STATE BANK OF VIETNAM | SOCIALIST REPUBLIC OF VIET NAM |
No. 585/CV-NHNN7 | Hanoi, July 06, 1998 |
To: | General Managers and Managers of Commercial Banks Authorised to conduct foreign exchange transactions |
On 23 January, 1998, the Government issued the Decree No.10/1998/ND-CP on some incentive measures to encourage and secure foreign direct investment in Vietnam. With regards to Article 15 of the Decree which stipulates on the foreign currency balance for enterprises with foreign invested capital and foreign parties to a business cooperation contract (hereinafter called enterprises), the State Bank of Vietnam provides the guidelines on the sale of foreign currency by foreign currency authorised commercial banks to enterprises as follows:
1. Enterprises producing basic import, substitute goods, constructing infrastructure projects and other important projects (in the List announced by the Ministry of Planning & Investment each year), which need to exchange Vietnamese Dong into foreign currency shall submit a request in writing, together with the Investment License to the State Bank for the granting of Confirmation of priority to have the right to convert to foreign currency (Form No. 1). This Confirmation by the State Bank shall be valid for the whole operation duration of the project.
For some special cases, the Confirmation by the State Bank shall be granted every year (for enterprises constructing important projects by quantitative targets like: contribution to the Budget more than VND 100 billions; using more than 5,000 workers- Form No. 2) or the Confirmation shall state that enterprises concerned have the right to convert a certain ratio of foreign currency in proportionate to the foreign currency requirement (for projects that only have one or a few products included in the List of import substitution products- Form 3)
Upon receiving the Confirmation by the State Bank, enterprises shall have the right to contact commercial banks authorised to conduct foreign currency transaction to buy the necessary amount of foreign currency to cover the reasonable foreign currency expenditures in accordance with the current foreign exchange control regulation.
2. With regards to the sale and repatriation of foreign currency as requested by the customers, commercial banks shall request enterprises to present the written document confirming the right of foreign currency conversion and the Investment License and shall be responsible for checking following necessary documents, depending on the purpose of the usage of foreign currency by enterprises:
+ For sale of foreign currency to enterprises for import of raw materials, basic materials, spare-parts and completed equipments for production: written import permit by the Ministry of Trade, commercial contract, report of foreign currency income and expenditures (Form 4, Circular No. 02/TT-NH7); documents evidencing the delivery of goods or the completion of the commercial contract.
+ For sale of foreign currency to enterprises for payment of services to foreign party: service contract with foreign party and document evidencing the completion of the service contract;
+ For sale of foreign currency to enterprises for payment of principals, interests and fees in foreign currency: promissory note and schedule of payments. In case of medium or long-term loans ( of joint-venture enterprises or enterprises with 100% foreign capital) there must be the confirmation by the State Bank of the loan registration).
+ For sale of foreign currency to foreign investors to repatriate profits and legal income: A copy of report of the financial year with certification by the Auditor, the protocol of the Board of Directors (or the Project Management Board in case of a Business Cooperation Contract) on the profit sharing (or receipt sharing) and confirmation in writing by the competent tax authority of the fulfillment of financial obligation to the State of Vietnam.
+ For sale of foreign currency to foreign investors to transfer out of Vietnam the legal capital, reinvestment funds or funds for implementing the business cooperation contract: a certified copy of the report on the liquidation of the enterprise or the Business Cooperation Contract (as approved by the competent agency for issuing the investment License) and confirmation in writing by the tax authority of the fulfillment of financial obligation to the State;
+ For sale of foreign currency to enterprises (or to foreign employees working for enterprises) to repatriate salaries and legal incomes of foreign employees when they are on business trips or remit funds to home country): Confirmation by the competent tax authority of the fulfillment of financial obligation by the foreign employee in accordance with provisions of Laws and confirmation in writing by the enterprise of the funds to be repatriated (total legal income subtracted by the funds needed to fulfill the financial obligations and the expenses in Vietnam).
The purchase and use of foreign currency not for purposes mentioned above shall be subject to approval by the State Bank.
3. If enterprises apart from those prioritised for foreign currency conversion as mentioned in paragraph 1, require to buy foreign currency, they shall submit an application for buying foreign currency to the State Bank as provided for in paragraph 15, Circular No. 02/TT-NH7. Depending on the availability of foreign currency from time to time, the State Bank shall consider and respond in writing to each case. Commercial banks shall base on the written approval by the State Bank and documents mentioned in paragraph 2 of this document to sell foreign currency to enterprises mentioned in paragraph 3.
Within 6 months from the date of selling the foreign currency to a authorised bank to conduct foreign currency transaction, and if there is a reasonable requirement for foreign currency (use of foreign currency for purposes mentioned in paragraph 2), enterprises shall contact that particular bank to buy foreign currency up to a maximum amount equal to the amount sold previously. If the purchase of foreign currency is at a different bank, the enterprises shall have to present documents relating to the previous sale of foreign currency (the bank which purchased the foreign currency shall give only one original document confirming the timing and the amount of foreign currency purchased from the enterprise). When selling foreign currency, the bank shall keep the written confirmation as the original document.
4. Commercial banks shall sell foreign currency to enterprises in the following order of priority:
+ Enterprises included in the List of priority as mentioned in paragraph 1;
+ Enterprises operating in the service area (tourism, hotel business, office leasing, public transportation, school, culture and public health, equipment leasing);
+ Enterprises which have export obligation shall be supported by the State Bank for a part of their foreign currency requirement in case of difficulties during the first 3 years of production or business.
Banks and enterprises can agree on the buying and selling of foreign currency through the spot or forward transactions in compliance with the current provisions of the State Bank on foreign currency transactions.
5. When repatriating foreign currency as requested by enterprises or foreign individuals working in enterprises, commercial banks shall check related documents as provided for in paragraph 2 of this document.
Commercial banks selling foreign currency to enterprises to make direct payment to foreign countries, shall not remit this foreign currency to the deposit account of the enterprises. The amount of foreign currency sold shall be transferred first to the foreign currency account Funds for specific purpose if the foreign currency sold is used for the following purposes:
+ Remittance of investment funds and reinvestment funds of foreign investors abroad;
+ Repatriation of profits and other legal income of foreign investors;
+ Repayment of principals, interests and fees of the foreign loans.
The period from the date when the enterprise buys the foreign currency to transfer to this account to the day the enterprise remit funds abroad for payment shall not be more than 5 working days.
6. On or before the 5th day of the first month of every quarter, commercial banks authorised to conduct foreign currency transactions shall report to the State Bank (the Foreign Exchange Control Department) and the State Bank branches in provinces and cities on the performance of the foreign currency sale to enterprises with foreign invested capital and foreign parties to a business cooperation contract (in accordance with form 8 stipulated in Circular 02/TT-NH7 dated 22 June, 1997).
If any obstacle relating to the State Bank occurs, commercial banks should report to the State Bank (the Foreign Exchange Control Department) for solution.
| FOR THE GOVERNOR OF THE STATE BANK OF VIETNAM |
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