Open a foreign direct investment capital account in Vietnam

A direct investment capital account is a payment account in foreign currencies or Vietnamese Dong that opened by foreign direct investment capital enterprises, foreign investors at the authorized bank to perform transactions related to direct investment activities from foreign countries into Vietnam. The investment capital contribution by the money of the foreign investor or Vietnamese investor must be performed through converting the money to the direct investment capital account.

Legal basis

• Law on Investment 2020;
• Law on the Vietnam State Bank 2010;
• Circular 06/2019/TT-NHNN of the State Bank dated June 26^th, 2019 guiding about the foreign exchange management for direct investment activities from foreign countries into Vietnam.

Subject of applicant of regulations on direct investment capital accounts

• Enterprises with the foreign direct investment capital;
• Foreign investors, Vietnamese investors in the foreign direct investment capital enterprise;
• Foreign investors participating in the business co-operation contract (hereinafter referred to as BCC);
• Foreign investors participating in the investment contract according to the public private partnership (hereinafter referred to as PPP);
• Organizations, individuals related to direct investment activities from foreign countries into Vietnam

Subjects are opened and used the direct investment capital account, including:

The foreign direct investment capital enterprise, including:

1. a) Enterprises are established according to the form of investment to establish economic organizations, in which foreign investors are members or shareholders and must perform procedures to be granted the Investment Registration according to the provisions of the law on investment;
2. b) Enterprises does not belong to cases according to the provisions in Point a of this Clause that foreign investors own from 51% or more of the charter capital of an enterprise, including:
   • An enterprise has foreign investors which contribute the capital, purchase the share, capital contribution into an enterprise (operate in business lines with conditions or without conditions applicable for foreign investors) resulting in the foreign investor own from 51% or more of the charter capital of an enterprise;
   • An enterprise is established after separation, merger, consolidation leading to foreign investors from 51% or more of the charter capital of an enterprise;
   • A new enterprise is established according to the provisions of specialized laws;

1. c) Project enterprises are established by foreign investors to perform the PPP project according to the law on investment.

Foreign investors joining in the BCC contract, foreign investors perform directly the PPP project in the case do not establish the project enterprise (hereinafter referred to as foreign investors perform directly the PPP project).

Number of the direct investment capital account that the foreign direct investment capital enterprise and the foreign investor is opened

• Open an direct investment capital account in foreign currencies at 01 (one) authorized bank to perform lawful revenue and expenditure transactions in foreign currencies related to direct investment activities from foreign countries into Vietnam;
• Corresponding to the type of foreign currency in which the capital contribution is performed, only 01 (one) direct investment capital account in that foreign currency can be opened at 01 (one) authorized bank;
• In the case of performing the investment in VND, is opened 01 (one) direct investment capital account in VND at the authorized bank where the direct investment capital account in foreign currencies is opened to perform lawful revenue and expenditure transactions in VND related to direct investment activities from foreign countries into Vietnam;
• In case the foreign investor participates inmany BCC contracts or implements directly many PPP projects, the foreign investor must open a separate direct investment capital account corresponding to each BCC contract or PPP project.

In case the change the authorized bank where the foreign direct investment capital is opened, the foreign direct investment capital enterprise and the investor must perform according to following steps:

• Open a direct investment capital account at another authorized bank;
• Convert the entire balance on the previously opened direct investment account to the new direct investment capital account, and then close the previously opened direct investment capital account;
• The direct investment capital account in the authorized bank is only used to perform revenue and expenditure transactions after completing the above step.

Regulations on contribute the investment capital through the direct investment capital account

• Foreign investors and Vietnamese investors may contribute investment capital in foreign currencies or VND according to the amount of capital contributed by the investor in the Investment Registration Certificate, License for Establishment and Operation in accordance with the provisions of specialized laws (for foreign direct investment capital enterprises established and operating under specialized laws), Notice of satisfaction of conditions for capital contribution, purchase shares,repurchase the contributed capital of foreign investors, PPP contracts signed with competent state agencies, other documents proving the foreign investor’s capital contribution in accordance with the provisions of law.
• Residents being Vietnamese investors are entitled to contribute the investment capital with their own foreign currency.
• The contribution of investment capital in money of foreign investors, Vietnamese investors must be implemented through the form of transfer to the direct investment capital account.

Regulations related to converting money, capital and profit, converting the investment capital and the investment project through the direct investment capital account

Convert money to perform investment preparation activities

• Before being granted the Investment Registration Certificate by a competent agency, Notice on the satisfied conditions for the capital contribution, the share purchase, redemption of the capital contribution of foreign investors, License for establishment and operate according to specialized laws, sign PPP contracts, foreign investors are allowed to convert money from foreign countries or from the repayment account in foreign currencies, VND of this foreign investors is opened at the authorized bank in Vietnam to repay legal expenses during the stage of pre-investment activities in Vietnam.
• After being granted the Investment Registration Certificate by a competent agency, Notice on the satisfied conditions for the capital contribution, the share purchase, redemption of the capital contribution of foreign investors, License for establishment and operate according to specialized laws, sign PPP contracts, the money that foreign investors have transferred into Vietnam to carry out investment preparation activities is used to:
  • Partially or wholly converted into the contributed capital;
  • Partially or wholly converted into foreign loans of foreign-invested enterprises. In case of conversion into foreign loans, foreign direct investment capital enterprises shall comply with the provisions of law on borrowing and repaying foreign loans of enterprises. The period of a foreign loan is counted from the date the project is granted the Investment Registration Certificate, the License for establishment and operation under specialized laws by the competent authority, or the date on which the parties sign a PPP contract or sign a foreign loan agreement (whichever is later) to the final repayment date;
  • Remittance to foreign investors in foreign currencies or VND the amount transferred into Vietnam for investment preparation activities after deducting legal expenses related to investment preparation activities in Vietn

• In case the competent agency do not grant the Investment Registration Certificate, Notice on the satisfied conditions for the capital contribution, the share purchase, redemption of the capital contribution of foreign investors, License for establishment and operate according to specialized laws, sign a PPP contract or not continue to implement direct investment projects in Vietnam, foreign investors are remitted the remaining amount in foreign currency or bought foreign currencies to remit overseas for the amount remitted into Vietnam and the resulting interest (if any) after deducting legal expenses related to investment preparation activities in Vietnam.

Remitance of the capital, profit and legal income abroad

Foreign investors must transfer abroad through the direct investment capital account:

• The direct investment capital when decreasing the investment capital; transferthe investment project (except for the case of transfer of investment projects between investors being non-residents or between investors being residents); liquidate, terminate the operation of investment projects, BCC contracts, PPP contracts according to the provisions of the law on investment;
• Principal, interest and expense of foreign loans (except for enterprises are allowed to open additional accounts for foreign loans and repayments), profit and lawful income sources related to direct investment activities in Vietnam

Transfer of the investment capital and investment project

The payment of the transfer value of shares and contributed capital in a foreign-invested enterprise shall be performed as follows:

• Between non-resident investors or between resident investors not through a direct investment capital account;
• Between a non-resident investor and a resident investor must be done through a direct investment capital account.

The payment of the transfer value of investment projects between investors in the BCC contract, between investors directly implementing PPP projects is implemented as follows:

• Between non-resident investors or between non-resident investors and resident investors in a BCC contract must be performed through a direct investment capital account;
• Between non-resident investors or between non-resident investors and resident investors directly implementing PPP projects must be performed through a direct investment capital account.