Socialist Republic of Vietnam

STATE BANK OF VIETNAM

No. 04-2001-TT-NHNN, Hanoi, 18 May 2001


CIRCULAR PROVIDING GUIDELINES ON FOREIGN EXCHANGE CONTROL
IN RESPECT OF ENTERPRISES WITH FOREIGN OWNED CAPITAL AND FOREIGN PARTIES TO BUSINESS CO-OPERATION CONTRACTS


In implementation of article 125 of Decree 24-2000-ND-CP of the Government dated 31 July 2000 providing detailed regulations on implementation of the Law on Foreign Investment in Vietnam, the State Bank of Vietnam provides the following specific guidelines on foreign exchange control in respect of enterprises with foreign owned capital and foreign parties to business co-operation contracts:


I. SUBJECTS AND SCOPE OF APPLICATION

1. This Circular shall apply to organizations permitted to engage in production and to conduct business in Vietnam in accordance with the Law on Foreign Investment in Vietnam, comprising:

1.1 Enterprises with one hundred (100) per cent foreign owned capital and joint venture enterprises (hereinafter referred to as enterprises with foreign owned capital);

1.2 Foreign parties to business co-operation contracts (hereinafter referred to as foreign business co-operation parties).

Foreign individuals working in enterprises with foreign owned capital and business co-operation projects who have foreign exchange and who carry out foreign exchange activities must comply with the provisions in Section II of Chapter I and Chapter III of Part Two of Circular 01-1999-TT-NHNN7 of the State Bank dated 16 April 1999 providing guidelines for implementation of Decree 63-1998-ND-CP of the Government dated 17 August 1998 on foreign exchange control.
2. Enterprises with foreign owned capital and foreign business co-operation parties carrying out transactions relating to foreign exchange, including: opening and operating accounts in domestic and foreign banks; converting foreign currency; transferring capital into and out of Vietnam; remitting profits overseas; exchange rates; and information and reports, must strictly implement the provisions of this Circular and the other current provisions of Vietnam on foreign exchange control.

Foreign exchange activities of credit institutions, investment funds with foreign owned capital, and forms of indirect investment shall not be within the governing scope of this Circular.


II. OPENING AND OPERATING ACCOUNTS AT
BANKS OPERATING IN VIETNAM

3. Opening and operating specialized foreign currency deposit accounts:

3.1 Enterprises with foreign owned capital and foreign business co-operation parties shall be required to open a specialized foreign currency deposit account at a bank authorized to deal in foreign currency (hereinafter referred to as an authorized bank) in order to conduct capital transfer transactions by foreign investors, comprising:

(a) Transfers into and out of Vietnam of legal capital or capital for implementation of a business co-operation contract by foreign investors;

(b) Transfers into and out of Vietnam of medium- and long-term foreign loan principal;

(c) Transfers out of Vietnam of interest and fees on medium- and long-term foreign loans for the purpose of repayment of foreign loans;

(d) Remittance out of Vietnam of legal profit and other income of foreign investors;

(e) Withdrawals of capital for the purpose of transfer into the foreign currency deposit account of an enterprise with foreign owned capital or a foreign business co-operation party;

(f) Deposits of capital from foreign currency accounts of enterprises with foreign owned capital or foreign business co-operation parties.

3.2 In special circumstances, at the request of a foreign lender, enterprises with foreign owned capital and foreign business co-operation parties shall be permitted to open an additional account for the purpose of receipt of foreign loan capital and repayment of foreign loans (in addition to the specialized foreign currency deposit account referred to in clause 3.1 above) at an authorized bank.

4. Opening and operating foreign currency deposit accounts:

Enterprises with foreign owned capital and foreign business co-operation parties shall be permitted to open and operate foreign currency deposit accounts at authorized banks for the purpose of servicing their activities. The opening and operation of foreign currency deposit accounts shall be conducted in accordance with the provisions in Section I of Chapter I of Part Two of Circular 01-1999-TT-NHNN7 of the State Bank dated 16 April 1999 providing guidelines for implementation of Decree 63-1998-ND-CP of the Government dated 17 August 1998 on foreign exchange control.

