New ruling on foreign currency-based financial transactions

Under the decree, on and from the Vietnamese territories, residents and non-residents are allowed to purchase, transfer and bring foreign currencies abroad for payments and money transfers. They will have to present vouchers as stipulated by the credit institution and law.

The resident foreign-invested enterprises and foreign party in business cooperation contracts must open a direct investment account in foreign currency at an authorized credit institution. They are allowed to use any income in Vietnamese dong from direct investments in Vietnam to purchase foreign currency at permitted credit organizations and transfer the sum abroad within 30 days of the date when the purchase is made.

The non-resident foreign investors are due to open an account for their portfolio investments in Vietnamese dong at an authorized credit organization. All portfolio investment transactions must be conducted through these accounts.

The Decree states that the resident organizations and individuals are allowed to invest directly abroad if permitted by the Certificate of Investment License Authority in line with the regulations on direct investment abroad. They can also make portfolio investments abroad if meeting all State Bank of Vietnam stipulations concerned.

The Ministry of Finance as the principal performer in collaboration with the State Bank of Vietnam, Ministry of Planning and Investment, and other ministries will submit to the Prime Minister for decision proposals for the amount, raised source, model, beneficiaries and management mechanisms of lending and recovering the Government’s funds to foreign countries. Annually, it shall review the performance of this activity and report to the Prime Minister.

Credit and other organizations are permitted to provide foreign exchange services in international markets in the following ranges:

- For banks: to provide international payment services; to buy and sell foreign currencies and gold in foreign markets; to take part in monetary and derivative markets abroad; to manage customers’ financial assets abroad; and to provide investment banking services in the international market.

- For financial companies: to buy and sell foreign currencies and gold in foreign markets; to take part in monetary and derivative markets abroad; and to manage customers’ financial assets abroad.

- For other organizations: the State Bank of Vietnam shall give them permission for some of the above services on the case-by-case basis.

By Xuân Hồng

(Source: Decree 160/2006/NĐ-CP)