Circular No. 32/2018/TT-NHNN guides the process of converting foreign currency for projects guaranteed and supported by the Government by the State Bank of Vietnam.

CIRCULAR

Guidelines for the foreign exchange conversion process (directly interacting and handling work) of the State Bank of Vietnam for

projects guaranteed and supported by the Government to convert foreign currency foreign exchange

 

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law amending and supplementing certain articles of the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Investment Law dated November 26, 2014 and the Law amending and supplementing Article 6 and Appendix 4 regarding the list of conditional business sectors dated November 22, 2016;

Căn cứ Pháp lệnh For power plants invested under the Build-Operate-Transfer (BOT) model, n is determined according to the operational period of the power plant stipulated in the BOT contract.foreign exchange management dated December 13, 2005 and Ordinance amending and supplementing certain articles of the Foreign Exchange Management Ordinance dated March 18, 2013 Pursuant to Decree No. 50/2014/NĐ-CP dated May 20, 2014 of the Government on managing state foreign exchange reserves;

guiding the foreign exchange conversion process of the State Bank of Vietnam for projects guaranteed and supported by the Government to convert foreign currency.;

Pursuant to Government Decree No. 16/2017/NĐ-CP dated February 17, 2017 on the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of the Department of Foreign Exchange Management;

The Governor of the State Bank of Vietnam promulgates Circular h1. These Circulars guide the foreign exchange selling process of the State Bank of Vietnam (hereinafter referred to as the State Bank) to the converting bank to meet the demand for foreign currency conversion for Projects guaranteed and supported by the Government to convert foreign currency. 2. In cases where the provisions of the Guarantee and Commitment Agreement (hereinafter referred to as GGU) of each project differ from the provisions of these Circulars, the provisions of the agreement shall apply.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

1. Investors implementing investments in Projects in Vietnam guaranteed and supported by the Government to convert foreign currency.

2. Project enterprises as stipulated in Clause 4 of Article 3 of this Circular.

Article 2. Applicability

3. Converting banks and credit institutions permitted to be involved in the implementation of the foreign currency conversion process for Projects guaranteed and supported by the Government to convert foreign currency.

4. Units under the State Bank.

5. Other organizations and individuals related to the implementation of the foreign currency conversion process.

1. The Guarantee and Commitment Agreement (hereinafter referred to as GGU) is an agreement signed by competent state agencies of Vietnam on behalf of the Government with the parties involved in the project.

2. Projects are investment projects guaranteed and supported by the Government to convert foreign currency.

Article 3. Explanation of Terms

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

3. Investors are foreign investors investing in Projects guaranteed and supported by the Government to convert foreign currency.

4. Project enterprises are enterprises established by investors to implement projects in Vietnam.

5. Converting banks are commercial banks and branches of foreign banks permitted to operate foreign exchange in Vietnam according to the law, designated by project enterprises and investors in accordance with the GGU to carry out the conversion of Vietnamese dong to foreign currency for the project.

6. Account No. 1 is a Vietnamese dong account opened by project enterprises and investors at the converting bank to receive the amount of Vietnamese dong required to be converted to foreign currency as committed by the Government in the GGU of each project.

7. Account No. 2 is a foreign currency account opened by project enterprises and investors at the converting bank to receive the foreign currency obtained from the conversion of the amount of Vietnamese dong in Account No. 1 as stipulated in the GGU of each project.

8. The notification date is the day when the converting bank notifies the exchange rate for converting Vietnamese dong to foreign currency to project enterprises and investors as stipulated in the GGU of each project.

9. The notified exchange rate is the exchange rate between foreign currency and Vietnamese dong notified by the converting bank to project enterprises and investors on the notification date. The exchange rate notified by the converting bank must comply with current regulations of the State Bank.

10. The payment date is the day when the amount of Vietnamese dong required to be converted is transferred into Account No. 1 as stipulated in the GGU of each project.

11. The request conversion date is the day when the converting bank sends a written request to the State Bank to sell foreign currency to fulfill the guarantee and support for foreign currency conversion for project enterprises and investors.

12. The conversion date is the day when the State Bank sells foreign currency from the Exchange Rate Stabilization Fund and Gold Market Management Fund to the converting bank to meet the demand for foreign currency conversion for project enterprises and investors.

13. The State Bank's foreign currency selling exchange rate is the exchange rate between foreign currency and Vietnamese dong determined by the converting bank on the conversion date. The exchange rate determined by the converting bank in this clause must comply with current regulations of the State Bank.

14. The foreign currency status of the converting bank is the foreign currency status on the working day immediately preceding the request conversion date.

