foreign currency and Vietnamese dong account of direct investment at 01 (one) authorized bank for the purpose of their receipt and expenditure transactions as stipulated in Article 7 and 8 of this Circular.

2. Foreign investment entities are eligible to open the account of chosen foreign currencies for their invested capital contribution.

With respect to the chosen foreign currency that serves as the invested capital, foreign investment entities are only allowed to open 01 (one) direct investment account in that foreign currency for their invested capital contribution.   

3. If the currency of overseas loans does not correspond to the currency that FDI enterprises use to open their direct investment accounts, these FDI enterprises are entitled to open other direct investment accounts of the loan currency at authorized banks where they have already held direct investment accounts in order to perform their receipt and expenditure transactions regarding foreign loans and other transactions regulated in Article 7 of this Circular.

4. In the event of wishing to open the direct investment account at another authorized bank, foreign investment entities must close their existing accounts and all of account balances are brought forward to new accounts.  Procedures for the opening and closing of direct investment accounts must adhere to regulations of authorized banks. 

Foreign investment entities are only allowed to perform their receipt and expenditure transactions on new direct investment accounts after completing the closing, clearing and settlement of old direct investment accounts.

Article 7. Use of foreign currency accounts of direct investment

Foreign currency accounts of direct investment are used to perform receipt and expenditure transactions regarding the following direct investment activities:

1. Receipt:

a) An amount of direct invested capital in foreign currency from foreign and Vietnamese investors contributed into FDI enterprises;

b) Direct investment withdrawals in foreign currency from domestic and overseas term loan of an FDI enterprise;

c) Payment amount for the ownership transfer of the value of invested capital and investment projects;

d) An amount of foreign currency from foreign currency demand accounts of FDI enterprises and foreign investors, opened at authorized banks;

đ) Other legal receipts in foreign currency generated from the foreign direct investment activities in Vietnam.

2. Expenditure:

a) Payment of principals, interests and charges for FDI enterprises’ term loans in foreign currency;

b) Transmission of foreign currency amounts to foreign currency demand accounts of FDI enterprises and foreign investors, opened at authorized banks;

c) Sale of foreign currency amounts to authorized credit institutions which are used to deposit into Vietnamese dong demand accounts of FDI enterprises and foreign investors;

d) Payment for the ownership transfer of the value of invested capital and investment projects;

đ) Payment for the transfer of profits and other legal receipts in foreign currency, generated from their foreign direct investment activities, out of Vietnam;  

e) Payment for the transfer of foreign investors’ direct invested capital in foreign currency out of Vietnam in case of FDI enterprises’ dissolution or termination; transfer of the ownership of invested capital and investment projects; reduction in invested capital or completion, liquidation and termination of investment projects as stipulated by investment laws;     

g) Other legal receipts paid in foreign currency regarding the foreign direct investment activities in Vietnam.

Article 8. Use of Vietnamese dong accounts of direct investment

Vietnamese dong accounts of direct investment are used to perform receipt and expenditure transactions regarding the following direct investment activities:

1. Receipt:

a) An amount of direct invested capital in Vietnamese dong from foreign and Vietnamese investors of FDI enterprises;

b) Vietnamese dong after-tax profits distributed to foreign and Vietnamese investors of FDI enterprises in order to perform their reinvestment activities in Vietnam;

c) Principal withdrawal on domestic term loans of FDI enterprises in Vietnamese dong to perform their investment activities in Vietnam;

d) Principal withdrawal on overseas Vietnamese dong loans of FDI enterprises who are entitled to receive foreign loans in Vietnamese dong according to current laws on the receipt and repayment of foreign loans of enterprises that are not pledged by the Government;

đ) Payment amounts on the ownership transfer of the value of invested capital and investment projects;

e) An amount transferred from Vietnamese dong demand accounts of FDI enterprises and foreign investors, opened at authorized banks.

2. Expenditure:

e) An amount transferred from Vietnamese dong demand accounts of FDI enterprises and foreign investors, opened at authorized banks.

b) Vietnamese dong profits distributed to foreign and Vietnamese investors of FDI enterprises;

c) Payment of principals, interests and charges on domestic term loan of FDI enterprises in Vietnamese dong to develop their investment projects;

d) Payment of principals, interests and charges on overseas term loan of FDI enterprises in Vietnamese dong, who are eligible to be granted overseas loans in Vietnamese dong according to current laws on overseas loan receipt and repayment of enterprises that are pledged by the Government;

đ) An amount paid for the monetary value received from the transfer of the ownership of invested capital and investment projects;

e) Repayment of invested capital in Vietnamese dong to foreign and Vietnamese investors of FDI enterprises in case of FDI enterprises’ dissolution or termination; transfer of their ownership of invested capital and investment projects; reduction in invested capital or completion, liquidation and termination of investment projects as stipulated by investment laws;  