Every item of revenue or expenditure in foreign currency of an enterprise with foreign owned capital and of a foreign business co-operation party must be conducted through its own accounts at an authorized bank and must comply with the provisions of this Circular and other current provisions on foreign exchange control.

5. Opening and operating Vietnamese dong accounts:

Enterprises with foreign owned capital and foreign business co-operation parties operating in Vietnam shall be permitted to open Vietnamese dong deposit accounts at banks. The opening and operation of Vietnamese dong deposit accounts shall be conducted in accordance with the regulations of the State Bank and the guidelines of the bank at which the enterprise with foreign owned capital or the foreign business co-operation party opens the account.


III. OPENING AND OPERATING FOREIGN CURRENCY
ACCOUNTS OVERSEAS

6. Enterprises with foreign owned capital shall be permitted to open accounts at banks overseas for the purpose of implementing medium- and long-term foreign loans in accordance with the provisions in Section I.2 of Chapter V of Part Two of Circular 01-1999-TT-NHNN7 of the State Bank dated 16 April 1999 providing guidelines for implementation of Decree 63-1998-ND-CP of the Government dated 17 August 1998 on foreign exchange control.

7. In addition to opening an account in accordance with the provision in clause 6 of this Circular, in special cases, enterprises with foreign owned capital may be permitted by the State Bank to open an account overseas for the purpose of servicing other objectives on the basis of the following conditions:

7.1 The enterprise belongs to the category of specially important investment in accordance with Government programs;

7.2 An enterprise investing in the BOT, BTO or BT form requires to open an account overseas for the purpose of fulfilling its undertakings;

7.3 An enterprise investing in the aviation, maritime, postal, insurance or tourism industries with international business activities requires to open an account overseas for the purpose of payment and off-setting in accordance with international practice;

7.4 An enterprise permitted to open a branch or a representative office overseas requires to open an account for the purpose of servicing the activities of the branch or representative office overseas.

8. The Governor of the State Bank shall consider and make a decision on any cases beyond those prescribed in clause 7 of this Circular, based on the requirement and necessity for opening an account overseas.

9. The Governor of the State Bank shall provide specific provisions on the objectives, the duration of operation and the foreign currency balance of an account in the decision permitting the opening and operation of a foreign currency account overseas for each particular case (Sample Form No. 8).

10. Application file for opening an account overseas: The subjects prescribed in clauses 7 and 8 of this Circular wishing to open an account overseas must submit a file to the State Bank (Department of Foreign Exchange Control). The file shall comprise:

10.1 Application for licence to open and operate a foreign currency account overseas (Sample Form No. 1);

10.2 Explanatory statement of necessity for opening an account overseas;

10.3 Notarized copy of investment licence;

10.4 Forecast plan of monthly foreign currency revenue and expenditure of the account overseas.

Within fifteen (15) working days from the date of receipt of a complete and proper file, the State Bank shall be responsible to consider and make a decision to permit or not to permit an enterprise to open an account overseas. If an enterprise is not permitted to open an account overseas, reasons must be specified.

11. Petroleum projects which are subject to the Law on Petroleum shall be permitted to open an account overseas in accordance with the provisions of the Law on Petroleum and, no more than fifteen (15) days after the date of opening the account, must register the account with the State Bank - Department of Foreign Exchange Control (Sample Form No. 2).


