Viet Nam

Viet Nam

New regulations on foreign exchange took effect

06 Sep 2019

On 26 June 2019, the State Bank of Vietnam issued Circular 06/2019/TT-NHNN on foreign exchange control of foreign direct investment (FDI) activities in Vietnam. It replaces Circular 19/2014/TT-NHNN (Circular 19) and amends certain articles in Circular 05/2014/TT-NHNN on the opening and use of foreign indirect investment capital accounts, and in Circular 16/2014/TT-NHNN on the use of foreign currency and Vietnamese Dong (VND) accounts for residents and non-residents.

Circular 19 required foreign invested enterprises (FIE) to open a direct investment capital account (DICA), but the definition of an FIE was not entirely clear. Articles 3.2 and 5 of Circular 06 clarifies the definition as follows: - Enterprises newly established by foreign investors and required by Vietnamese law to obtain an investment registration certificate; - Enterprises having 51% or more foreign ownership; and, - Project companies established by foreign investors to implement public-private partnership projects.

In addition to an FIE, Circular 06 requires the following investors to open a DICA: - Foreign investors entering into business co-operation contracts (BBC Investors); and - Foreign investors directly entering into PPP projects without setting up a project company.

Also, Circular 09 previously required unused pre-establishment costs to be remitted withing 30 days from the date that these costs were converted from VND to foreign currency. This timeline has been abolished under Circular 06.