Circular No. 19/2014/TT-NHNN, issued on August 11, 2014, by the State Bank of Vietnam (SBV), provides specific guidance on foreign exchange management for foreign direct investment (FDI) activities in Vietnam.
The circular specifies regulations on capital contribution; opening and using direct investment capital accounts in foreign currency and Vietnamese Dong; transferring capital, profits, and direct revenue abroad; transferring capital for the investment preparation phase; implementing direct investment in the form of capital contribution and share purchase; and the rights and obligations of licensed credit institutions, FDI enterprises, and foreign investors.
The Circular applies to resident enterprises with FDI capital; non-residents participating in business cooperation contracts in Vietnam; non-residents who are foreign investors in FDI enterprises; and organizations and individuals related to FDI activities in Vietnam.
When conducting transactions related to FDI activities in Vietnam by FDI enterprises and foreign investors, authorized credit institutions are responsible for guiding FDI enterprises and foreign investors on procedures related to opening and closing direct investment accounts, etc. Authorized credit institutions are also responsible for selling foreign currency to foreign investors for transfer abroad based on their own foreign currency reserves and in accordance with legal regulations.
Regarding the rights and obligations of FDI enterprises and foreign investors, the Circular stipulates that FDI enterprises and foreign investors are responsible for declaring the details of revenue and expenditure transactions related to FDI activities in Vietnam as required and guided by authorized credit institutions; and submitting and supplementing documents and records as required by authorized credit institutions.
Foreign investors may transfer foreign direct investment capital abroad upon dissolution, cessation of operations of FDI enterprises, reduction of investment capital, or termination, liquidation, or cessation of operations of investment projects and business cooperation contracts in accordance with the law on investment, including principal, interest and foreign loan costs, profits and other legitimate sources of income related to direct investment activities in Vietnam through a direct investment capital account, except for certain cases specified in this Circular.
Foreign investors may use legitimate Vietnamese Dong earnings from direct investment activities in Vietnam to purchase foreign currency at authorized credit institutions and transfer it abroad within 30 working days from the date of purchase.
The circular also stipulates: “Article 9 of Circular No. 05/2014/TT-NHNN dated March 12, 2014 of the State Bank of Vietnam guiding the opening and use of indirect investment capital accounts for carrying out foreign indirect investment activities in Vietnam is hereby repealed.”
This Circular takes effect from the date of 25 / 9 / 2014.
"From the effective date of this Circular, FDI enterprises and foreign investors are responsible for converting their specialized foreign currency deposit accounts to foreign currency direct investment accounts. The conversion must be completed within 6 months from the effective date of the Circular. After this period, enterprises and investors are not allowed to use specialized foreign currency deposit accounts to carry out direct investment activities in Vietnam," Circular 19 clearly states.