IV. FOREIGN CURRENCY CONVERSION

12. Enterprises with foreign owned capital and foreign business co-operation parties shall be permitted to purchase foreign currency at authorized banks for the purpose of satisfying the following transactions:

12.1 Current transactions as prescribed in Appendix 3 of Circular 01-1999-TT-NHNN7 of the State Bank dated 16 April 1999 providing guidelines for implementation of Decree 63-1998-ND-CP of the Government dated 17 August 1998 on foreign exchange control;

12.2 Other permitted transactions, comprising:

(a) Repayment of principal and interest and fees on short-term foreign loans (if the loan conditions are consistent with the regulations of the Governor of the State Bank on foreign loans and foreign loan repayment by enterprises);

(b) Repayment of principal, interest and fees on medium- and long-term foreign loans which have been registered with the State Bank;

(c) Repayment of principal, interest and fees on foreign currency loans at banks authorized to operate in Vietnam;

(d) Transfer overseas of legal capital, re-invested capital or capital for implementation of a business co-operation contract upon termination of operation due to expiry of duration of operation or early dissolution (including cases of assignment of capital).

13. With respect to enterprises with foreign owned capital and foreign business co-operation parties within the category of specially important investment projects in accordance with Government programs, the authorized bank shall, depending on the decision of the Prime Minister of the Government and the provisions in the investment licence on guarantee of foreign currency balancing for each specific project, satisfy foreign currency balancing requirements of enterprises with foreign owned capital and foreign business co-operation parties. In any case where it does not have sufficient foreign currency to satisfy a request for conversion, the authorized bank shall report to the State Bank (Department of Foreign Exchange Control) in order that the State Bank may provide the foreign currency in accordance with the decision of the Prime Minister of the Government.

14. With respect to enterprises with foreign owned capital and foreign business co-operation parties within the category of projects for construction of infrastructure works and a number of other important projects, in the case where an authorized bank has difficulties and is unable to satisfy fully a request for foreign currency conversion, the authorized bank must report to the State Bank (Department of Foreign Exchange Control) in order that the State Bank may consider and make a submission to the Government to make a decision on assistance with foreign currency.


V. TRANSFER OF CAPITAL INTO AND OUT OF
VIETNAM

15. Enterprises with foreign owned capital and foreign business co-operation parties must contribute invested capital strictly in accordance with the schedule stated in the joint venture contract, the charter of the enterprise, or the business co-operation contract which has been approved by the authorized body.

16. Enterprises with foreign owned capital and foreign business co-operation parties which have foreign currency revenue from current transactions overseas must remit it back to Vietnam into their foreign currency deposit accounts opened at authorized banks. The obligations of enterprises with foreign owned capital and of foreign business co-operation parties to sell foreign currency shall be fulfilled in accordance with the current regulations of the Prime Minister.

17. Foreign investors shall be entitled to remit overseas profit earned from business activities, distributed income, income from the supply of services and from technology transfers, and other items of money and assets which they legally own, after they have fulfilled all of their financial obligations to the State of Vietnam.

Upon termination of operation or dissolution of an enterprise, a foreign investor shall be entitled to remit overseas legal capital, re-invested capital, capital for implementation of a business co-operation contract, and legally owned assets. In the case where the amount to be remitted overseas is higher than the amount of the initial capital or re-invested capital, such amount may only be remitted overseas after approval from the investment licence-issuing body.

Enterprises with foreign owned capital and foreign business co-operation parties shall be entitled to remit foreign currency overseas for the purpose of repaying foreign loans, including principal, interest and fees, in accordance with the regulations of the Government and of the State Bank on foreign loans and foreign loan repayment.

18. Depending on the particular purpose of use of foreign currency, upon purchase and remittance of foreign currency overseas, enterprises with foreign owned capital and foreign business co-operation parties must present to the authorized bank their investment licence and the following documents proving the purpose of use of foreign currency:

18.1 Foreign currency for purpose of importing raw materials and supplies, and replacement accessories:

Import licence (if any), commercial contract, and documents proving delivery of goods or implementation of the commercial contract.

18.2 Foreign currency for purpose of making payment in money for services from foreign parties:

Services contract with foreign party and documents proving performance of services contract.

