On June 26, 2019, the State Bank of Vietnam issued Circular No. 06/2019/TT-NHNN on guidance on foreign exchange management for foreign direct investment in Vietnam. This Circular comes into effect from September 06, 2019.
The Circular contains several new regulations in comparison with its predecessor (i.e. Circular No. 19/2014/TT-NHNN) as follows:
1. According to Article 11 of the Circular 19/2014/TT-NHNN, the acquisition of a foreign investor in target enterprise in Vietnam will be considered as foreign direct investment if the target enterprise obtained Investment Registration Certificate. Therefore, many banks have refused to open direct investment capital account for foreign investor because of lack of Investment Registration Certificate. On the other side, Circular No. 06/2019/TT-NHNN fixes this problem by providing more evidence for direct investment, among others, Notification of acquisition eligibility (or M&A Approval).
2. The usage of direct investment capital account for domestic loans of Vietnamese enterprises considered as foreign investor according to Investment Law 2014.
3. The denomination and payment of transfer of capital or investment project between non-residents might be performed in foreign currency, while that between residents or between a non-resident and a resident must be performed in Vietnam dong.
4. Only the payment and transfer of ownership interest in Vietnamese enterprises, which are considered as foreign investor, are made in direct investment capital account.
In conclusion, the Circular contributes to remove previous disagreement and discrepancy in Circular 19/2014/TT-NHNN and to facilitate foreign direct investment in Vietnam.