Circular No. 01/2001/TT-NHNN guiding foreign exchange management for direct investment abroad by Vietnamese enterprises

CIRCULAR

Guidelines on foreign exchange management for direct investment abroad by Vietnamese enterprises

direct foreign business operations of Vietnamese enterprises

_____________________

On April 14, 1999, the Government issued Decree No. 22/1999/NĐ-CP regulating foreign investment by Vietnamese enterprises. The State Bank of Vietnam hereby provides specific guidelines on foreign exchange management for Vietnamese enterprises with overseas investments as follows:

I. APPLICABLE SUBJECTS

1. These Guidelines apply to Vietnamese enterprises permitted to make direct investments abroad, including: enterprises established under the Law on State Enterprises; cooperatives established under the Law on Cooperatives; enterprises established under the Enterprise Law (hereinafter referred to collectively as enterprises).

2. These Guidelines do not apply to the following subjects:

a. Enterprises with foreign capital and foreign parties participating in joint business contracts.

b. Vietnamese enterprises investing abroad through credit lending, purchasing stocks, banking, insurance, which are not within the scope regulated by these Guidelines.

II. OPENING AND USING ACCOUNTS

3. To implement overseas investment projects, enterprises must open a foreign currency deposit account at a bank authorized to conduct foreign exchange operations (hereinafter referred to as the authorized bank). All transactions involving transfers of funds abroad and into Vietnam related to the enterprise's overseas investment activities must be conducted through this account:

Part Receipts:

a. Foreign currency transferred from the enterprise's foreign currency deposit account for the purpose of contributing capital for investment or transferring investment capital abroad;

b. Profits, revenues distributed and other lawful income derived from the enterprise's overseas investment activities transferred back to Vietnam;

c. Investment capital and reinvestment capital transferred back to Vietnam.

Part Payments:

a. Expenses for transferring funds abroad to contribute capital for investment or to transfer investment capital to implement investment projects;

b. Expenses for transferring funds into the enterprise's foreign currency deposit account;

c. Selling foreign currency to authorized foreign exchange banks.

4. The opening and use of foreign currency accounts outside Vietnam for overseas investment projects shall be carried out in accordance with the regulations of the receiving country and shall only serve transactions related to the operation of the overseas investment project.

In cases where enterprises have a need to open foreign currency accounts abroad, they must comply with the provisions set forth in Section I Chapter V Part II of Circular No. 01/1999/TT-NHNN7 dated April 16, 1999, issued by the State Bank guiding the implementation of Decree No. 63/1998/NĐ-CP dated August 17, 1998 of the Government on foreign exchange management.

III. TRANSFERRING INVESTMENT CAPITAL ABROAD, TRANSFERRING PROFITS, INVESTMENT CAPITAL, AND REINVESTMENT TO VIETNAM

5. Enterprises must register with the branch of the State Bank of Vietnam in the province/city where their headquarters is located regarding the opening of a foreign currency account and the progress of transferring investment capital abroad. The documents include:

- Application form for opening an account and transferring investment capital abroad (Form No. 1);

- The Business Registration Certificate (certified copy).

- Investment permit issued by the competent authority of Vietnam (a certified copy);

- Approval document for investment issued by the receiving country (accompanied by a Vietnamese translation with the signature of confirmation by the General Director or Director);

- Document specifying the schedule for capital contribution (recorded in the articles of association or joint venture contract, business cooperation contract approved by the competent authority of the receiving country, if any, or the projected schedule for capital contribution by the enterprise permitted to invest abroad).

Within five working days from the date of receipt of complete and valid documents, the branch of the State Bank of Vietnam in the province/city has the responsibility to confirm the opening of the account and registration of the progress of transferring investment capital abroad (Form No. 2) to serve as the basis for Vietnamese investors to transfer investment funds abroad to implement investment projects through the opened account at the authorized bank.

6. Enterprises are only allowed to use foreign currency in their foreign currency deposit accounts opened at authorized banks to transfer funds abroad for investment capital contribution based on the provisions stipulated in the Investment Permit issued by the competent authority.

7. Annually, enterprises with overseas investments must transfer profits and other lawful income back to Vietnam within the latest six months from the end of the fiscal year of the receiving country.

In case it is impossible to transfer profits and other lawful income back to Vietnam within the aforementioned period, the enterprise must submit a report explaining the reasons to the branch of the State Bank of Vietnam in the province/city where the enterprise's headquarters is located.

