Contract for Entrusted Import and Export: Is Foreign Exchange Usable for Residents in the Territory of Vietnam?
Is the use of foreign exchange allowed for transactions conducted in Vietnam?
Based on Article 22 of the 2005 Foreign Exchange Ordinance (amended by Clause 13, Article 1 of the 2013 Amendment to the Foreign Exchange Ordinance) regulating the restriction of foreign exchange use within the territory of Vietnam as follows:
Regulations on the restriction of using foreign exchange
Within the territory of Vietnam, all transactions, payments, listings, advertisements, quotations, pricing, price recordings in contracts, agreements, and other similar forms by residents and non-residents are not allowed to be conducted in foreign exchange, except for cases permitted according to regulations of the State Bank of Vietnam.
Thus, the current laws stipulate that all transactions by residents and non-residents within the territory of Vietnam are not allowed to be conducted in foreign exchange, except for cases permitted according to the regulations of the State Bank of Vietnam.
Therefore, as a principle, ordinary transactions within the territory of Vietnam are only allowed to use the Vietnamese dong.
Can entrustment contracts for import-export use foreign exchange for residents within Vietnam's territory?
Can entrustment import-export contracts use foreign exchange for residents in Vietnam?
Based on Clause 6, Article 4 of Circular 32/2013/TT-NHNN, which provides for some cases where foreign exchange can be used within the territory of Vietnam by residents as follows:
Cases of using foreign exchange within the territory of Vietnam
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4. A resident who is a legal entity may transfer internal capital in foreign currency via transfer between accounts of that entity and accounts of dependent units without legal capacity and vice versa.
5. Residents may contribute capital in foreign currency via transfer to implement foreign investment projects in Vietnam.
6. Residents executing entrustment contracts for import and export under the following regulations:
a) A resident entrusted to import may record the price in the entrustment import contract in foreign currency and receive payment in foreign currency via transfer for the contract's import value from the import entrustor;
b) A resident entrusted to export may record the price in the entrustment export contract in foreign currency and make payment in foreign currency via transfer for the contract's export value to the export entrustor.
7. Residents who are local contractors, foreign contractors execute according to the following regulations:
a) For overseas expenses related to implementing bidding packages through international bidding under the provisions of the Bidding Law: contractors are allowed to bid in foreign currency and receive payment in foreign currency via transfer from the investor, main contractor for payment, settlement, and transfer abroad.
b) For implementing bidding packages under the provisions of the petroleum law: contractors are allowed to bid in foreign currency and receive payment in foreign currency via transfer from the investor, main contractor for payment, settlement, and transfer abroad.
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Thus, in the case of residents executing entrustment import-export contracts, they can use foreign exchange within the territory of Vietnam:
- Residents entrusted to import may record the price in the entrustment import contract in foreign currency and receive payment in foreign currency via transfer for the contract's import value from the import entrustor;
- Residents entrusted to export may record the price in the entrustment export contract in foreign currency and make payment in foreign currency via transfer for the contract's export value to the export entrustor.
How does the State manage the use of foreign exchange by organizations and individuals through its policy?
Based on Article 3 of the 2005 Foreign Exchange Ordinance, which provides for the foreign exchange management policy of Vietnam as follows:
Foreign exchange management policy of Vietnam
The Socialist Republic of Vietnam implements a foreign exchange management policy to facilitate and ensure the legal interests of organizations and individuals participating in foreign exchange activities, contribute to promoting economic development; achieve the objectives of the national monetary policy, enhance the convertibility of the Vietnamese dong; achieve the goal that only the Vietnamese dong is used within the territory of Vietnam; fulfill the commitments of the Socialist Republic of Vietnam in the process of international economic integration, strengthen the state management effectiveness on foreign exchange and perfect the foreign exchange management system of Vietnam.
Thus, the current laws have specific policies and regulations related to the management and use of foreign exchange within the territory of Vietnam through principles, policies, and specific cases that can use foreign exchange as mentioned above.
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