b) Foreign currency payment facilities, including cheques, payment cards, bills of exchange, promissory notes and other payment facilities;

c) Foreign currency financial instruments, including government bonds, corporate bonds, exchange bills, shares and other financial instruments;

d) Gold classified as state foreign exchange reserves, gold on residents’ offshore bank accounts; gold bullions, bars, granules or ingots which are brought into or out of Vietnam’s territory;

dd) Currency of the Socialist Republic of Vietnam which is brought into or out of Vietnam’s territory or used for international payment.

2. [2] “resident” means any of the following entities:

a) Credit institutions or foreign bank branches (FBBs) that are duly established and operating in Vietnam in accordance with provisions of the Law on Credit Institutions;

b) Business entities other than credit institutions that are duly established and operating in Vietnam (hereinafter referred to as “business entities”);

c) Regulatory authorities, armed forces, political organizations, socio-political organizations, socio-political-professional organizations, social organizations, socio-professional organizations, social and charity funds of Vietnam that are operating in Vietnam;

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dd) Vietnam’s diplomatic missions, consular missions and missions to international organizations in foreign countries;

e) Vietnamese citizens residing in Vietnam; Vietnamese citizens residing abroad for less than 12 months; Vietnamese citizens working for the organizations mentioned in Point d or dd of this Clause and their companions;

g) Vietnamese citizens traveling to foreign countries for the purposes of tourism, education, medical care and visiting;

h) Foreign nationals permitted to reside in Vietnam for at least 12 months. Foreign nationals who are living in Vietnam for education, medical care or visiting purposes or who are working for diplomatic missions, consular missions or missions of international organizations in Vietnam, representative offices of foreign organizations in Vietnam shall not be considered as residents, regardless of their stay duration;

i) Branches in Vietnam of foreign business entities, other forms of presence in Vietnam of foreign parties making investments in accordance with regulations of law on investment, and executive offices of foreign contractors in Vietnam.

3. “non-resident” means an entity other than those specified in Clause 2 of this Article.

4. [3] “capital transaction” means a transaction of capital transfer between a resident and a non-resident for the following purposes:

a) Direct investment;

b) Indirect investment;

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d) Granting and collecting foreign loans;

dd) Other activities as prescribed in the law of Vietnam.

5. “current transaction” means a transaction between a resident and a non-resident which is conducted not for the purpose of capital transfer.

6. [4] "payment and money transfer for current transactions” includes:

a) Payment and money transfer relating to import and export of goods and services;

b) Payment and money transfer relating to short-term commercial credit loans and bank loans;

c) Payment and money transfer relating to incomes earned form direct and indirect investments;

d) Money transfers made when the decrease in direct investment is accepted;

dd) Payment of interests on and installment payment of principal amount of foreign loans;

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g) Other payments and money transfers prescribed by the State Bank of Vietnam (SBV).

7. [5] “one-way money transfer” means the transfer of money from a foreign country into Vietnam or vice versa via a bank or public postal network of a public postal service provider for the purposes of financial support, aid or assistance to family relatives or personal spending, and not for payment for import or export of goods and services.

8. “foreign exchange activities” includes activities performed by residents or non-residents in their current transactions, capital transactions, use of foreign currencies in the territory of Vietnam, provision of foreign exchange services, and other foreign exchange-related transactions.

9. “VND exchange rate” means the price of one foreign currency in terms of VND.

10. “foreign currency cash” means money in the form of paper or metal coins.

11. [6] “licensed credit institution” means a bank, non-bank credit institution or FBB that is licensed to trade or provide foreign exchange services in accordance with regulations of this Ordinance.

12. [7] “foreign direct investment in Vietnam” means a foreign investor’s transfer of capital for investment and participation in the management of investment activities in Vietnam.

13. [8] “foreign indirect investment in Vietnam” means a foreign investor’s investment made in Vietnam through purchase and sale of securities, other financial instruments, contribution of capital or purchase of shares, or through securities investment funds or other intermediary financial institutions in accordance with the law of Vietnam without direct participation in management of investment activities.

14. “outward investment” means a resident’s transfer of capital to a foreign country for making investment in the forms prescribed by laws.

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16. “granting and collecting foreign loans" means a resident's act of granting loans to and collecting loan debts from a non-resident in the forms prescribed by laws.

17. “balance of international payments” means a statement that systematically summaries, over a given period of time, all economic transactions between Vietnam and other countries.

