2019 12 April

Vietnam Legal Update: Additional Permitted Cases on the Use of Foreign Currency in the Territory of Vietnam

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On 29 March 2019, the State Bank of Vietnam issued Circular No. 03/2019/TT-NHNN which entered into force on 13 May 2019 (“Circular 03”) on the amendment, supplementation of some articles of Circular 32/2013/TT-NHNN of the State Bank of Vietnam dated 26 December 2013 (“Circular 32”).

Principles on restricted use of foreign currency within the territory of Vietnam

Pursuant to Circular 32, within the territory of Vietnam, except for some special cases, all transactions, payments, listings, advertisements, quotations, setting [fixing] prices, and recording prices in contracts and agreements and other similar forms (including conversion or amendment of prices of goods and services and of contract and agreement prices) of residents and non-residents are not permitted to be conducted in foreign currency. Accordingly, there are 16 cases where use of foreign currency is permitted within the territory of Vietnam.

Additional permitted cases on the use of foreign currency within the territory of Vietnam under Circular 03

Circular 03 supplements provisions on cases where foreign investors are allowed to make security or escrow deposits in foreign currency for bank transfers when participating in auctions:

  1. Purchase of shares in State-owned enterprises to be equitized approved by the Prime Minister;
  2. Purchase of shares, contribution of capital portions by the State in State-owned enterprises, enterprises with State capital to be divested, as approved by the Prime Minister;
  3. Purchase of shares, contributed capital of State-owned enterprises investing in other enterprises to be divested, as approved by the Prime Minister.

Therefore, share purchases in private enterprises or foreign-owned enterprises are not permitted cases under Circular 03.

Furthermore, Circular 03 also regulates that where there is a failure with the auction, foreign investors could remit abroad the amount of security or escrow deposits in foreign currency after subtracting the related expenses (if any).

 

The information provided in this article is for information purposes only and is not intended to constitute legal advice should be obtained from qualified legal counsel for all specific situations.


DFDL Contacts

Jerome Buzenet 

Partner; Managing Director

DFDL Vietnam

jerome.buzenet@dfdl.com

Hoang Phong Anh

Partner

DFDL Vietnam

phonganh.hoang@dfdl.com


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