Circular No. 05/2001/TT-NHNN guiding the implementation of Decision No. 61/2001/QĐ-TTg dated April 25, 2001 of the Prime Minister on the obligation to sell and the right to buy foreign currency for resident organizations

CIRCULAR

Guidelines for Implementing Decision No. 61/2001/QD-TTg dated April 25, 2001

of the Government on the Obligation to Sell and Right to Purchase Foreign Currency

of Resident Individuals as Organizations

On April 25, 2001, the Government issued Decision No. 61/2001/QD-TTg on the Obligation to Sell and Right to Purchase Foreign Currency of Resident Individuals as Organizations; Pursuant to Clause 3, Article 6 of this Decision, the State Bank of Vietnam hereby provides guidelines for implementation as follows:

PART I

GENERAL PROVISIONS

Section 1. TERMINOLOGY EXPLANATION

In this Circular, the following terms are understood as follows:

1. Current Account Revenue refers to revenue in foreign currency of Resident Individuals from current account transactions between Resident Individuals and Non-Resident Individuals (as stipulated in Appendix 3 of Circular No. 01/1999/TT-NHNN dated April 16, 1999 of the State Bank of Vietnam).

2. Capital Account Revenue refers to revenue in foreign currency of Resident Individuals from capital account transactions between Resident Individuals and Non-Resident Individuals (as stipulated in Appendix 4 of Circular No. 01/1999/TT-NHNN dated April 16, 1999 of the State Bank of Vietnam).

3. Sponsorship, Aid refers to non-repayable sponsorship or aid provided by Non-Resident Individuals to Resident Individuals.

4. Buying and Selling Foreign Currency refers to the act of using Vietnamese Dong to purchase foreign currency or selling foreign currency for Vietnamese Dong between Authorized Banks and Resident Individuals as Organizations.

Section 2. APPLICABLE OBJECTS

The applicable objects of this Circular include:

1. Vietnamese economic organizations, foreign-invested enterprises, and foreign parties participating in joint business contracts, foreign company branches, foreign contractors, and foreign contractor consortia (hereinafter referred to collectively as Economic Organizations).

2. State agencies, armed forces units, political organizations, socio-political organizations, social organizations, occupational social organizations, social funds, charitable funds of Vietnam (hereinafter referred to collectively as Social Organizations).

3. Authorized Banks (hereinafter referred to as Banks).

Chapter II

SPECIFIC PROVISIONS

Section 1. OBLIGATION TO SELL FOREIGN CURRENCY TO BANKS

1. Object and Ratio of Sale

a) For Economic Organizations: Must sell immediately at least 40% of the foreign currency received from current account revenue to the Bank;

b) For Social Organizations: Must sell immediately 100% of the foreign currency received from current account revenue to the Bank.

Economic Organizations and Social Organizations mentioned in Points a and b above shall be collectively referred to as "organizations."

2. Procedures for Selling Foreign Currency

2.1. For foreign currency revenue of Organizations determined to be current account revenue that must be sold:

a) When foreign currency is credited to the account and the Organization has an immediate need to sell foreign currency according to the prescribed ratio to the Bank where the Organization maintains a foreign currency deposit account, the Bank is responsible for purchasing the foreign currency immediately;

b) When foreign currency is credited to the account and the Organization does not sell foreign currency immediately, the Bank where the Organization maintains a foreign currency deposit account will immediately transfer the foreign currency required to be sold according to the prescribed ratio from the foreign currency deposit account to the "Foreign Currency Held for Settlement" account. At the same time, the Bank will notify the Organization immediately to proceed with the sale of foreign currency. Within three working days from the date the foreign currency is credited to the foreign currency deposit account, the Bank and the Organization must fulfill their obligation to buy and sell foreign currency according to the prescribed ratio in this Circular;

c) In case the Organization wishes to sell the foreign currency subject to the obligation to sell to another Bank other than the Bank where the account is maintained, the Organization must present the foreign currency purchase and sale contract signed to the Bank where the account is maintained before or on the day the foreign currency is credited to the account. The Bank where the account is maintained will transfer the foreign currency to the Bank that has signed the foreign currency purchase contract based on the foreign currency purchase and sale contract. The Bank signing the foreign currency purchase contract with the Organization is responsible for purchasing the foreign currency immediately.

d) If within three working days from the date the foreign currency is credited to the account, the Organization does not fulfill the obligation to sell foreign currency according to the prescribed ratio, the Bank where the Organization maintains an account must purchase the foreign currency required to be sold from the "Foreign Currency Held for Settlement" account immediately; At the same time, credit it to the Vietnamese Dong account of the Organization maintained at the Bank. If the Organization has not opened a Vietnamese Dong account at the Bank, the Bank will open a Vietnamese Dong account for the Organization to immediately purchase foreign currency.

