On 12^th March 2014, the State Bank of Vietnam (SBV) issued Circular No. 05/2014/TT-NHNN providing guidance on openning and using indirect investment accounts to implement indirect investment activities in Vietnam. This Circular has some new regulations on indirect investment activities of foreign investors in Vietnam, in detail as follows:

Firstly, foreign investors are determined only including non-resident foreign individuals and organizations carrying out indirect investment activities in Vietnam. Previously, foreign investors include non-resident economic financial organizations established under foreign laws and regulations; non-residents include foreigners who are not resident in Vietnam, overseas Vietnamese; residents that are foreigners who are resident in Vietnam. Thus, definition of foreign investors is narrowed.

Secondly, all indirect investment activities of foreign investors in Vietnam must be excuted in Vietnam dong. Transactions related to indirect investment activities of foreign investors must be implemented through 01 (one) indirect investment account openned at an authorized bank. If foreign investor already has opened and used an indirect capital investment account at an authorized bank and now has demand of opening an indirect capital investment account at another authorized bank, foreign investors must close the current account, transfer all balances in the current account to the new account. Opening and closing indirect capital account procedures is implemented in compliance with regulations of authorized banks.

Thirdly, foreign investors do not have to report periodically on his own indirect investment activities to SBV. Foreign investors only report when being requested unexpectedly by SBV. Authorized credit institutions are allowed to report by statistical report regime.

Fourthly, within 90 days from the execution date of the Circular 05/2014/TT-NHNN, foreign investors who wish to continue indirect investment activities in Vietnam must convert their indirect capital investment account  or, in case they do not want to continue indirect investment activities in Vietnam, they must follow procedures as specified in this Circular. If after 90 days since the execution date of this Circular foreign investors do not switch their indirect capital investment account as regulated by this Circular, they are not allowed to carry out indirect investment activities in Vietnam through capital account, purchasing shares, specialized demand deposit accounts in foreign currency and in Vietnam dong opened at authorized banks by stock companies.

The Circular No. 05/2014/TT-NHNN comes into efect from 28^th April 2014 and replace the Circular No. 03/2004/TT-NHNN dated 25^th May 2004 of the State Bank of Vietnam guiding the foreign exchange management of the capital contribution and purchasing shares of foreign investors in Vietnamese enterprises.

For further details of this legal document, please contact us via email: smic.hanoi@smic.org.vn