18.3 Foreign currency for purpose of remitting lawful profits and income overseas:

Minutes of board of management (or project management board in the case of a business co-operation contract) on distribution of profits (or distribution of income in the case of a business co-operation contract); and written confirmation from the tax authority that all financial obligations to the State of Vietnam have been fulfilled.

In the case where the authorized tax office provides written approval, an enterprise with foreign owned capital or a foreign business co-operation party shall be entitled to remit profits or distributed income overseas on a number of occasions in a year.

18.4 Foreign currency for purpose of transferring overseas lawful salaries and other income of foreign individuals working in enterprises with foreign owned capital and for business co-operation contracts:

Letter of confirmation from enterprise with foreign owned capital or from foreign business co-operation party regarding the amount of money to be transferred overseas (total lawful income less amount paid to fulfil financial obligations and less amount paid for expenses in Vietnam); and written confirmation from the tax authority that all financial obligations to the State of Vietnam have been fulfilled.

18.5 Foreign currency for purpose of payment of principal, interest and fees on loans:

Foreign currency loan contract (or certificate of indebtedness) and schedule of repayment; in addition to the above documents, for a foreign medium- or long-term loan, there must also be written confirmation from the State Bank that the loan has been registered.

18.6 Foreign currency for purpose of transferring overseas legal capital, re-invested capital or capital for implementation of a business co-operation contract upon termination of operation or early dissolution:

Decision on dissolution of an enterprise with foreign owned capital; decision on termination of validity of a business co-operation contract, enclosing a report on the results of liquidation of the enterprise or business co-operation contract; and written confirmation from the tax authority that all financial obligations to the State of Vietnam have been fulfilled.

In the case where a foreign party assigns capital to another party, upon purchase and transfer of foreign currency overseas, the following documents must be presented: contract of assignment of capital which has been registered and bears confirmation from the authorized body; and written confirmation from the tax authority that all financial obligations to the State of Vietnam have been fulfilled (if the assignment of capital has resulted in a profit).

18.7 In the case of purchase and use of foreign currency servicing other current transactions, depending on each specific case, an authorized bank may require an enterprise with foreign owned capital or a foreign business co-operation party to present the necessary documents proving lawfulness of those current transactions.

19. The necessary documents stipulated in clause 18 above shall be originals, or copies signed and sealed with confirmation by the general director (director) of the enterprise with foreign owned capital, the representative of the foreign business co-operation party, or the lawful representative. In necessary cases, an authorized bank shall have the right to inspect originals for the purpose of ensuring the veracity of all types of documents presented.

20. Licensed banks may only sell foreign currency to enterprises with foreign owned capital and to foreign business co-operation parties for the purpose of making direct payment to overseas parties and for other permitted domestic payments (they shall not be permitted to sell foreign currency for the purpose of retaining it in accounts of enterprises with foreign owned capital and foreign business co-operation parties). In the particular cases of sale of foreign currency for the purposes of use listed below, it must be transferred via a specialized foreign currency deposit account (or an additional account opened for the purpose of receipt of foreign loan capital and repayment of foreign loans):

20.1 For the purpose of transferring invested capital or re-invested capital of a foreign investor overseas;

20.2 For the purpose of transferring lawful profits and income of a foreign investor overseas;

20.3 For the purpose of transferring overseas repayments of principal, interest and fees on medium- and long-term foreign loans.

The period between the time of purchase of foreign currency by an enterprise with foreign owned capital or a foreign business co-operation party and its transfer into a specialized foreign currency deposit account and the time of its transfer to make payment overseas shall not exceed a maximum of five working days.


VI. EXCHANGE RATES

21. The average trading exchange rate between Vietnamese dong and United States dollar in the inter-bank foreign currency market as published by the State Bank at the time of the capital contribution shall apply to the conversion of United States dollars and Vietnamese dong for the purpose of contribution of legal capital or contribution of capital for implementation of a business co-operation contract.

22. The purchase and sale of foreign currencies relating to the business activities of enterprises with foreign owned capital and foreign business co-operation parties shall be carried out in accordance with the buying and selling exchange rates of the authorized bank at the time of the transaction.


