According to Circular 05/2014/TT-NHNN issued by the State Bank of Vietnam, FPI in Vietnam must be made in Vietnamese dong through an account opened at a legally licensed bank in Vietnam.
Particularly, Circular 05/2014/TT-NHNN provides guidance on opening and using accounts for FPI activities in Vietnam. This Circular is applied to the following subjects: foreign investors who are not Vietnamese residents performing FPI activities in Vietnam; organisations and individuals related to the FPI activities in Vietnam.
However, this Circular is not subject to foreign investors who are foreign residents or foreign oganisations and individuals. These subjects performed indirect investment activities in Vietnam under the current regulations of the securities laws and other relevant legal documents.
Circular states: All FPI activities of foreign investors in Vietnam have been made in Vietnamese dong. Transactions relating to FPI in Vietnam must be implemented through one FPI account which is opened at a legally licensed bank in Vietnam.
In addition, when performing FPI activities in Vietnam under forms prescribed in this Circular, foreign investors must comply with the provisions of the Circular, the legal regulations concerning the opening and using clearance accounts, the regulations and guidance documents of Stock Act, the prevailing regulations relating to capital contribution or share purchase by foreign investors in Vietnamese enterprises and on the stock market of Vietnam, and other relevant legal provisions.
The account balance of FPI is not transferred to term deposits and savings deposits at bank or foreign bank branches.
FPI in Vietnam includes: capital contribution , purchase and sale of shares, equity capital in Vietnamese enterprises those are unlisted and unregistered in Vietnam stock market and those are participated in the management of investee enterprises; capital contribution, purchase and sale of shares of Vietnamese firms in Unlisted Public Company Market (UPCOM) and not directly participate in the management of investee companies; purchase and sale of bonds and other securities in Vietnam stock market; purchase and sale of valuable papers by Vietnamese dong issued by legally licensed organisations within the territory of Vietnam; trust investment in Vietnamese dong through fund management companies, securities companies and organizations permitted to engage in the trust investment under the provisions of securities law; trust investment in Vietnamese dong through banks and branches of foreign banks; capital contribution, capital transfer of foreign investors (not directly participate in management ) in securities investment funds and fund management companies under the provisions of the securities law and other forms of indirect investment as prescribed by law.
The Circular also specifies the opening and using of FPI account to perform activities of foreign indirect investment in Vietnam; the legal transfer of capital and income relating to indirect investment activities in Vietnam by overseas investors; rights and obligations of the licensed financial institutions and foreign investors in the implementation of regulations on opening and using FPI account to perform FPI activities in Vietnam.
This Circular takes effect from April 28th, 2014 and replaces Circular No 03/2004/TT-NHNN dated May 25th, 2004 of the State Bank of Vietnam which provides guidance on the foreign exchange management of the capital contribution or share purchase of foreign investors in Vietnamese enterprises.