The Vietnam State Bank have just issued the Circular No, 06/2019/TT-NHNN guiding on the management of the foreign currency in the foreign direct investment operation in Vietnam

Circular No. 06/2019 / TT-NHNN provides guidance on the management of foreign exchange for foreign direct investment operations in Vietnam, including: Capital contribution; opening and use of DICA in foreign currencies and Vietnam dong; transfer money to conduct investment preparation activities; transfer capital, profits and lawful revenue abroad; transfer of investment capital, transfer of investment projects.

At the same time, it also regulates the contents related to foreign exchange management for foreign-invested enterprises which are public companies with listed stocks or registered for trading on the Stock Exchange, according to the regulations on foreign exchange control for foreign indirect investment operation in Vietnam.

The content of the Circular provides the following matters:

• Opening and using a direct investment capital account,
• Transactions of receipts and payments on capital accounts directly invested in foreign currencies,
• Revenues and expenditures on direct investment accounts in Vietnam dong,
• Transfer money to carry out investment preparation operation,
• Transfer of capital, profits and legal revenue abroad,
• Transfer of investment capital and investment projects

More specific guidance on opening and using DICA

The FDI enterprises and foreign investors mentioned above are required to open a DICA in a foreign currency (and a DICA in VND if they wish to do so) at a licensed bank in Vietnam.

Foreign investors participating in more than one BCC or PPP project must open a DICA for each respective BCC or PPP project.

For foreign loans made in a foreign currency other than the currency of the DICA, FDI enterprises are allowed to open another “bank account for taking and paying foreign loans” in such foreign currency at the same bank at which the DICA was opened.

If changing the bank at which the DICA was opened, FDI enterprises and foreign investors must close the current DICA at the current bank after transferring the balance in the current DICA to the new DICA opened at the new bank.

Transactions Required to be Routed via DICA

The below transactions must be routed via DICA:

(a) Capital contributions in cash (i.e., bank transfers) made by foreign investors to the charter capital of the relevant FDI enterprise;

(b) Payments for capital transfer transactions between a local seller and a foreign purchaser;

(c) Payments for investment project transfer transactions in BCCs and PPP projects between a local seller and a foreign purchaser, and between a foreign seller and a foreign purchaser;

(d) Profit repatriation to foreign investors; and

(e) Transactions relating to foreign loans of FDI enterprises (i.e., loan drawdown and repayment).

It is important to note that under Circular 06, payments for capital transfer transactions in FDI enterprises between a foreign seller and a foreign purchaser, and between a local seller and a local purchaser, are not required to be routed via DICAs.

In addition, the Circular also provides for responsibilities of related parties such as responsibilities of authorized credit institutions, responsibilities of foreign-invested enterprises and foreign investors.

Circular No. 06/2019/ TT-NHNN is replaced Circular 19/2014 / TT-NHNN dated August 11, 2014 on similar issues, while also amending Circular 05/2014 / TT- NHNN dated March 12, 2014 instructing the opening and use of indirect investment capital accounts to carry out foreign indirect investment activities in Vietnam and adding some articles of the Circular No. 16/2014 / TT-NHNN dated August 1 guiding the use of foreign currency accounts and Vietnamese dong accounts of residents and non-residents.