18. “foreign currency market" means a place where foreign currencies are traded. Vietnam’s foreign currency market includes interbank foreign currency market and foreign currency market for banks and their clients.

19. “state foreign exchange reserves” means assets in foreign currencies shown in SBV’s cash flow statements.

20. [9] "foreign exchange trading” means foreign exchange activities performed by licensed credit institutions for the purposes of earning profits, preventing risks and ensuring safety and liquidity for their operations.

Article 5. Application of laws on foreign exchange, international conventions, foreign laws and international practices

1. Foreign exchange activities must comply with the provisions of this Ordinance and relevant laws.

2. If there is any difference between the provisions of this Ordinance and an international convention to which the Socialist Republic of Vietnam is a signatory, that international convention shall prevail.

3. Foreign exchange activities which are not governed by the law of Vietnam shall be performed in accordance with foreign laws or international practices as agreed upon between relevant parties provided that such applied foreign laws or international practices shall not be contrary to basic principles of Vietnam's law.

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CURRENT TRANSACTIONS

Article 6. Liberalization of current transactions

All payments and money transfers for current transactions between residents and non-residents shall be freely made.

Article 7. Payment and money transfer relating to import and export of goods and services

1. All residents are allowed to purchase foreign currencies from licensed credit institutions for making payment for their imported goods/services.

2. Residents shall transfer foreign currencies obtained from their export of goods/services to their foreign currency accounts opened at licensed credit institutions in Vietnam. Holding of foreign currencies abroad requires the SBV’s permission.

3. All payments and money transfers for import or export of goods/services must be made through licensed credit institutions.

Article 8. One-way money transfer

1. Foreign currencies obtained by residents that are organizations in Vietnam from one-way money transfers must be transferred to their foreign currency accounts opened at licensed credit institutions or sold to these licensed credit institutions.

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3. Residents are allowed to buy, transfer and carry foreign currencies abroad to serve their lawful purposes.

4. Non-residents and residents that are foreigners may transfer foreign currency on their accounts abroad and may buy foreign currency using their lawful incomes in VND (if any) for transfer abroad.

5. [10] Residents and non-residents are not allowed to send foreign exchanges inside their postal parcels.

Article 9. Carrying foreign currencies, VND and gold upon exit from or entry into Vietnam; export and import of foreign currencies [11]

1. Residents and non-residents that are individuals are required to make declaration with the relevant checkpoint custom authorities when carrying an amount of foreign currency cash, VND cash and gold into Vietnam in excess of the amount prescribed by SBV.

2. Residents and non-residents that are individuals are required to make declaration with the relevant checkpoint custom authorities and submit required documents as prescribed by SBV when carrying an amount of foreign currency cash, VND cash and gold out of Vietnam in excess of the amount prescribed by SBV.

3. Residents that are licensed credit institutions are allowed to export/import foreign currency cash after obtaining written approval from SBV. SBV shall stipulate required documentation and procedures for giving approval for export/import of foreign currency cash to licensed credit institutions.

Article 10. Currency used in current transactions

Residents may use VND, convertible currencies and other currencies which are accepted by licensed credit institutions for making payments for their current transactions.

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CAPITAL TRANSACTIONS

SECTION 1. FOREIGN INVESTMENT IN VIETNAM

Article 11. Foreign direct investment in Vietnam [12]

1. Enterprises that have foreign direct investment (FDI enterprises) and foreign investors that enter into business cooperation contracts are required to open direct investment accounts at licensed credit institutions. Contribution of investment capital and transfer of principal amount of investment capital, profits and other lawful incomes must be made through these accounts.

2. Lawful incomes earned by foreign investors from their direct investment in Vietnam may be used for making reinvestment or transferred abroad. If these incomes are earned in VND, they shall be used for buying foreign currencies from licensed credit institutions for being transferred abroad.

3. Other lawful capital transfers relating to direct investment in Vietnam shall comply with relevant laws and guidelines of SBV.

Article 12. Foreign indirect investment in Vietnam[13]

1. Foreign investors that are non-residents shall open indirect investment accounts in VND for making indirect investment in Vietnam. Indirect investment capital in foreign currency shall be converted into VND for making investment through these accounts.

2. Lawful incomes earned by foreign investors that are non-residents from their indirect investment in Vietnam may be used for making reinvestment or buying foreign currencies from licensed credit institutions for transfer abroad.