Enterprises must fulfill their obligations to remit profits and other lawful income from overseas investment activities according to the regulations of the Government during each period.

8. When the project ends or is dissolved prematurely, or when the project cannot be implemented, enterprises must transfer investment capital, reinvestment capital, and proceeds from liquidation back to Vietnam within six months from the date of completion of liquidation and must report to the branch of the State Bank of Vietnam in the province/city where the enterprise's headquarters is located about the situation of transferring capital, profits, and other lawful income back to Vietnam.

In case it is impossible to transfer capital back to Vietnam within the aforementioned period, the enterprise must submit a report explaining the reasons to the branch of the State Bank of Vietnam in the province/city where the enterprise's headquarters is located.

9. In cases where enterprises use profits for reinvestment or extend the investment period abroad, after obtaining approval from the Ministry of Planning and Investment, the enterprise must register with the branch of the State Bank of Vietnam in the province/city where the enterprise's headquarters is located regarding the use of profits for reinvestment or extending the investment period.

10/ When implementing the transfer of foreign direct investment capital abroad at the request of the enterprise, the Bank shall be responsible for checking the confirmation document registering the opening of a foreign currency account and transferring foreign direct investment capital abroad of the enterprise in accordance with Point 5 of this Circular. The Bank shall only transfer foreign direct investment capital abroad when the enterprise has a confirmation document registering the opening of a foreign currency account and transferring foreign direct investment capital abroad issued by the branch of the State Bank of Vietnam located in the province or city where the enterprise's headquarters is situated.

IV/ REPORTING INFORMATION AND VIOLATION HANDLING

11/ Annually, within six months from the end of the fiscal year of the receiving country, the enterprise must submit to the branch of the State Bank of Vietnam located in the province or city where the enterprise's headquarters is situated a financial report (including a summary balance sheet and profit and loss statement of the enterprise) certified by an auditing agency or an authorized agency of the receiving country.

12/ Annually, no later than January 15 (for the second half-year report) and July 15 (for the first half-year report), enterprises with overseas investment projects must report to the State Bank of Vietnam (Department of Foreign Exchange Management) and the branch of the State Bank of Vietnam located in the province or city where the enterprise's headquarters is situated on the operation status and implementation of overseas investment capital (Form No. 3).

13/ Annually, no later than January 15 (for the second half-year report) and July 15 (for the first half-year report), the Bank (through its head office) must report to the State Bank of Vietnam (Department of Foreign Exchange Management) on the situation of transferring funds abroad and back to Vietnam related to the enterprise's overseas investment activities (Form No. 4).

14/ Within thirty days from the date this Circular takes effect, enterprises that have implemented overseas investment projects must register their accounts and progress in contributing overseas investment capital in accordance with Point 5 of this Circular, and simultaneously report to the branch of the State Bank of Vietnam located in the province or city where the enterprise's headquarters is situated on the implementation of overseas investment capital (Form No. 3) up to that point.

15/ Annually, no later than January 20 (for the second half-year report) and July 20 (for the first half-year report), branches of the State Bank of Vietnam located in provinces and cities must report to the Governor of the State Bank of Vietnam (through the Department of Foreign Exchange Management) on the overseas investment situation of enterprises in their jurisdiction (account opening situation, registration of capital transfer, implementation of overseas investment capital, advantages, difficulties, and recommendations for handling measures).

16/ Enterprises with overseas investment capital, if the Bank violates the provisions of this Circular, depending on the severity of the violation, will be subject to administrative penalties as stipulated in Decree No. 20/2000/NĐ-CP dated June 15, 2000 of the Government on administrative penalties in the field of currency and banking operations, or be subject to other legal provisions currently in force.

V/ IMPLEMENTATION PROVISIONS

17/ This Circular shall take effect fifteen days from the date of issuance and replace the provisions in Section II Chapter III Part Four of Circular No. 01/1999/TT-NHNN7 dated April 16, 1999 of the State Bank guiding the implementation of Decree No. 63/1998/NĐ-CP of the Government on Foreign Exchange Management.

18/ Heads of units under the State Bank of Vietnam, Directors of provincial and municipal branches of the State Bank, General Directors (Directors) of credit organizations, General Directors (Directors) of enterprises with overseas investment capital, within the scope of their functions, are responsible for organizing, guiding, and implementing this Circular.