Circular 05/2014/TT-NHNN (12 March 2014) issued by the State Bank of Viet Nam (SBV) contains guidelines on opening and using indirect investment capital accounts for implementing foreign indirect investment activities in Viet Nam.

The Circular applies to foreign investors who are non-residents looking to carry out indirect investment activities in Viet Nam, as well as organizations and individuals concerned with such activities.

General rules

Indirect investment capital account (hereafter referred to as "Account") is a VND (Vietnamese dong) account opened by foreign investor at an authorised commercial bank and foreign bank branch to implement income and expenditure transactions relating to foreign indirect investment activities in Vietnam. All such activities have to be carried out in the domestic currency. All transactions must be made via one account opened with an authorized bank. Any balance in the account cannot be transferred to a fixed-term deposit or savings account in domestic credit institutions or foreign bank branches.

Opening an Account

Any foreign investor wanting to implement indirect investment activities in Viet Nam must open one account at an authorised bank for income and expenditure transactions. If the foreign investor wants to open another account with another authorised bank, the existing account must be closed and the balance therein transferred to the new account.

Using the Account

The circular lists the income and expenditure transactions for which an account can be used.

1. Income:

(a) Revenues from foreign currency sales to authorised credit institutions;

(b) Receipt of contributed capital, and revenues from the sale of shares, bonds and other securities, interest and dividends from shares, bonds and other securities in VND arising from portfolio investments inViet Nam;

(c) Transfer from another account in VND that the foreign investor has opened at an authorised bank;

(d) Transfers from accounts of fund management companies, securities companies, credit institutions and foreign bank branches allowed to implement investment transactions for foreign investors;

(e) Other legitimate VND transaction receipts.

2. Expenditures:

(a) Implementation of foreign indirect investment activities (portfolio investments) in Viet Nam;

(b) Purchase of foreign currency from authorised credit institutions to remit capital, profits and other legitimate incomes abroad;

(c) Payment for legitimate expenses arising in Viet Nam;

(d) Transfer to VND account of foreign investor in an authorised bank;

(e) Transfer to accounts of fund management companies, securities companies and organizations allowed to carry out investment transactions for foreign investors;

(f) Other legitimate expenses.

Investment capital remittance abroad

Foreign investors are allowed to use VND in their accounts to purchase foreign currencies from authorised credit institutions for remitting capital, profit and other legitimate incomes from indirect investment activities abroad.

The Circular takes effect on 28 April 2014 and replaces SBV Circular 03/2004/TT-NHNN (25 May 2004) guiding the foreign exchange management over the contribution of capital to, and purchase of shares from, Vietnamese enterprises by foreign investors.— Mai Counsel