PROCEDURE FOR IMPLEMENTING FOREIGN EXCHANGE CONVERSION

1. Project enterprises and investors proactively convert the amount of Vietnamese dong in Account No. 1 to foreign currency on the market according to the purposes specified in the GGU.

Chapter II

2. On the notification date, project enterprises and investors must notify the State Bank (Trading Department) about the amount of Vietnamese dong to be converted and one (01) designated converting bank to carry out foreign currency conversion for the project.

Article 4. Principles of Implementation

3. In cases where the foreign currency status of the converting bank is negative or positive but cannot meet the entire demand for foreign currency conversion of projects at the same time, the converting bank or project enterprises and investors (through the converting bank) determine the remaining amount of Vietnamese dong requiring guarantee and support for conversion to be implemented according to Article 5 of this Circular.

4. Based on the request of project enterprises, investors, and the converting bank regarding the remaining amount of Vietnamese dong requiring guarantee and support for conversion determined in Clause 3 of this Article, the State Bank will consider selling foreign currency to the converting bank according to Article 5 of this Circular.

3. In cases where the foreign currency status of the converting bank is at a negative or positive level but does not fully meet the foreign currency conversion needs of projects at the same time, the converting bank or the project enterprise, investor (through the converting bank) shall determine the remaining amount of Vietnamese dong required for guarantee and support for the foreign currency conversion as prescribed in Article 5 of this Circular.

4. Based on the request from the project enterprise, investor, and the converting bank regarding the remaining amount of Vietnamese dong required for guarantee and support for conversion determined under Clause 3 of this Article, the State Bank shall consider selling foreign currency to the converting bank as prescribed in Article 5 of this Circular.

Article 5. Procedures for foreign currency conversion

1. For foreign currency conversion needs guaranteed by the Government to cover conversion:

a) Step 1: In cases where the project enterprise or investor cannot convert foreign currency on the market within the number of days specified in the Guarantee and Granting Agreement (GGU) of each project, the project enterprise or investor (through the converting bank) shall determine the remaining amount of Vietnamese dong required for guaranteed conversion according to Clause 3, Article 4 of this Circular and submit it to the converting bank along with the invoice (as specified in the GGU of each project).

b) Step 2: On the day of the request for conversion, the converting bank shall send a letter along with the invoice (as specified in the GGU of each project) requesting the State Bank of Vietnam (Trading Department) to sell the corresponding amount of foreign currency for the remaining amount of Vietnamese dong required for guaranteed conversion.

c) Step 3: Within the number of days specified in the GGU of each project, on the conversion date, based on the provisions of the GGU, the status of foreign currency of the converting bank as stipulated in Clause 3, Article 4 of this Circular, and other provisions of this Circular, the State Bank of Vietnam (Trading Department) shall verify the invoices and related documents and sell foreign currency from the Exchange Rate Stabilization Fund and Gold Market Management Fund to the converting bank at the announced exchange rate.

Within the time limit specified herein, the project enterprise or investor may continue to convert foreign currency on the market. If the project enterprise or investor can convert all the required foreign currency on the market, the State Bank of Vietnam will sell the remaining amount of foreign currency needed for guaranteed conversion based on verification of invoices and related documents.

d) Step 4: Within two (02) working days from the conversion date, the converting bank shall sell the foreign currency and transfer it into account number 2 or an overseas account (as specified in the GGU of each project) of the project enterprise or investor at the announced exchange rate.

2. For foreign currency conversion needs supported by the Government:

a) Step 1: Within two (02) weeks from the payment date, the project enterprise or investor shall convert foreign currency on the market.

b) Step 2: After two (02) weeks from the payment date, if the project enterprise or investor cannot fully convert the required amount on the market, the project enterprise or investor (through the converting bank) shall determine the remaining amount of Vietnamese dong required for supported conversion according to Clause 3, Article 4 of this Circular and submit it to the converting bank along with the invoice (as specified in the GGU of each project).

c) Step 3: On the day of the request for conversion, the converting bank shall send a letter along with the invoice (as specified in the GGU of each project) requesting the State Bank of Vietnam (Trading Department) to support the sale of foreign currency corresponding to the remaining amount of Vietnamese dong required for supported conversion.

d) Step 4: Within two (02) weeks from the request date, based on the provisions of the GGU, the status of foreign currency of the converting bank as stipulated in Clause 3, Article 4 of this Circular, and other provisions of this Circular, the State Bank of Vietnam (Trading Department) shall verify the invoices and related documents and sell foreign currency from the Exchange Rate Stabilization Fund and Gold Market Management Fund to the converting bank at the State Bank of Vietnam's selling exchange rate for foreign currency.

