In the last 10 years, foreign direct investment activities have consistently brought in substantial capital, contributing to the promotion of domestic economic growth in Vietnam. To encourage investment, Vietnam has gradually introduced more liberal mechanisms, including regulations on conducting capital contribution and capital transfer transactions through foreign direct investment capital accounts.
Article table of contents
How to open and use foreign direct investment accounts in Vietnam? (Illustrative image)
1. Subjects opening and using direct investment capital accounts in Vietnam
Previously, there were regulations about foreign investors (“FIs”) requiring to open and use investment capital accounts when participating in investments in Vietnam. However, it was not until June 26, 2019, when the State Bank of Vietnam issued Circular 06/2019/TT-NHNN that there was a regulation explaining the definition of "enterprises with foreign direct investment capital." Articles 3 and 5, Circular 06/2019/TT-NHNN stipulate the subjects opening and using direct investment capital accounts, including:
- Enterprises with foreign direct investment capital:
- Enterprises established in the form of establishing an economic organization, in which there is an FI being a member or shareholder and are required to undergo procedures for issuing Investment Registration Certificates as stipulated by investment laws;
- Enterprises with FIs contributing capital, purchasing shares, or capital contributions into enterprises (operating in conditional or non-conditional business investment sectors applicable to FIs) resulting in FIs owning 51% or more of the charter capital of the enterprise;
- Enterprises established after division, merger, or consolidation, resulting in FIs owning 51% or more of the charter capital of the enterprise;
- Newly established enterprises according to specialized laws with FIs owning 51% or more of the charter capital of the enterprise;
- Project enterprises established by FIs to implement PPP projects as stipulated by investment laws.
- FIs participating in BCC contracts, FIs directly implementing PPP projects in cases where a project enterprise is not established (hereinafter referred to as FIs directly implementing PPP projects).
Procedures for opening and closing direct investment capital accounts are conducted in accordance with regulations of the State Bank of Vietnam on opening and using payment accounts at payment service-providing organizations.
Note: The use of direct investment capital accounts in the payment for the transfer of investment capital and investment projects in enterprises with foreign direct investment capital is stipulated in Article 10 as follows:
- Between investors who are non-residents or between investors who are residents without using direct investment capital accounts;
- Between investors who are non-residents and investors who are residents must implement through direct investment capital accounts.
2. Regulations on conversion between types of investment capital accounts in Vietnam
No later than 12 months from the effective date of Circular 06/2019/TT-NHNN, which is 12 months from June 26, 2019, enterprises and non-resident FIs owning shares or capital contributions in that enterprise must convert accounts as regulated in the following cases:
- In case enterprises with FIs that have opened and used indirect investment capital accounts to contribute capital, purchase shares, or capital contributions in enterprises leading to FIs owning 51% or more of the charter capital must open direct investment capital accounts according to regulations in Circular 06/2019/TT-NHNN.
- In the following cases, enterprises that have opened direct investment capital accounts must close those accounts, and non-resident FIs owning shares or capital contributions in that enterprise must open indirect investment capital accounts in accordance with foreign exchange management regulations:
- Enterprises with FIs owning less than 51% of the charter capital of enterprises, except for the case stipulated at point a, clause 2, Article 3 of Circular 06/2019/TT-NHNN;
- Enterprises not required to undergo procedures for issuing Investment Registration Certificates but have a demand and have been issued Investment Registration Certificates by competent authorities according to investment laws;
- Enterprises with foreign direct investment capital with shares listed on the stock exchange or registered for trading on the Stock Exchange;
- In cases where the above enterprises are borrowing and repaying foreign loans through direct investment capital accounts, they can continue to maintain these accounts for the purpose of foreign loan borrowing and repayment in accordance with regulations on foreign loan borrowing and repayment of enterprises.
During the conversion period, enterprises and non-resident FIs owning shares or capital contributions in those enterprises are allowed to continue using the existing accounts to conduct related investment activities in Vietnam.
Hoa Hong
- Key word:
- foreign direct investment account
- Vietnam
