On March 18, 2013, the National Assembly promulgated Ordinance No. 06/2013/UBTVQH13 amending several articles of the Ordinance on Foreign Exchange No. 28/2005/UBTVQH11 (collectively, “Amended FX Ordinance”).1

The Amended FX Ordinance focuses on several issues for investors such as:

  1. Investor’s Rights and Obligations:
    • Stricter regulation on foreign currency use in Vietnam: Residents and non-residents must specify the cost of all transactions, “payments, price listings, advertisings, evaluating and quotations” in VND, whereas, currently, only transactions such as payments, price listing and advertising are restricted activities.
    • New provision on indirect investment accounts: Non-residents investors must open an indirect investment account in VND to conduct their investments in Vietnam, and convert all of their indirect investment amounts from foreign currency into VND via such account. Currently, indirect investors must only make the conversion in VND through authorized credit institutions.
    • Capital sources for overseas investments are no longer limited and investors may use all legal capital sources at their disposal.
    • A guarantee for overseas and non-resident loans is no longer limited to credit institutions, but open to economic organizations such as enterprises or cooperatives, except for export goods and deferred payment services requiring the Prime Minister’s approval.
  2. Competent authorities’ responsibilities:
    • Wider control of the State Bank of Vietnam (“SBV”): which will control overseas gold accounts of residents in addition to gold import/export activities under the current regulation;
    • More visibility on foreign currency management: the Government and the SBV must periodically report to the National Assembly Standing Committee about the result of their management of foreign exchange.

The Amended FX Ordinance does not bring major changes to foreign exchange controls. It mainly provides clarification of terms and wording of the current rules. Nevertheless, it brings additional restrictions on foreign currency use in Vietnam and is expected to enhance commercial activities in VND.

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(1)The Amended FX Ordinance will take effect from January 1, 2014.