Within the time limit specified herein, the project enterprise or investor may continue to convert foreign currency on the market. If the project enterprise or investor can convert all the required foreign currency on the market, the State Bank of Vietnam will sell the remaining amount of foreign currency needed for supported conversion based on verification of invoices and related documents.

e) Step 5: The converting bank shall sell the foreign currency and transfer it into account number 2 or an overseas account (as specified in the GGU of each project) of the project enterprise or investor at the State Bank of Vietnam's selling exchange rate for foreign currency.

Chapter III

RESPONSIBILITIES OF THE PARTIES INVOLVED

Article 6. Responsibilities of Units under the State Bank

1. Responsibilities of the Trading Department:

a) Implement the tasks of the Trading Department as prescribed in Article 5 of this Circular regarding the foreign currency conversion process;

b) Report to the Governor of the State Bank (simultaneously notifying the Foreign Exchange Management Department and the Monetary Policy Department) on the situation of selling foreign currency from the Exchange Rate Stabilization Fund and managing the gold market to the converting bank for the purpose of converting the remaining foreign currency for project enterprises and investors immediately after completing the transaction.

2. Responsibilities of the Foreign Exchange Management Department:

By the latest on March 31 each year, coordinate with relevant units to submit a report to the Governor of the State Bank.

3. Responsibilities of the Finance and Accounting Department:

Coordinate with the Trading Department in accounting for transactions arising from the sale of foreign currency to projects guaranteed and supported by the Government for foreign currency conversion.

Article 7. Responsibilities of the Converting Bank

1. Carry out the foreign currency conversion process for projects guaranteed by the Government and supported for foreign currency conversion according to the provisions stipulated in the GGU and this Circular.

2. Be responsible for verifying the authenticity and accuracy of the documents and certificates of project enterprises and investors to ensure that the foreign currency conversion for the project is carried out in accordance with the provisions stipulated in the GGU and this Circular.

Article 8. Responsibilities of Project Enterprises and Investors

1. Determine the need for guarantees and support for foreign currency conversion and submit it to the State Bank through the converting bank as prescribed in Articles 4 and 5 of this Circular.

2. Be responsible for the authenticity and accuracy of the documents and certificates submitted to the converting bank and the State Bank as the basis for implementing the foreign currency conversion process according to the provisions of this Circular.

Chapter IV

REPORTING SYSTEM

Article 9. Reporting System for the Converting Bank

1. By the latest on the 20th of each month, the converting bank must notify the State Bank (Foreign Exchange Management Department, Monetary Policy Department, and Trading Department) about:

a) The situation of selling foreign currency to project enterprises and investors during the month of conversion;

b) The estimated amount of foreign currency needed for conversion for project enterprises and investors in the following month.

2. Quarterly (by the latest on the 3rd day of the first month of the reporting quarter), the converting bank reports to the State Bank (Foreign Exchange Management Department, Monetary Policy Department, and Trading Department) on the estimated demand for foreign currency conversion of project enterprises and investors in the next quarter and the plan to balance foreign currency to meet that demand.

Article 10. Reporting System for Project Enterprises and Investors

1. Quarterly (by the latest on the 3rd day of the first month of the reporting quarter), project enterprises and investors report to the State Bank (Foreign Exchange Management Department and Trading Department) on the estimated demand for foreign currency conversion in the next quarter.

2. Annually (by the latest on January 5), project enterprises and investors report to the State Bank (Foreign Exchange Management Department and Trading Department) on the estimated demand for foreign currency conversion for the project in that year.

Article 11. Emergency Reporting Requirements

In cases of emergency or when necessary, project enterprises, investors, currency conversion banks, and permitted credit organizations shall submit reports as required by the State Bank of Vietnam.

Chapter V

IMPLEMENTING PROVISIONS

Article 12. Effective Date

1. This Circular takes effect from February 1, 2019.

2. This Circular replaces Decision No. 218/2002/QĐ-NHNN dated March 22, 2002 of the Governor of the State Bank of Vietnam on procedures for converting Vietnamese dong to US dollars and transferring abroad for projects guaranteed and committed by the Government.

Article 13. Implementation Organization

The Director of the Office, the Head of the Foreign Exchange Management Department, the Heads of relevant units under the State Bank of Vietnam, the Chairmen of the Boards of Directors, the Chairmen of the Boards of Members, and the General Managers (Directors) of permitted credit organizations are responsible for implementing this Circular./.