FDI firms allowed to open local currency accounts

A customer transacts with ANZ Vietnam Bank in this file photo. From September 25, foreign investors and FDI enterprises can open investment accounts in Vietnam dong along with those in foreign currency - Photo: Thuy Trieu

In Circular 19/2014/TT-NHNN guiding the implementation of the Government’s Decree 70/2014/ND-CP, the central bank says FDI enterprises and foreign investors participating in business cooperation contracts (BCC) must open a direct investment capital foreign currency account at an authorized credit institution for transaction.

If the investment is implemented in dong, FDI firms or BCC foreign investors must open a direct investment capital dong account at the authorized credit institution where FDI firms or BCC foreign investors already have a direct investment capital foreign currency account.

Foreign investors repatriating legitimate incomes in dong from direct investment activities in Vietnam can purchase foreign currency and send it overseas within 30 business days after the date of purchase of foreign currency.

Credit institutions have the right to ask FDI firms and foreign investors to show papers related to their direct investment activities in the country.

Earlier, Decree 160, which guides the implementation of the Foreign Exchange Ordinance, sought to limit foreign currency deposits and transactions to thwart dollarization in the economy.

The new circular is expected to benefit foreign investors operating in Vietnam as holding accounts in dong makes things easier. International investors have more options as they can utilize a variety of legal funding sources in both dong and foreign currency.

In addition, residents having foreign currency revenue from the export of goods and services or from other revenue sources overseas must deposit the foreign currency amount into a foreign currency account opened at the authorized credit institution in Vietnam.

All payments and remittances relating to the import and export of goods and services must be done via an authorized credit institution.

A leader of the central bank said the circular aims to realize general rules of the Foreign Exchange Ordinance and the Government’s Decree 70 guiding foreign-exchange activities by residents and non-residents.

The regulations aim to better control FDI inflows and outflows through the banking system and prevent transfer pricing. The circular will also support foreign investors in conducting foreign exchange procedures in the country, the official said.