VII. INFORMATION AND REPORTS AND
DEALING WITH BREACHES

23. Every year, no later than 15 January (for an annual report) and no later than 15 July (for a report for the first six months of the year), enterprises with foreign owned capital and foreign business co-operation parties shall be required to submit a report on the current status of implementation of invested capital to the State Bank of Vietnam (Department of Foreign Exchange Control) and to the provincial or municipal branch of the State Bank in the same locality (Sample Form No. 3).

24. Every year, no later than 30 January (for an annual report) and no later than 30 July (for a report for the first six months of the year), provincial and municipal branches of the State Bank shall be required to submit a report to the State Bank of Vietnam (Department of Foreign Exchange Control) on the current status of implementation of invested capital by the enterprises with foreign owned capital and foreign business co-operation parties in their respective localities (Sample Form No. 4).

25. Every year, no later than 15 January (for an annual report) and no later than 15 July (for a report for the first six months of the year), enterprises with foreign owned capital which have been permitted to open bank accounts overseas in accordance with the provisions in Section III of this Circular shall be required to submit a report to the State Bank of Vietnam (Department of Foreign Exchange Control) on the current status of operation of the accounts they have been permitted to open overseas (Sample Form No. 5).

26. Every quarter, no later than the tenth day of the first month of the following quarter, authorized banks (head office) shall be required to submit reports to the State Bank of Vietnam (Department of Foreign Exchange Control) on: sales of foreign currency to enterprises with foreign owned capital and foreign business co-operation parties (Sample Form No. 6); current status of operation of specialized foreign currency deposit accounts and accounts for receipt of foreign loan capital and foreign loan repayment (if any) of enterprises with foreign owned capital and foreign business co-operation parties (Sample Form No. 7).

27. If an enterprise with foreign owned capital, a foreign business co-operation party or an authorized bank breaches the provisions of this Circular, depending on the seriousness of the breach, a penalty may be imposed in accordance with the provisions of Decree 20-2000-ND-CP of the Government dated 15 June 2000 on administrative penalties for offences in monetary and banking operations, or it shall be dealt with in accordance with other current provisions of the law.


VIII. IMPLEMENTING PROVISIONS

28. This Circular shall be of full force and effect after fifteen (15) days from the date of its signing and shall replace Circular 02-TT-NH7 of the State Bank dated 28 June 1997 providing guidelines on foreign exchange control in respect of enterprises with foreign owned capital and foreign business parties to business co-operation contracts and Decision 468-2000-QD-NHNN7 of the Governor of the State Bank dated 8 November 2000 on sale of foreign currency to enterprises with foreign owned capital and foreign business parties to business co-operation contracts.

29. Heads of units under the State Bank, directors of State Bank branches in provinces and cities under central authority, chairmen of boards of management and general directors (directors) of banks operating in Vietnam, general directors (directors) of enterprises with foreign owned capital, and representatives of business co-operation parties shall, within the scope of their respective duties and powers, be responsible to guide and develop the implementation of this Circular.


Governor of the State Bank of Vietnam
Deputy Governor


DUONG THU HUONG

Form 1

SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness

…Date…

APPLICATION FOR ISSUANCE OF LICENCE TO OPEN AND
OPERATE A FOREIGN CURRENCY BANK ACCOUNT OVERSEAS

To: State Bank of Vietnam - Department of Foreign Exchange Control

Name of enterprise:
Investment licence no. …………… issued on ……………200..
Address:
Telephone no: Facsimile no:

Form of investment:
- Enterprise with 100% foreign owned capital: ڤ
- Joint venture enterprise: ڤ

Business and production areas:

Invested capital:
Of which: - Legal capital:
- Loans:

Official Letter of State Bank on confirmation of registration of foreign loan is numbered …… and dated …….. .

We request the State Bank to consider and issue a licence to open and operate a foreign currency bank account overseas.

