New Regulation On Foreign Exchange Control For Foreign Investment Activities In Vietnam.

No.

Matter

Circular 06/2019

Circular 19/2014

1

Entities obliged to open the DICA

1. (i)  Newly setup FIEs required to obtain an investment

   registration certificate;

2. (ii)  FIEs with 51% or more foreign ownership as a

   result of M&A transactions or shares subscriptions;

3. (iii)  Newly setup FIEs with 51% or more foreign ownership in accordance with certain specialised laws;

4. (iv)  Project enterprises established by foreign

   investors to implement public-private partnership (PPP) projects; and

5. (v)  Foreign investors participating in business

   cooperation contracts (BCC).

1. (i)  All FIEs regardless of foreign ownership

   percentage; and

2. (ii)  Foreign investors participating in BCC.

2

Entities obliged to close the DICA

1. (i)  FIEs having their foreign ownership percentage

   reduced to less than 51% as a result of M&A transactions; and

2. (ii)  FIEs having shares listed or registered with a Stock Exchange.

After closing the DICA, non-resident foreign investors must open an IICA to continue their investment activities in Vietnam.

Not specified

3

Foreign loan receipt and repayment

Borrowing and repayment of foreign loans of FIEs must go through the DICA and must be implemented in accordance with the current regulations on foreign loans (which provide that cash flow through the DICA is mandatory for medium and long term loans, but optional for short term loans).

Borrowing and repayment of domestic and foreign loans of FIEs (short, medium and long term) must go through the DICA

4

Payment of investment preparation activities
(i.e. expenses incurred by foreign investors prior to the approval/ implementation of their investments)

Foreign investors can make payments for their pre-approval investing activities either:

1. (i)  directly from overseas; or

2. (ii)  from their current account (in either foreign currency or VND) opened in Vietnam.

Foreign investors can make payments for their pre-approval investing activities only via their current account in foreign currency opened in Vietnam.

5

Payment of capital assignment in M&A transactions must be made via the DICA

An exception is introduced for transactions between non-resident investors or between resident investors.

As a result, non-resident investors selling equity in a Vietnamese company to other non-resident investors will be allowed to receive the purchase price directly into their bank accounts abroad (i.e. without transiting through Vietnam).

No exceptions

As a result, in case of non-resident investors selling equity in a Vietnamese company to other non-resident investors, the purchase price must first transit through the DICA in Vietnam, and only then can be transferred from the DICA to the seller’s bank accounts abroad.

6

Permitted currency for implementation and payment of share purchase agreements

1. (i)  Foreign currency is allowed in case the

   transaction is between non-resident investors; and

2. (ii)  VND is required in case the transaction is

   (a) between non-resident investors and resident investors; or (b) between resident investors.

Not specified