2.2. For foreign currency revenue of Organizations that have not been determined to be current account revenue that must be sold:

a) When foreign currency is credited to the foreign currency deposit account of the Organization and the Bank has not yet determined it to be current account revenue that must be sold, the Bank will immediately transfer 40% of the foreign currency for Economic Organizations or 100% for Social Organizations to the "Foreign Currency Held for Settlement" account; At the same time, notify the Organization immediately;

b) Within three working days from the date the foreign currency is transferred to the "Foreign Currency Held for Settlement" account, if the Organization presents valid documents to the Bank proving that the foreign currency revenue does not need to be sold according to Clause 2, Section 2, Chapter II of this Circular, the Bank is responsible for transferring the foreign currency back immediately from the "Foreign Currency Held for Settlement" account to the foreign currency deposit account of the Organization;

c) After three working days from the date the foreign currency is transferred to the "Foreign Currency Held for Settlement" account, if the Organization cannot prove that the foreign currency belongs to current account revenue that does not need to be sold or intentionally fails to fulfill the obligation to sell foreign currency according to the prescribed ratio, the buying and selling of foreign currency between the Bank and the Organization will be carried out as prescribed in Subparagraphs c and d, Clause 2.1, Section 1 of this Chapter.

2.3. The Bank must pay interest in foreign currency on the foreign currency transferred from the foreign currency deposit account to the "Foreign Currency Held for Settlement" account according to the regulations of the Bank where the account is maintained.

2.4. When fulfilling the obligation to sell foreign currency from current account revenue according to this Circular, the Organization may retain a minimum amount of foreign currency to maintain the foreign currency deposit account according to the regulations of the Bank where the account is maintained.

3. Forms of Buying and Selling Foreign Currency

3.1. Spot Foreign Currency Trading: The spot foreign currency trading between the Bank and the Organization must be completed within three days from the date the foreign currency is credited to the Organization's foreign currency deposit account.

3.2. Forward Foreign Currency Trading:

a) The term for foreign currency spot sale from current account receipts under the agreement between the Bank and the Organization must be consistent with the payment term of the export or service contract with foreign countries to ensure that foreign currency from current account receipts when transferred into the Organization's account can be immediately sold to the Bank.

b) For foreign currency forward sale contracts from current account receipts that must be sold according to the agreements already signed between the Bank and the Organization before this Circular takes effect, the Organization must immediately sell to the Bank at the specified ratio when the foreign currency is credited to its foreign currency account.

Section 2. CURRENT ACCOUNT RECEIPTS NOT SUBJECT TO THE OBLIGATION TO SELL FOREIGN CURRENCY TO THE BANK

SALE OF FOREIGN CURRENCY TO BANK

1. Current account receipts not subject to the obligation to sell foreign currency

a) Receipts from non-repayable grants and aid under Agreements committed between residents and the funding party;

b) Receipts of the entrusted party from entrusted export contracts. In this case, the entrusting party still has to fulfill the obligation to sell foreign currency to the Bank;

c) Receipts from temporary importation for re-export under foreign trade purchase and sale contracts. The portion of the price difference in foreign currency from this transaction must fulfill the obligation to sell to the Bank;

d) Receipts from deposits and guarantees made by Non-residents and collections on behalf of Non-residents;

e) Foreign currencies of economic organizations permitted by the State Bank of Vietnam to receive from overseas Vietnamese and foreigners transferred to Vietnam to assist family members or for other charitable purposes;

Current account receipts not required to be sold shall be based on the Prime Minister's Decision.

