Transfer of foreign direct investment capital into Vietnam

Vietnam has always been appreciated for its stable politics, abundant human resources, potential markets, competitive costs, favorablee geographical location and an increasingly integrated economy. The free trade agreements that Vietnam has signed and entered into force contribute to the attractiveness of Vietnam’s business and investment environment. Viet An Law hereby would like to send to you the article related to the transfer of direct investment capital from abroad into Vietnam.

Legal basis

• The Law on Investment 2020.
• Circular No. 06/2019/TT-NHNN guiding foreign exchange management for foreign direct investment in Vietnam.
• Circular No. 23/2014/TT-NHNN guiding the opening and use of payment accounts at payment service suppliers.
• Circular No. 02/2019/TT-NHNN amendments to circular No. 23/2014/tt-nhnn dated August 19, 2014 of the state bank of vietnam providing guidelines for opening and maintenance of current accounts at payment service providers.

Forms of foreign investors’ direct investment in Vietnam

If the Law on Investment 2014 stipulates 4 forms of investment, including: investment to establish an economic organizations; investment in the form of capital contribution, purchase of shares/ stakes to an economic organization; investment in the form of PPP contract and investment in the form of BCC contract, the Law on Investment 2020 adds new investment forms and economic organizations according to the Government’s regulations to the regulations on investment forms in Article 21. Thus, the forms of direct investment in Vietnam by foreign investors from January 1, 2021 include:

• Investment to establish an economic organizations
• Investment to contribute capital or purchase shares or stakes.
• Implementation of investment projects.
• Investment in the form of BCC contract.
• New forms of investment and new types of economic organizations according to regulations of the Government.

Open a direct investment capital account

Subjects opening direct investment capital accounts

The foreign direct investment enterprises include:

• Enterprises are established in the form of investment to establish economic organizations, in which foreign investors are members or shareholders, and must carry out procedures for issuance of an Investment Registration Certificate in accordance with regulations of the law on investment;
• Enterprises not falling into the above cases with foreign investors owning 51% or more of the enterprise’s charter capital, including:
  • Any enterprises (operating in conditional business lines or without conditions applicable to foreign investors) at least 51% of charter capital of which is held by foreign investors through contribution purchase of shares/stakes;
  • Enterprises derived from division, acquisition, consolidation whose 51% of charter capital is owned by foreign investors after such events;
  • New enterprises established in accordance with relevant laws;
• Foreign investors participating in BCC contracts, foreign investors directly implementing PPP projects without establishing project enterprises (hereinafter referred to as foreign investors directly implementing PPP projects).

Requirements for opening a direct investment capital account

• Open a foreign currency account at one (01) authorized bank in order to receive and make payments in that currency during the process of foreign direct investment in Vietnam;
• Only 01 (one) direct investment account may be opened for a foreign currency at one (01) authorized bank;;
• In case of investment in Vietnam dong, the investor open 01 (one) direct investment capital account in Vietnamese dong at an authorized bank where the direct investment account in foreign currency is opened in order to receive and make payment in VND during the process of foreign direct investment in Vietnam;
• In case a foreign investor participates in  several BCCs or directly implements several PPP projects, such foreign investor shall open a direct investment account for each BCC or PPP project.

The dossier for opening a payment account

• An application form for opening a payment account, enclosed with the registration of seal and signature samples (according to Appendix 01 and Appendix 02 attached to this Circular) signed by the legal representative of the organization opening the account, mark;
• Documents proving that the applicant is established and operates legally, including its charter, establishment decision, operation license, enterprise registration certificate or corporate registration certificate or investment certificate;
• Papers proving the legal representative status of the legal representative of the organization opening the payment account and his/her citizen identification card or valid ID card or passport;
• A document or decision on appointment and ID card or valid passport of the chief accountant or person in charge of accounting, person who controls the documents of transactions with the State Bank.

Note: The documents in the application file for opening a payment account in items (ii), (iii), (iv) are originals or copies. If the documents in the dossier for opening a payment account are in a foreign language, they must be translated into Vietnamese and notarized in accordance with law.

The above dossiers will be sent to the State Bank (State Bank Transaction Office or State Bank branches in provinces and cities) where the request to open a payment account is requested and processed within 01 working day.

Transfer money to implement investment preparation activities

Upon being granted an Investment Registration Certificate by a competent authority, a Notice of satisfaction of conditions for capital contribution, share purchase, and redemption of stakes from foreign investors, establishment and operation license according to specialized laws, when entering into a PPP contract, a foreign investor is allowed to transfer money from abroad or from a foreign currency or Vietnamese dong payment account of that foreign investor opened at an authorized bank in Vietnam before to pay legal expenses during the stage of investment preparation activities in Vietnam such as:

• Convert part or all into contributed capital;
• Convert part or all into foreign loans of enterprises with foreign direct investment capital. In case of conversion into foreign loans, foreign direct investment enterprises shall comply with the provisions of law on borrowing and repaying foreign loans of enterprises. The term 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, the date on which the parties sign a PPP contract or sign a foreign loan agreement (whichever is later) to the final repayment date;
• Transfer return to foreign investors in foreign currency or Vietnamese dong the amount transferred into Vietnam to conduct investment preparation activities after deducting legal expenses related to investment preparation activities private in Vietnam.

In case the investment registration certificate is not granted by the competent authority, the notice of satisfaction of the conditions for capital contribution, share purchase, or redemption of stakes of foreign investors, establishment license and operate under specialized laws, sign PPP contracts or stop implementing direct investment projects in Vietnam, foreign investors may remit the remaining amount in foreign currency or buy foreign currency to remit overseas for the amount already transferred into Vietnam and the profit generated (if any) after deducting legal expenses related to investment preparation activities in Vietnam.

The above are some instructions on the transfer of foreign direct investment capital into Vietnam by foreign investors. If you have any difficulties, please contact Viet An Law Firm for fastest support!