Can International Investors Purchase Foreign Currency in Vietnam?

Vietnam, with its open-door policies and deep international economic integration, has attracted a large amount of foreign direct investment (FDI). Accompanying this FDI inflow is the demand for foreign currency by investors. Thus, under Vietnamese law, can international investors purchase foreign currency in Vietnam? Through the article below, Viet An Law will address this question.

Can international investors purchase foreign currency in Vietnam?

Pursuant to Articles 7 and 12 of the Ordinance on Foreign Exchange, individuals eligible to purchase foreign currency include:

Foreign investors have the right to purchase foreign currency in cases where they are conducting direct investment activities in Vietnam and intend to transfer their earnings abroad.

Related Questions

Can foreign investors contribute capital in foreign currency to implement investment projects in Vietnam?

According to Article 4 of Circular No. 06/2019/TT-NHNN, the right to contribute capital in foreign currency is regulated as follows:

• International investors and Vietnamese investors are allowed to contribute investment capital in foreign currency or Vietnamese dong, following the capital contribution ratio stated in the Investment Registration Certificate, the License for Establishment and Operation by specific laws (applicable to enterprises with foreign direct investment established and operating under specific legal regulations), the Notification confirming the eligibility to contribute capital, purchase shares or acquire capital contributions from foreign investors, PPP contracts signed with competent state authorities, or other documents proving the legality of the capital contribution by the international investor by the law.
• Vietnamese resident investors are allowed to contribute investment capital from their foreign currency sources.
• Capital contributions by foreign and Vietnamese investors must be made via wire transfer to a direct investment capital account.
• All matters related to short-term-, medium, and long-term foreign loans of enterprises with foreign direct investment (such as disbursement, repayment of principal, interest, fees; foreign loan and repayment accounts) must comply with the legal provisions on foreign borrowing and repayment by enterprises.
• The international investors’ use of profits distributed within the territory of Vietnam must comply with foreign exchange management regulations and other relevant legal provisions.

To conclude, under the above regulations, both international and Vietnamese investors are allowed to contribute capital in foreign currency or Vietnamese dong, by the registered capital amount stated in the Investment Registration Certificate or the License for Establishment and Operation (for FDI enterprises governed by specific laws). This means that the investor must have obtained the appropriate Investment Registration Certificate, the License for Establishment and Operation in accordance with the law, to be eligible to contribute capital.

What types of receipt and expenditure transactions are permitted on direct investment capital accounts in foreign currencies?

Pursuant to Article 6 of Circular No. 06/2019/TT-NHNN, the receipt and expenditure transactions on direct investment capital accounts in foreign currencies are as follows:

• Revenues
  • Direct capital contribution from the transfer of direct contributed capital in foreign currency of Vietnamese, foreign investors of FDI enterprises, foreign investors involved in BCC contracts, and/or directly implementing PPP projects;
  • Payment for the transfer of investment capital or investment projects as prescribed by law;
  • Transferred foreign currency purchased from authorized credit institutions to transfer capitals, profits, and legal earnings overseas by regulations;
  • Transfer from a foreign currency demand account opened at an authorized bank of the FDI enterprise, foreign investors involved in BCC or directly implementing PPP projects, to transfer capital, lawful revenues, and profits abroad as prescribed by law;
  • Revenue from foreign currency exchange for capital contribution in case the capital contribution currency is different from the currency of the opened direct investment account;
  • Capital surplus from additional shares to raise the charter capital of the FDI enterprise;
  • Foreign currency revenue from domestic sales of petroleum products (after fulfilling all financial obligations and deducting expenses in Vietnam dong), in accordance with petroleum laws and any applicable Government Guarantees and Undertakings (if any);
  • Transferred revenues relating to foreign loans in foreign currencies of FDI enterprises by the law on overseas loan receipt and repayment of enterprises, except for cases prescribed by law;
  • Other lawful revenues in Vietnamese dong relating to foreign direct investment in Vietnam
• Expenditures:
  • Amounts transferred to foreign currency accounts opened at authorized banks of FDI enterprises, foreign investors involved in BCC or directly implementing PPP projects, project managers of petroleum projects, according to laws on petroleum for foreign direct investment in Vietnam;
  • Sale of foreign currency to authorized credit institutions, which is then transferred into Vietnamese dong demand accounts opened at authorized banks of FDI enterprises, foreign investors involved in BCC, or directly implementing PPP projects;
  • Payments for transfer of investment capital, investment projects to overseas transferors or sale of foreign currencies for such transactions to transferors in Vietnam in Vietnamese dong in accordance with provisions prescribed in Article 10 of this Circular;
  • Overseas transfer of profits and legal revenues in foreign currency from foreign investors’ foreign direct investment in Vietnam;
  • Overseas transfer of  investment capital in foreign currencies by foreign investors in case of capital reduction, finish, termination of investment projects, BCC, PPP contracts in accordance with the law on investment;
  • Payment for currency exchange to transfer overseas the capital, profits, and legal revenues   in case the currency used for transferring such items is different from the currency used to open the direct investment account;
  • Transfer payments related to foreign loans in foreign currencies of FDI enterprises according to the provisions of the law on foreign borrowing and repayment of enterprises, unless otherwise prescribed by law;
  • Other lawful expenditures in Vietnamese dong relating to foreign direct investment in Vietnam.

What is the penalty for foreign exchange transactions that violate legal regulations?

Pursuant to Article 23 of Decree No. 88/2019/ND-CP, as amended by point d, clause 13, Article 1 of Decree No. 143/2021/ND-CP, the payment in foreign currency or stating prices in contracts that do not comply with legal regulations will be subject to a warning or, depending on the value of the goods paid in foreign currency, a fine ranging from VND10,000,000 to VND 100,000,000.

The fine prescribed in this Decree applies to individuals; the fine for organizations committing the same administrative violation is twice the amount imposed on individuals.

This is the legal advice provided by Viet An Law regarding whether international investors can purchase foreign currency in Vietnam. If you have any other legal concerns related to FDI enterprises’ investment activities, please contact Viet An Law for more detailed and specific advice.