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SECTION 2. VIETNAM’S OUTWARD INVESTMENT

Article 13. Capital sources for outward direct investment [14]

After obtaining license for outward direct investment, residents may use the following sources of foreign exchange for making investment:

1. Foreign currencies on their accounts opened at licensed credit institutions;

2. Foreign currencies purchased from licensed credit institutions;

3. Foreign exchanges from other lawful sources as prescribed by law.

Article 14. Transfer of outward direct investment capital [15]

After obtaining license for outward direct investment, residents shall open foreign currency accounts at licensed credit institutions and apply for transfer of foreign currency abroad for making investment through these accounts in accordance with SBV’s regulations.

Article 15. Transfer of capital and profits earned from outward direct investment to Vietnam [16]

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Article 15a. Outward indirect investment [17]

1. Credit institutions shall be allowed to make outward indirect investment in accordance with regulations of law on investment and SBV’s regulations.

2. After obtaining license for outward indirect investment, residents other than credit institutions specified in Clause 1 of this Article shall open and use accounts for transferring capital abroad for making investment and transferring capital, profits and other lawful incomes earned from their outward indirect investment to Vietnam in accordance with SBV’s regulations.

SECTION 3. TAKING AND REPAYING FOREIGN LOANS

Article 16. Taking and repaying foreign loans of Government [18]

The Government’s taking of foreign loans, authorization to other organizations to take foreign loans, repayment of foreign loan debts, and guarantee for foreign loans shall comply with in accordance with regulations of law on public debt management and relevant laws.

Article 17. Taking and repaying foreign loans of residents [19]

1. Residents that are enterprises, cooperatives, cooperative unions, credit institutions and FBBs shall take foreign loans in the form of conventional loans and assume responsibility to repay debts in accordance with regulations of law.

2. Residents that are individuals shall take foreign loans in the form of conventional loans and assume responsibility to repay debts in accordance with the Government’s regulations.

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4. Residents shall be allowed to buy foreign currencies from licensed credit institutions by presenting valid documents for repaying principal, interests, and relevant fees on their foreign loans.

5. Other lawful capital transfers relating to taking and repaying foreign loans shall comply with SBV’s regulations and relevant laws.

SECTION 4. GRANTING AND COLLECTING FOREIGN LOANS

Article 18. Granting and collecting foreign loans of Government

The Government shall decide to grant and collect foreign debts of the State or Government and other organizations authorized by the State or Government.

Article 19. Granting and collecting foreign loans of residents that are credit institutions and business entities [20]

1. Credit institutions shall be allowed to grant and collect foreign debts, and grant guarantee for non-residents in accordance with SBV’s regulations.

2. Business entities shall extend outbound loans, except export of goods and deferred payment services; provide guarantee for non-residents after obtaining permission from the Prime Minister.

SBV shall provide guidelines for opening and use of accounts, transfer of capital abroad and collection of foreign debts, registration of foreign loans, collection of foreign loans and other capital transfer transactions relating to grant and collection of foreign loans of business entities.

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Article 20. Residents issuing securities outside Vietnam’s territory

After obtaining permission for issuance of securities outside the territory of Vietnam, residents that are organizations shall open accounts at licensed credit institutions. Any transactions relating to the issuance of securities outside Vietnam’s territory must be made through these accounts.

Article 21. Non-residents issuing securities in Vietnam’s territory

After obtaining permission for issuance of securities in the territory of Vietnam, non-residents that are organizations shall open accounts at licensed credit institutions. Any transactions relating to the issuance of securities in Vietnam’s territory must be made through these accounts.

Chapter 4.

USE OF FOREIGN EXCHANGES IN VIETNAM’S TERRITORY

Article 22. Limitations on use of foreign exchanges [21]

Both residents and non-residents shall not be allowed to conduct any transactions, payments, listing, advertising, forecasting, valuation, prices specified in contracts/agreements and other similar forms in foreign exchanges in the territory of Vietnam, unless otherwise permitted according to SBV’s regulations.

Article23. Opening and use of accounts [22]

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2. Residents that are licensed credit institutions shall be allowed to open and use foreign currency accounts abroad to serve their foreign exchange activities performed abroad according to SBV’s regulations.

