From March 2019, foreign investors are now entitled to use foreign currencies to make deposits as well as enter into escrow agreements.

The State Bank of Vietnam (“SBV”) has issued Circular No. 03/2019/TT-NHNN on amending and supplementing a number of articles of Circular No. 32/2013/TT-NHNN – guiding the implementation of regulations on restricting the use of foreign currencies across the Vietnamese territory (“Circular 03”). Circular 03 came into force on March 29, 2019.

Circular 03 resulted from the SBV’s efforts in reviewing and revising the current regulations on foreign exchange management, following the direct guidance of the Government to speed up the equitization of State-owned Enterprises (“SOEs”) and divestment of State capital, via Official Letter No. 10681/VPCP-KTTH dated November 2, 2018 and Notice No. 285/TB-VPCP dated August 09, 2018, due to the SOEs equitization, and divestment lagging behind schedule.

Prior to Circular 03, foreign investors relied on Circular No. 16/2015/TT-NHNN (“Circular 16”) which contained no provisions on the use of foreign currencies in deposit and escrow transactions, especially when purchasing shares in SOEs, in the case of equitization and divestment. Foreign investors who wanted to proceed with the above had to obtain approval from the SBV Governor.

In particular, Circular 03 stipulates that foreign investors are entitled to deposit and set up escrow accounts using foreign currencies when participating in an auction when:

  • Purchasing shares of SOEs in case of equitization;
  • Purchasing shares of SOEs in case of divestment;
  • Purchasing shares owned by SOEs in another enterprise, in case such another enterprise carries out divestment.

If the investors fail to purchase shares at auction, they can transfer the deposit money in the escrow account abroad after deducting any related expenses.

Under Circular 02, foreign investors will no longer have to carry out the procedures for requesting approval of the SBV Governor for the use of foreign exchange in the territory of Vietnam under Article 1.2 of Circular 16. The new regulation now allows foreign investors to cut through red tape, save time and facilitate the SOEs’ equitization and divestment of State capital.


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