The purpose of opening the foreign currency bank account overseas is ………. . The place where the account is to be opened is: Country: ………. Bank: ………. . The duration of operation of the overseas account shall be: …………………… .

We hereby undertake to implement strictly the current provisions of the law of Vietnam on foreign exchange control and the provisions in any licence issued by the State Bank of Vietnam permitting the opening of a foreign currency bank account overseas.


General Director (Director) of Enterprise with Foreign Owned Capital

Form 2

SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness

…Date…

APPLICATION FOR REGISTRATION OF FOREIGN CURRENCY
BANK ACCOUNT OVERSEAS
(Applicable to petroleum projects which are subject to the Law on Petroleum)

To: State Bank of Vietnam - Department of Foreign Exchange Control

Name of enterprise:
Investment licence no. …………… issued on ……………200..
Address:
Telephone no: Facsimile no:

Form of investment:
- Enterprise with 100% foreign owned capital: ڤ
- Joint venture enterprise: ڤ
- Business co-operation contract ڤ

Invested capital:
Of which - Legal capital:
- Vietnamese Party:
- Foreign Party:

We hereby register a bank account opened overseas with the following details:
The purpose of opening the foreign currency bank account overseas was ……… .
The place where the account was opened is: Country: ………. Bank: ………… .
The duration of operation of the overseas account shall be: ………………… .

We hereby request that the State Bank confirm that (...name of enterprise opening account…) has registered this account with the State Bank.


General Director (Director) of Enterprise
or Representative of Foreign Business Co-operation Party



Document to be enclosed:
Notarized copy of investment licence

Form 3

REPORT ON CURRENT STATUS OF
IMPLEMENTATION OF INVESTED CAPITAL
(Report for Period ……… to ………….)

To: State Bank of Vietnam - Department of Foreign Exchange Control
and Provincial or Municipal State Bank Branch in ……..

Name of enterprise (or foreign business co-operation party):
Address: ………………. in Province (or City): ……………..
Investment licence no. …………… issued on ……………200..
Telephone no: Facsimile no:

Foreign investor (name of company and country of incorporation):

Duration of production and business operation: …… years
Business and production areas: …………………………..

Invested capital pursuant to Investment Licence:
Legal capital pursuant to Investment Licence:

Form of investment:
- Joint venture enterprise: ڤ
- Enterprise with 100% foreign owned capital: ڤ
- Business co-operation contract (BCC): ڤ

Name of bank where Company has opened its foreign currency account:
(USD)
Item Budgeted planfor year of report Report period Accumulatedfrom date of project implementation
First six months of year Whole year
I. Total invested capitalA. Total legal capital (1+2+3)1. Value of capital contribution of Vietnamese Party:- Land use right- Factory, machinery and equipment- Foreign currency- Vietnamese money- Other forms (specify)2. Value of capital contribution of Foreign Party:- Foreign currency transferred to Vietnam- Vietnamese currency- Technology transfer and copyright- Other forms of capital contribution (specify)3. Re-invested profits:B. Loans: 1. Medium- and long-term foreign loans:1.1 Loans already drawn down1.2 Loans repaid:a: Principal:b: Interest and fees:1.3 Loan balance (1.1-1.2a) 2. Short-term foreign loans:Loan balance:3. Medium- and long-term loans from banks operating in Vietnam:3.1 Loans already drawn down3.2 Loans repaid:a: Principal:b: Interest and fees:3.3 Loan balance (3.1-3.2a)4. Short-term loans from banks operating in Vietnam:Loan balance:II. Profit1. Profit remitted overseas:2. Profit retained for investment in other projects in Vietnam:III. Transfer of legal capital overseas:

Notes: Explain clearly any part of capital not yet implemented.
Loans in Vietnamese dong should be converted into USD as at the date of signing the loan contract.


…Date…
Prepared by:


General Director (Director) of Enterprise
or Representative of Foreign Business Co-operation Party

Checked by: