Restrictions on the use of foreign currency
Within the territory of Vietnam, all transactions, payments, listings and advertisements of residents and non-residents must not be affected in foreign exchange except for the following cases:
i) Transactions with credit institutions and other institutions permitted to provide foreign exchange services
ii) Residents being organizations shall be permitted to transfer capital internally by a telegraphic transfer of foreign currency (as between an entity with legal status and a dependent accounting entity or vice versa)
iii) Residents shall be permitted to contribute capital in foreign currency in order to implement a foreign investment project in Vietnam
iv) Residents shall be permitted to receive payment by a telegraphic transfer of foreign currency pursuant to a contract entrusting import or export.
v) Residents being domestic or Foreign Contractors (FCs) shall be permitted to receive payment by a telegraphic transfer of foreign currency from investors or head contractors in order to make payment and disbursement transactions and to remit money overseas.
vi) Residents being institutions providing insurance business services shall be permitted to receive a telegraphic transfer of foreign currency from insurance purchasers for all types of goods and services which must be reinsured offshore
vii) Residents being institutions conducting business in duty free goods, providing services in separated areas in international border gates or providing customs bond warehouse services shall be permitted to receive payment in foreign currency and VND for the supply of goods and services.
viii)Residents being customs and police offices of international border gates and customs bond warehouses shall be permitted to receive foreign currency from non-residents for all types of taxes and fees for entry/exit visas and fees for the provision of services.
ix) Non-residents being diplomatic offices and consulates shall be permitted to collect fees for entry/exit visas and other types of fees and charges in foreign currency.
x) Non-resident and residents being foreigners shall be permitted to receive salary, bonuses and allowances in foreign currency from residents and nonresidents being organizations.
xi) Non-residents shall be permitted to make telegraphic transfers of foreign currency to other non-residents or to make payment to residents of money for the export of goods and services.
Other necessary cases after consideration by and permission from the Governor of the SBV.
Use of foreign currency cash by individuals
i) Residents and non-residents being individuals with foreign currency cash shall be permitted to store or carry such cash personally to donate or bequeath it, to sell it to an authorized credit institution, to remit or carry it overseas to service lawful purposes, or to pay it to entities entitled to collect foreign currency pursuant to this Decree.
ii) Residents being individuals with foreign currency cash shall be permitted to deposit it in savings accounts at authorized credit institutions, and to withdraw the principal in and to receive interest in foreign currency cash in accordance with the Law on foreign currency savings accounts.
iii) Individuals being Vietnamese citizen shall be entitled to buy foreign currencies in cash at authorized credit institutions to satisfy their foreign currency demands shall be entitled to buy foreign currency which is the local currency of the country where Vietnamese citizen come. Where they do not have local currency of the country where Vietnamese citizen come, authorized credit institutions shall sell other freely convertible foreign currencies.
iv) Individuals being Vietnamese citizen shall be entitled to buy foreign currencies in cash at authorized credit institutions to satisfy their demands for foreign currencies as stipulated in Paragraph 1, Article 2 of this Circular with the limit of USD 100/1 person/1 day or other foreign currencies with the same value within the time of ten (10) days when they stay in foreign countries. The above foreign currency limit is also applicable to children sharing passport with their parent.
v) Any individual who carries foreign currency in cash upon entry into the country and has a demand for depositing that amount of foreign currency in his foreign currency payment account opened at an authorized credit institution.
vi) The individual shall present the authorized credit institution with an entry and exit Declaration with confirmation of the border Customs on the amount of the foreign currency in cash carried into the country. When performing the transaction for the customer, the authorized credit institution shall provide its seal for confirming the foreign currency amount deposited to the foreign currency payment account on the original copy of the entry and exit Declaration, and keep 1 copy of the Declaration at the same time.
vii) The entry and exit Declaration with confirmation of border Customs shall only be valid for the individual’s deposit of foreign currency in his foreign currency payment account within a period of 60 days since the date stated on the Declaration.
Use of VND by non-residents
Non residents being organizations and individuals shall be permitted to open and use VND accounts at authorized credit institutions in order to implement the following revenue and disbursement transactions:
i) To collect proceeds from sale of foreign currency to an authorized credit institution
ii) To collect revenue from other legal sources in Vietnam
iii) To make cash payments or to withdraw cash to spend in Vietnam
iv) To disburse in payment of a current transaction of capital transaction in accordance with this Decree
v) To disburse by way of gift or payment of an inheritance in accordance with law
vi) To disburse by way of purchase of foreign currency at an authorized credit institution for remittance abroad
vii)To disburse for other purposes permitted by law
Use of currencies of countries with a common border with Vietnam
Residents being organizations and individuals who have lawful revenue in currencies of a country with a common border with Vietnam from activities of export and import goods and services or who have other lawful revenue shall be permitted to open VND accounts at authorized credit institutions in order to implement the following revenue and disbursement transactions:
i) To collect proceeds from the sale of goods and services
ii) To collect proceeds being the purchase at an authorized credit institution of a currency of a country with a common border
iii) To collect revenue from other legal sources in Vietnam
iv) To disburse by way of payment for the import of goods or services
v) To disburse by way of sale to an authorized credit institution or exchange bureau
vi) To withdraw in cash in order to pay salary, bonuses and allowances to foreigners working for an organization or to spend in a country with a common border
vii)To disburse for other purposes permitted by law
The use of currencies of countries with common borders with Vietnam to purchase or sell goods in border areas and in economic zones of border gates must comply with regulations of the SBV.
The foreign exchange rate is set by averaging rates from the previous day’s inter-bank transactions. This crawling peg system has established a trading band that allows VND/USD exchange deals to be executed within a tight band. The Government is, however, planning to move towards a more market-determined exchange rate in coming years.
Daily spot exchange rates are announced by the SBV based on the previous day’s average rate on the interbank market. From 11th Feb 2011 other banks must then trade within +/- 1% of this official rate instead of +/- 3% previously.
Opening of bank accounts by foreign invested enterprises
Enterprises with foreign owned capital and foreign parties to business co-operation contracts must open a direct investment capital foreign currency account at an authorized credit institution in order to implement the following revenue and disbursement transactions:
i) Receipt of charter capital monetary contributions, receipt of capital for implementation of direct investment and receipt of medium and long-term foreign loan capital
ii) Receipt of foreign currency from a foreign currency savings account of a resident being an enterprise with foreign owned capital or a foreign party to a business co-operation contract
iii) Disbursement of foreign currency remitted into a foreign currency savings account of a resident being an enterprise with foreign owned capital
iv) Disbursement to outside Vietnam of principal, interest and fees on a foreign medium or long term loan
v) Disbursement to outside Vietnam of capital, profit and other legal revenue of a foreign investor
vi) Other revenue and disbursement transactions relating to direct foreign investment activities.
In addition, Foreign Invested Enterprises (FIEs) may open current accounts in a foreign currency and VND at authorized banks in Vietnam for their business transactions.
Registration of overseas borrowings
All medium and long-term loans from foreign sources must be registered with and periodically reported to the SBV. The borrower is required to comply with several other requirements in purchasing foreign currency from financial institutions to repay the loan, e.g. the repayment must be in line with the repayment schedule.
Within 15 working-days since day receiving completed and valid documents, SBV replied in official letter about approval or rejection of overseas borrowings or issuing international bonds project of state owned commercial banks. In case of rejection, the SBV must have documents stated the reasons clearly.
Monthly and yearly, state-owned commercial banks are are required to report directly to the SBV statement of oversea borrowings. The deadline for submission is no later than 10th of the next month and 31st January of the next year for monthly and yearly report respectively.