Current transactions using foreign exchange for payments, imports and exports will enjoy more freedom and will likely no longer need to be licenced, under a draft decree relaxing regulations on foreign currency.
Forex transactions may no longer need to be licenced
Removal of the licencing requirement is just one new point in the draft decree guiding the Forex (foreign exchange) Ordinance, which took effect last Wednesday. The State Bank of Vietnam (SBV) has posted the draft on its website at www.sbv.gov.vn.
In addition to current transactions, regulations on capital transactions for direct and indirect investments into and out of Vietnam, foreign debts and the use of foreign currencies in the country will all be relaxed.
Entities needing to trade in another currency may go straight to commercial banks with a forex trading right to buy foreign currency.
But according to a member of the board that developed the draft decree, there are still limits on the use of foreign currency. Individuals seeking to use foreign currency must show proof of a need, such as for overseas education or healthcare purposes. In such a case, the bank would be responsible for selling enough foreign currency to meet the demands of the buyer based on its real capacity.
Regarding the local market, the draft underlines the principle of “using Vietnamese dong in Vietnam’s territory”. In other words, those without legitimate need for foreign currency are not allowed to use it to make payments, while those who receive foreign currency as payment may continue to save and make deposits as per existing laws.
Under the draft, there are only nine types of forex transactions allowed in the territory of Vietnam, including those made by credit organisations with forex trading permission and those by residents making account exchanges based on an export contract.
Other limits will also remain. For example, distributors of imports must not quote prices and make transactions in foreign currency.
A new point in the draft is related to the opening of a forex account in Vietnam or abroad. Economic entities having branches and representative offices abroad will have the right to open such an account after being licensed by SBV.
Individuals temporarily residing abroad will be allowed to open foreign accounts in line with the host country’s laws. But when their residence permit expires, they are required to close the account and transfer the deposits back to Vietnam.
The draft also names 10 situations under which an individual may open a foreign currency account in a Vietnamese bank.
The draft also addresses foreign debts and provides detailed regulations on forex management in both cases of indirect and direct investments and issuing securities overseas.
No. 764/June 5-11, 2006