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|A new circular drafted by the State Bank of Vietnam would reduce punishments for foreign currency exchange violations. - Photo vietnamfinance.vn|
The draft regulation, if approved, would be added to Circular 32/2013/TT-NHNN, dated December 26, 2013, restricting the use of foreign currencies in Vietnam.
The draft would allow non-resident foreign investors to use foreign currencies to pay deposits when bidding for stakes in SOEs during their privatisation or capital divestment.
If the foreign investors do not win in the bidding, the deposits would be transferred abroad after deducting the costs (if any) they must pay for submitting a bid.
If a foreigner investor were to win the bidding, the investment procedures would be conducted following the established regulations about foreign currencies.
The central bank said the draft regulation would make it quicker and easier for foreign investors to buy stakes in SOEs undergoing privatisation or capital divestment.
There are currently no regulations allowing non-resident foreign investors to pay bid deposits in foreign currencies, meaning foreign investors must get approval for the Governor of the State Bank of Vietnam on a case-by-case basis.
The central bank expects the regulation to encourage the participation of foreign investors in the SOE privatisation and capital divestment process.
Privatisation results are expected to miss targets set for this year; therefore, the Government has targeted attracting foreign investors to accelerate the process.
The central bank also drafted a regulation setting lighter punishments for illegal transactions of foreign currencies.
This came after 38-year-old Nguyen Ca Re in Ninh Kieu District, Cần Thơ Province was fined VND90 million for exchanging US$100 at a gold store – not an official channel for currency exchange. The punishment for Rê was said to be too heavy for such a small individual violation.
The draft proposes setting the lightest punishments at merely a warning or VND10-20 million (US$435-870), far lower than the previous fine of VND80-100 million.
The central bank said Decree 96/2014/NĐ-CP, which set the original punishment, was outdated after four years in effect, adding that several punishments were no longer appropriate.
According to lawyer Nguyen Duc Chanh from the HCM City Bar Association, introducing lighter punishments for illegal currency transactions was reasonable as several punishments were too severe compared to the seriousness of violations.
Chánh said the draft should categorise violations into different levels, as the punishment for exchanging $1 should be smaller than for exchanging $1,000.
Financial and banking expert Nguyen Tri Hieu said it was necessary to quantify the damage of the violations to the economy to identify the appropriate punishment.
The draft decree also added punishments to casino operation violations related to the listing of currency exchanges and the opening and use of accounts in foreign countries without the approval of the central bank.