Article 9. Transfer of invested capital, profits and legal receipts to foreign countries

1. Foreign investors are allowed to move their direct investments overseas in case of dissolution, termination of FDI enterprises; reduction in invested capital or completion, liquidation and termination of investment projects and business cooperation agreement according to legal regulations on investment, principals, interests and expenses of overseas loans, profits and relevant legal receipts regarding the direct investment activities in Vietnam through their direct investment accounts, except for several cases regulated in clause 2 of this Article and clause 2, 3 of Article 10 stated in this Circular.  

2. If FDI enterprises must close their direct investment accounts due to dissolution or termination, transfer of the ownership of invested capital which results to the change in initial legal status of these FDI enterprises, foreign investors have the right to use their foreign currency and Vietnamese dong accounts opened at authorized banks to purchase foreign currency, transfer their direct investments and legal earnings overseas.

3. Foreign investors are entitled to use their legal revenues in Vietnamese dong generated from their foreign direct investment activities in Vietnam to purchase foreign currency at authorized credit institutions and move this foreign currency amount overseas within a period of 30 working days from the date on which foreign currency procurement is completed.

Article 10. Invested capital transfer for the pre-investment stage

1. Transfer invested capital to Vietnam before obtaining the investment certificate:

a) Before obtaining the investment certificate, foreign investors are allowed to move their investments to Vietnam to meet the legal expenses of pre-investment activities in Vietnam according to a written agreement between concerned parties and through their foreign currency demand accounts opened at authorized banks;

b) Foreign investors are allowed to use accounts of invested capital transferred to Vietnam as regulated in point a of this clause to meet the legal expenses for the pre-investment stage in Vietnam on the basis of compliance with current legislation on the use of foreign exchange in the territory of Vietnam and other relevant Vietnam laws.

2. Invested capital transfer to foreign countries after obtaining the investment certificate:

a) After obtaining the Investment certificate issued by competent agencies, foreign and Vietnamese investors of foreign investment enterprises must complete all clearing and settlement activities on an amount of invested capital that has been transferred to Vietnam prior to the issuance of the investment certificate; 

b) Transforming an amount of investment which foreign investors has transferred to Vietnam to meet the relevant expenses for the pre-investment stage into foreign contributed or loan capital must be performed on the basis of mutual agreement amongst concerned parties and compliance with current legislation on investment, bookkeeping, accounting and other relevant Vietnam laws.

If the amount of investment that foreign investors have transferred to Vietnam and used to meet the expenses for the pre-investment stage is transformed into FDI enterprises’ foreign medium and long-term loans, these FDI enterprises must follow required procedures for the registration of such loans in accordance with current regulations of the State Bank;

c) If the amount of invested capital of foreign investors that has been transferred to Vietnam to meet the expenses for the pre-investment stage has not been used up, they are allowed to move the remaining amount in foreign currency overseas or to purchase foreign currency to send abroad the amount of Vietnamese dong investments that have not been used up in Vietnam after providing legal records and proofs of their original amount and all expenses incurred by investment projects in Vietnam. Transferring invested capital overseas must be done within a period of 30 working days from the date on which the foreign currency procurement is complete.

3. Transferring invested capital overseas due to failure to obtain the Investment certificate or termination of investment projects in Vietnam:

a) If foreign investors, after transferring their invested capital to Vietnam to meet the legal expenses for the pre-investment stage, have not been granted the Investment certificate by competent agencies or choose to terminate their investment projects in Vietnam, they are permitted to send abroad the mount that has been transferred to Vietnam and any interest on their demand deposit accounts (if any) after deducting relevant expenses incurred in the pre-investment stage, which must be endorsed by relevant records of the aforesaid investment amount and expenses;  

b) Foreign investors are eligible to purchase foreign currency and send abroad the amount of Vietnamese dong investment that has not been used up provided that they can provide relevant records of their investment amount and expenses incurred by the investment projects in Vietnam. Transferring invested capital overseas must be done within a period of 30 working days from the date on which foreign currency procurement is complete.

4. Transferring the remaining amount of invested capital overseas regulated at clause 2, clause 3 of this Article must be performed through the foreign currency demand accounts opened at authorized banks that foreign investors use to transfer their investment to Vietnam as regulated at point a clause 1 of this Article.