3. SBV shall consider issuing permission to open foreign currency accounts abroad to residents that are organizations in the following cases:

a) A business entity that establishes branches and/or representative offices abroad or wishes to open foreign currency accounts abroad for receiving borrowed capital or performing commitments/contracts signed with foreign parties;

b) Regulatory authorities, armed forces, political organizations, socio-political organizations, socio-political-professional organizations, social organizations, socio-professional organizations, social and charity funds of Vietnam that are operating in Vietnam and wish to open foreign currency accounts abroad for receiving financial supports, aids and grants from foreign countries or in other cases with permission from Vietnam’s competent authorities.

Article 24. Use of foreign currency cash by individuals

1. Foreign currency cash of residents and non-residents that are individuals may be kept themselves, carried with them, sold to licensed credit institutions or used for other lawful purposes.

2. Residents that are Vietnamese citizens may deposit foreign currency cash to their savings accounts opened at licensed credit institutions, withdraw principal amounts and receive interests in foreign currency cash.

Article 25. Use of VND by non-residents [23]

Non-residents that are either organizations or individuals and have VND cash from their lawful incomes shall be allowed to open accounts at licensed credit institutions. SBV shall stipulate the use of VND accounts of the entities specified in this Article.

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Residents that are licensed credit institutions shall be allowed to open and use foreign currency accounts abroad to serve their foreign exchange activities performed abroad according to SBV’s regulations.

Article 26. Use of currencies of countries sharing border with Vietnam[25]

Use of currencies of countries sharing border with Vietnam shall comply with international conventions to which the Socialist Republic of Vietnam is a signatory and SBV’s regulations.

Article 27. Issuance and use of payment cards

1. Residents and non-residents that are individuals shall be allowed to use their international payment cards for making payments at licensed credit institutions and merchants in the territory of Vietnam.

2. Merchants shall only accept payments in VND from acquiring banks.

3. SBV shall stipulate the issuance and use of cards in conformity with actual foreign exchange management objectives.

Chapter 5.

FOREIGN CURRENCY MARKET, EXCHANGE RATE MECHANISM AND MANAGEMENT OF GOLD AS FOREIGN EXCHANGE [26]

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1. Participants in interbank foreign currency market are SBV and licensed credit institutions.

2. [27] Participants in foreign currency market for licensed credit institutions and their clients are licensed credit institutions and their clients that are residents and non-residents in Vietnam.

3. Participants in Vietnam’s foreign currency markets shall be allowed to conduct different forms of transactions as prescribed international practices after having fulfilled requirements laid down by SBV.

Article 29. SBV’s activities in foreign currency markets

SBV shall be allowed to purchase and sell foreign currencies in domestic foreign currency markets for fulfilling objectives of national monetary policies.

Article 30. VND exchange rate mechanism

1. VND exchange rate is set on the basis of foreign currency demand and supply on the market with the State regulation.

2. [28] SBV shall announce exchange rates and decide to adopt exchange rate policies and management mechanisms.

Article 31. Management of gold as foreign exchange [29]

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Chapter 6.

STATE FOREIGN EXCHANGE RESERVES MANAGEMENT

Article 32. Types of state foreign exchange reserves

1. Foreign currency cash, foreign currencies on offshore deposit accounts.

2. Securities and other financial instruments in foreign currency issued by the Government, foreign organizations or international organizations.

3. Special drawing rights and reserves in the International Monetary Fund (IMF).

4. [30] Gold managed by SBV.

5. [31] Other State foreign exchange types.

Article 33. Sources of state foreign exchange reserves

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2. Foreign exchange amounts from loans granted by international financial organizations and banks.

3. Foreign exchange amounts from deposits of State Treasury and credit institutions.

4. Foreign exchange amounts of other sources.

Article 34. Management of state foreign exchange reserves [32]

1. SBV manages state foreign exchange reserves in accordance with the Government’s regulations in order to implement national monetary policies, ensure international payment capacity and preserve state foreign exchange reserves.

2. The Ministry of Finance of Vietnam shall inspect the SBV’s management of state foreign exchange reserves in accordance with the Government's regulations.

3. SBV shall submit periodical or ad hoc reports on its management of state foreign exchange reserves to the Prime Minister of Vietnam.

4. The Government shall submit reports to the Standing Committee of National Assembly on any changes in state foreign exchange reserves.