2. Documents proving current account foreign currency receipts not subject to the obligation to sell

a) For point 1a: Agreements on non-repayable grants and aid committed with the funding party or related documents concerning the grant and aid;

b) For point 1b: Entrusted export contracts signed between the entrusting party and the entrusted party;

c) For point 1c: Temporary importation for re-export contracts signed among the parties and the Commercial Ministry's document permitting such services for that type of goods;

d) For point 1d: Purchase and sale contracts and services containing provisions on deposits and guarantees; Collection agreements between resident organizations and non-resident parties;

e) For point 1e: The State Bank of Vietnam’s permit for economic organizations to provide services for receiving and paying foreign currency from overseas Vietnamese and foreigners transferred to Vietnam;

f) For point 1f: The Prime Minister's Decision allowing exemption from the obligation to sell foreign currency.

Documents and certificates proving cases not required to sell foreign currency must be originals or certified copies. If a notary public does not certify, the Bank may require the Organization to present original documents or certified copies with confirmation and stamp of the Organization. The confirmation must clearly state that the copy matches the original. If there are discrepancies, the Organization will bear legal responsibility. Where a document or certificate consists of multiple pages, the Organization must confirm each page.

Mục 3. RIGHTS TO PURCHASE FOREIGN CURRENCY OF ORGANIZATIONS

1. Rights to purchase foreign currency

a) Resident entities that are Vietnamese economic organizations, credit institutions in Vietnam, branches of foreign companies, foreign contractors, joint venture contractors with foreign parties, state agencies, armed forces units, political organizations, socio-political organizations, social organizations, occupational social organizations, Vietnamese social funds, and charitable funds shall be entitled to purchase foreign currency from banks upon presenting valid documents and certificates when they have a need for foreign currency to meet current transactions, capital transactions, and other permitted transactions as stipulated.

b) Resident entities that are foreign-invested enterprises and foreign parties participating in business cooperation contracts shall be entitled to purchase foreign currency from banks upon presenting valid documents and certificates when they have a need for foreign currency to meet current transactions, capital transactions, and other permitted transactions as stipulated.

c) Resident entities that are foreign-invested enterprises and foreign parties participating in business cooperation contracts investing in particularly important projects under the government's program shall have their balance of payments in foreign currency guaranteed for each project by the Prime Minister upon consideration and decision. Banks shall be responsible for meeting the demand for foreign currency of foreign-invested enterprises and foreign parties participating in business cooperation contracts that have been decided by the Prime Minister to ensure a balanced foreign exchange position; in cases where existing foreign currency sources are insufficient to meet the demand, they shall report to the State Bank of Vietnam to supplement foreign currency sources.

d) Resident entities that are foreign-invested enterprises and foreign parties participating in business cooperation contracts investing in construction projects of infrastructure and other important projects shall have their balance of payments in foreign currency supported and guaranteed by the Prime Minister based on the proposal of the Governor of the State Bank of Vietnam when banks are unable to meet the demand for foreign currency.

1. Necessary documents for purchasing foreign currency.

When purchasing foreign currency to meet current transactions, capital transactions, or other permitted transactions, Organizations must present to the bank the following valid documents and certificates for each type of transaction:

a) For payment of imports of goods and services to foreign countries: There must be an import contract for goods and services with foreign countries; an import permit issued by the Prime Minister (for goods listed in the Prohibited Import List), or a permit or quota issued by the Ministry of Trade or relevant management department (for goods listed in the Conditional Import List), establishment decision, business registration, a complete set of documents including a letter of credit (if applicable), invoice, bill of lading, and other documents related to the import of goods and services.

b) Entrusted payment for export and import of goods and services: There must be an entrusted export and import contract and related documents for entrusted export and import.

c) Refund of compensation related to export of goods and services: There must be an export contract for goods and services, payment notice, complaint letter, minutes, and other documents related to dispute resolution and complaints.

d) Transfer of advance payment for bidding abroad: There must be a related contract, and documents and certificates related to bidding abroad.

đ) Payment of membership fees to international organizations and registration fees for international meetings: There must be approval documents from competent authorities and other related documents.

e) Expenses related to fees and expenditures for establishing and operating representative offices abroad: There must be approval from competent authorities for establishing representative offices abroad and documents related to the payment of various fees and expenditures of the office.

g) Expenses related to registering trademarks, applying for patents and inventions, consulting services: There must be a related contract and other documents related to payment to foreign countries.

h) Expenses related to sending individuals to work, study, survey, seminars... abroad: There must be documents from competent authorities allowing travel abroad and documents related to overseas payments, and other related documents.

i) Repayment of principal, interest, and fees for foreign loans: There must be an approved loan agreement and other related documents.

k) Transfer of foreign currency abroad by foreign-invested enterprises and foreign parties participating in business cooperation contracts: Depending on the purpose of using foreign currency, they must present documents as prescribed in Circular No. 04/2001/TT-NHNN dated May 18, 2001 of the State Bank guiding foreign exchange management for foreign-invested enterprises and foreign parties participating in business cooperation contracts.

l) For current transactions and other permitted transactions, depending on the specific case, the bank will specify the necessary documents when purchasing foreign currency.