Article 11. Direct investment in the form of capital contribution and shareholding

Foreign investors who directly invest in Vietnam in the form of shareholding or capital contribution to get involved in the management of investment projects in Vietnam must observe the regulations on the opening of accounts as follows: 

1. If Vietnamese enterprises are granted the Investment certificate by competent agencies under current legislation on investment, they must open the direct investment account and comply with regulations specified in this Circular. 

2. Cases other than those regulated in point a of this clause must adhere to regulations specified in the Circular No.05/2014/TT-NHNN dated March 12, 2014 of the State Bank on providing instructions for the opening and use of indirect invested capital to implement the indirect investment activities in Vietnam as well as other amended documents (if any).

Chapter III

RIGHTS AND OBLIGATIONS OF AUTHORIZED CREDIT INSTITUTIONS, FDI ENTERPRISES AND FOREIGN INVESTORS;

Article 12. Rights and obligations of authorized credit institutions

1. Whilst opening the direct investment accounts and performing receipt and expenditure transactions regarding the foreign direct investment in Vietnam for FDI enterprises and foreign investors, authorized credit institutions have the right to request FDI enterprises and foreign investors to provide relevant records or documents regarding their investment activities in Vietnam.

2. Whilst performing receipt and expenditure transactions regarding the foreign direct investment activities of FDI enterprises and foreign investors in Vietnam, authorized credit institutions are obliged to:

a) Provide instructions for FDI enterprises and foreign investors on required procedures for the opening and closing of direct investment accounts;

b) Regulate, inspect and keep all required records appropriate for the receipt and expenditure transactions on direct investment accounts of foreign investors to ensure these transactions comply with regulations of this Circular as well as those in conformity with relevant Vietnam laws; 

c) Sell foreign currency to foreign investors for their overseas transfer on the basis of their foreign currency self-balance and law observance.

Article 13. Rights and obligations of FDI enterprises and foreign investors

1. FDI enterprises and foreign investors have the right to perform the direct investment activities in Vietnam on the basis of compliance with provisions of this Circular and other relevant Vietnam laws.

2. Whilst performing receipt and expenditure transactions regarding the foreign direct investment activities in Vietnam, FDI enterprises and foreign investors are obliged to:

a) Specify their specific receipt and expenditure transactions regarding the foreign direct investment in Vietnam as required and guided by authorized credit institutions;

b) Provide and supplement records or documents required by authorized credit institutions.

Chapter IV

REPORTING MECHANISM

Article 14. Reporting mechanism of authorized credit institutions

Authorized credit institutions must compile reports for submission to the State Bank on the foreign direct investment of foreign investors in Vietnam according to current regulations of the State Bank on the statistical and reporting mechanism.

Article 15. Requirements for the immediate report

Whenever unexpected events occur or when necessary, FDI enterprises and authorized credit institutions are advised to report relevant issues to the State Bank.

Chapter V

INSPECTION AND SETTLMENT OF VIOLATIONS

Article 16. Inspection and supervision

1. The State Bank and its affiliates in centrally-governed cities and provinces must carry out inspection and supervision to ensure the compliance with regulations on foreign exchange management regarding the foreign direct investment activities of FDI enterprises, foreign investors and authorized credit institutions in Vietnam as stipulated in this Circular and other relevant laws.

Concerned organizations and individuals are responsible to provide all required records and documents to carry out the inspection and supervision in an effective and timely manner.

Article 17. Settlement of violations

Where any violation against regulations of this Circular are found, depending on their severity, FDI enterprises, foreign investors and authorized credit institutions shall handle it according to legal regulations.

Chapter VI

IMPLEMENTATION

Article 18. Effect

1. This Circular shall come into effect from September 22, 2014.

2. The Article 9 of the Circular No.05/2014/TT-NHNN dated March 12, 2014 of the State Bank on guiding the opening and use of direct investment accounts to carry out the foreign indirect investment activities in Vietnam shall be annulled. 

Article 19. Transitional provisions

1. From the effective date of this Circular, foreign investment entities are responsible to transform special foreign-currency deposit accounts into foreign-currency direct-investment accounts.    

This transformation must be done within a period of 6 months from the effective date of this Circular. 

2. Authorized credit institutions are responsible to carry out the transformation of the foreign-currency direct-investment accounts as stipulated at clause of this Article for foreign investment entities.

3. After 06 months from the effective date of this Circular, foreign investment entities are not allowed to use special foreign-currency deposit-accounts for direct investment activities in Vietnam.

Article 20. Implementation

The Chief of Staff, the Director General of Foreign Exchange Management Department, Heads of relevant units affiliated with the State Bank, the Director of State Bank of centrally-affiliated cities and provinces, President of the Board of Directors, President of the Members Board, Chief Executive Officer (Director) of credit institutions and foreign banks’ branches are responsible to implement this Circular.