Article 35. Foreign currencies of state budget [33]

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2. The Prime Minister of Vietnam shall stipulate the rate of foreign currencies derived from state budget revenues to be retained by the Ministry of Finance of Vietnam for covering state budget recurrent expenditures in foreign currency. The Ministry of Finance of Vietnam shall sell the remaining amount of foreign currencies to the state foreign exchange reserves management department for concentrated management at SBV.

Article 35a. Use of state foreign exchange reserves[34]

The Prime Minister of Vietnam shall decide to use state foreign exchange reserves to serve unscheduled or urgent State demands. Any changes in state budget estimates as a result of the use of state foreign exchange reserves shall be dealt with in accordance with regulations of the Law on state budget.

Chapter 7.

FOREIGN EXCHANGE TRADING, PROVISION OF FOREIGN EXCHANGE SERVICES BY CREDIT INSTITUTIONS, FOREIGN BANK BRANCHES AND OTHER ORGANIZATIONS [35]

Article 36. Rules for trading in foreign exchange and providing foreign exchange services [36]

1. Credit institutions, FBBs and other organizations shall be allowed to trade in foreign exchange and provide foreign exchange services domestically and in foreign countries after obtaining written approval from SBV.

2. SBV shall promulgate regulations on scope of foreign exchange trading and provision of foreign exchange services domestically and in foreign countries, requirements to be satisfied and procedures for giving approval for foreign exchange trading and provision of foreign exchange services of credit institutions, FBBs and other organizations.

Article 37. Mobilizing savings and granting loans in foreign currency domestically

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Article 38. [37] (abrogated)

Article 39. Responsibilities of credit institutions and other organizations when providing foreign exchange services

1. Strictly comply with and instruct their clients to strictly comply with regulations on foreign exchange management and other relevant laws.

2. Examine documents and papers relating to transactions of clients to ensure their compliance with the provisions of this Ordinance and other relevant laws on foreign exchange management.

3. Meet foreign currency demands for making outbound payment for current transactions of residents that are either organizations or individuals.

4. Bear inspection and strictly comply with regulations on information provision and reporting laid down in laws.

Chapter 8.

STATE MANAGEMENT OF FOREIGN EXCHANGE ACTIVITIES

Article 40. State management of foreign exchange activities

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2. SBV shall assume responsibility before the Government to perform state management of foreign exchange activities, formulate and promulgate policies on foreign exchange management, instruct and inspect the implementation of regulations on documents, information provision and reporting.

3. Ministries, ministerial agencies and provincial People’s Committees shall, within the ambit of their assigned tasks and powers, perform state management of foreign exchange activities.

Article 41. Safety measures

In order to ensure national monetary policy and financial security, the Government may, if deemed necessary, adopt the following measures:

1. Limit the purchase, carrying, transfer or payment for transactions on current accounts and capital accounts;

2. Apply regulations on obligations to sell foreign currencies of residents that are organizations;

3. Apply economic, financial and monetary measures;

4. Adopt other measures.

Article 42. Reporting

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2. SBV shall play the leading role and cooperate with relevant Ministries and regulatory authorities in collecting information and data to serve the State management of foreign exchange activities and establishment of balance of international payments.

Licensed credit institutions shall submit reports on their foreign exchange activities to SBV in accordance with SBV’s regulations.

Organizations and individuals that perform foreign exchange activities shall provide information and data at the request of SBV and licensed credit institutions in accordance with regulations of law.

3. Ministries, ministerial agencies and provincial People’s Committees shall, within the ambit of their assigned tasks and powers, shall provide information and data on foreign exchange activities to SBV to serve the State management of foreign exchange activities and establishment of balance of international payments.

Chapter 9.

COMPLAINTS, DENUNCIATION, INITIATION OF LAWSUITS AND ACTIONS AGAINST VIOLATIONS

Article 43. Actions against violations

Organizations and individuals violating the regulations of this Ordinance shall, depending on the nature and severity of their violations, be disciplined, face administrative penalties or criminal prosecution, and make compensation for any damage in accordance with regulations of law.

Article 44. Complaints and denunciations

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2. During the consideration of a complaint or lawsuit, the organization or individual incurring administrative penalties shall still implement the penalty imposition decision until the decision on complaint outcomes of a competent authority or a court’s judgment or decision takes legal effect.

Chapter 10.

IMPLEMENTATION [38]

Article 45. Effect

This Ordinance comes into force from June 01, 2006.

Article 46. Guidelines for implementation

The Government shall elaborate on and provide guidelines for the implementation of this Ordinance./.