Documents and certificates submitted to the bank for purchasing foreign currency must be original or notarized copies. In cases where notaries do not provide notarization, the bank may require the Organization to present original documents or certified copies stamped by the Organization, with a clear statement that the copy is identical to the original. If there are discrepancies, the Organization shall bear legal responsibility. In cases where a document or certificate has multiple pages, the Organization must certify each page.

Section 4. RESPONSIBILITIES OF THE BANK

When implementing foreign currency purchase and sale transactions with Organizations as stipulated in this Circular, Banks must strictly fulfill the following regulations:

1. Guide, urge, and notify Organizations to fulfill their obligation to sell foreign currency to Banks, and purchase foreign currency in accordance with the provisions of this Circular;

2. Meet the Organization's foreign currency needs in compliance with the provisions of Section 3, Chapter II of this Circular and in accordance with the actual value that the Organization must pay for settlement; Specifically, for the sale of foreign currency to settle capital transactions, it shall be carried out in accordance with current regulations.

3. Post the buying rate and selling rate in accordance with the State Bank of Vietnam's regulations. The posting of rates is considered a commitment to conduct foreign currency transactions with Organizations;

4. Daily report accurately to the State Bank of Vietnam (Department of Foreign Exchange Management) on the amount of foreign currency bought and sold on that day, ensuring the maintenance of foreign exchange status or Vietnamese dong status, conducting foreign currency purchases and sales with Organizations, other Banks, and the State Bank of Vietnam in the inter-bank foreign exchange market to meet the Organization's foreign currency needs and ensure the maintenance of the end-of-day foreign exchange status as prescribed by the State Bank of Vietnam;

5. Monthly, no later than the fifth day of the following month, report fully to the State Bank of Vietnam (Department of Foreign Exchange Management) on the situation of foreign currency purchases and sales with Organizations (as attached);

6. Promptly report to the State Bank of Vietnam any violations by other Banks or Organizations of the provisions of this Circular when discovered, so that appropriate measures can be taken;

Section 5. RESPONSIBILITIES OF THE ORGANIZATION

1. Strictly implement the sale of foreign currency as stipulated in this Circular;

2. Present all required documents and certificates as prescribed and upon reasonable request by the Bank;

3. Truthfully declare in accordance with the provisions of this Circular;

4. Report promptly to the State Bank of Vietnam any violations by Banks or other organizations of the provisions of this Circular when discovered, so that appropriate measures can be taken;

Section 6. SANCTIONS FOR VIOLATIONS

Banks and Organizations that violate the provisions of this Circular will be subject to administrative penalties in the banking and monetary sector or other applicable laws, depending on the severity of the violation;

Chapter III

IMPLEMENTING PROVISIONS

This Circular takes effect fifteen days from the date of issuance and replaces the following previous documents issued by the State Bank of Vietnam:

Circular No. 08/1998/TT-NHNN7 dated September 30, 1998, guiding the implementation of Decision No. 173/1998/QĐ-TTg dated September 12, 1998, of the Government; Decision No. 418/1998/QĐ-NHNN7 dated December 11, 1998, of the Governor of the State Bank of Vietnam amending and supplementing certain points of Circular No. 08/1998/TT-NHNN7 dated September 30, 1998; Decision No. 314/1999/QĐ-NHNN7 dated September 9, 1999, of the Governor of the State Bank of Vietnam amending certain points of Decision No. 418/1998/QĐ-NHNN7.

Heads of Departments, Bureaus, Chief of the Office, Chief Inspector of the State Bank of Vietnam, Governors of the State Bank of Vietnam branches in provinces and centrally-administered cities, General Directors (Directors) of Banks within their functional responsibilities are responsible for organizing and guiding the implementation of this Circular./.