The State Bank of Vietnam (SBV) has recently posted on its website www.sbv.gov.vn a draft circular guiding the management of foreign exchange operations with regard to foreign direct investment (FDI) in Vietnam.
Accordingly, an FDI enterprise or a foreign party to a business cooperation contract in Vietnam would be required to open a direct investment capital account at a credit institution licensed for foreign exchange operations so as to conduct transactions related to its/his/her investment activities in the country.
Unlike current regulations which stipulate that direct investment capital accounts must be opened in a foreign currency, the draft permits such accounts to be opened in both foreign currency and Vietnam dong. As explained by the SBV, this provision would enable FDI enterprises and foreign investors to use lawful sources of Vietnam-dong and foreign-currency capital to make contributions to projects.
However, in case of making investment in Vietnam dong, FDI enterprises and foreign investors would have to open Vietnam-dong direct investment capital accounts at the credit institutions where they have opened their foreign-currency accounts. If wishing to open a direct investment capital account at another credit institution, an FDI enterprise or investor would have to close the previously opened account and transfer the whole balance of such account to the new one.
The draft also allows foreign investors to remit abroad charter capital, direct investment capital, re-investment capital, capital earned from liquidation of projects upon license expiration or ahead-of-schedule dissolution, earning, from transfer of investment projects, interests and costs of foreign loans and lawful revenues related to FDI activities in Vietnam through direct investment capital accounts. However, the investment capital amount remitted overseas must not exceed the capital amount already transferred into Vietnam plus on-demand interests.-