On April 25, 2001, the Prime Minister issued Decision No.61/2001/QD-TTg on the organization-residents’ obligation to sell and right to buy foreign currencies. Pursuant to Clause 3, Article 6 of this Decision, the State Bank of Vietnam hereby guides the implementation thereof as follows:

Chapter I

GENERAL PROVISIONS

Section 1. INTERPRETATION OF TERMS

In this Circular, the following terms and expressions shall be construed as follows:

1. Current revenue sources are foreign currency revenue sources earned by residents from current transactions between residents and non-residents (as specified in Appendix 3 to the State Bank’s Circular No.01/1999/TT-NHNN7 of April 16, 1999).

2. Revenue sources from capital transactions are foreign currency revenue sources of residents from capital transactions between residents and non-residents (as specified in Appendix 4 to the State Bank’s Circular No.01/1999/TT-NHNN7 of April 16, 1999).

3. Financial donations and aids are non-refundable ones provided by non-residents to residents.

4. Foreign currency purchase and sale are the use of Vietnam dong to buy foreign currencies or the sale of foreign currencies for Vietnam dong between licensed banks and organization-residents.

Section 2. SUBJECTS OF APPLICATION

Subject to this Circular are:

1. Vietnamese economic organizations, foreign-invested enterprises and foreign parties to business cooperation contracts, branches of foreign companies, foreign contractors and contractors joining partnerships with foreign parties (hereinafter referred collectively to as economic organizations).

2. State agencies, armed force units, political organizations, socio-political organizations, social organizations, socio-professional organizations, social funds and charity funds of Vietnam (hereinafter referred collectively to as social organizations).

3. Licensed banks (hereinafter called banks).

Chapter II

SPECIFIC PROVISIONS

Section 1. THE OBLIGATION TO SELL FOREIGN CURRENCIES TO BANKS

1. Subjects liable to sell foreign currencies and foreign currency selling percentage:

a/ For subjects being economic organizations: They shall have to immediately sell to banks at least 40% of their foreign currency amounts earned from current revenue sources.

b/ For subjects being social organizations: They shall have to immediately sell to banks 100% of their foreign currency amounts earned from current revenue sources.

Subjects being economic organizations and social organizations mentioned at Points a and b above shall hereinafter be collectively referred to as "organizations".

2. Procedures for selling foreign currencies:

2.1. For organizations’ foreign currency revenue sources already determined as current revenue sources subject to the obligatory sale:

a/ When foreign currency amounts are credited into their accounts, and the organizations have the demand to immediately sell such foreign currencies according to the prescribed percentage to banks where they open foreign currency deposit accounts, the banks shall have to immediately buy such foreign currency amounts;

b/ When foreign currency amounts are credited into their accounts, and the organizations does not need to immediately sell foreign currencies, the banks where the organizations open accounts shall immediately deduct and transfer foreign currency amounts subject to the compulsory sale according to the prescribed percentage from foreign currency deposit accounts to accounts "money in safe-keeping and awaiting settlement", and at the same time, notify such to the organizations, so that the latter carry out the procedures for selling foreign currencies. Within 3 working days after the foreign currency amounts are credited into foreign currency deposit accounts, the banks and organizations shall have to perform the obligation to buy and/or sell foreign currencies according to the percentage prescribed in this Circular.

c/ In cases where an organization wishes to sell its foreign currency amount subject to the obligatory sale to a bank other than the bank where it opens account, such organization shall have to produce the signed foreign currency purchase and sale contract to the bank where it has opened account before or on the date when its foreign currency amount is credited into its account. The bank where its account is opened shall base itself on the foreign currency purchase and sale contract to transfer such foreign currency amount to the bank which has signed the foreign currency purchase contract. The latter shall have to immediately buy such foreign currency amount.

d/ Past 3 working days after foreign currency amounts are credited into their accounts, if the organizations still fail to perform the obligation to sell foreign currencies according to the prescribed percentage, the banks where the organizations have opened their accounts shall have to immediately buy foreign currency amounts subject to the compulsory sale from the account "money in safe-keeping and awaiting settlement", and at the same time credit them into Vietnam dong accounts opened by the organizations at the banks. In cases where an organization has not yet opened any Vietnam dong account at any bank, the concerned bank shall have to open a Vietnam dong account for such organization to effect the immediate purchase of foreign currencies.

2.2. For organizations’ foreign currency revenue sources not yet determined as current revenue sources subject to the obligatory sale:

a/ When foreign currency amounts, which have not yet been determined by the banks as current revenue sources subject to the compulsory sale, are credited into organizations’ foreign currency deposit accounts, the banks shall immediately deduct and transfer 40% of foreign currency amounts, for economic organizations or 100% for social organizations, to the account "money in safe-keeping and awaiting settlement", and at the same time notify such to the organizations;

b/ Within 3 working days after the foreign currency amounts are deducted and transferred into the account "money in safe-keeping and awaiting settlement", if organizations can produce to the banks valid papers evidencing that their foreign-currency revenue sources are not subject to the compulsory sale according to the provisions of Clause 2, Section 2, Chapter II of this Circular, the banks shall have to immediately deduct and return the foreign currency amounts from the account "money in safe-keeping and awaiting settlement" to foreign currency deposit accounts of organizations.

c/ Past 3 working days after foreign currency amounts are deducted and transferred to the account "money in safe-keeping and awaiting settlement", if organizations still fail to prove that such foreign currency amounts constitute current revenue source not subject to the compulsory sale or deliberately shirk the obligation to sell foreign currencies according to the prescribed percentage, the foreign currency purchase and sale between the banks and organizations shall be effected according to the provisions of Items c and d, Clause 2.1, Section 1 of this Chapter.

2.3. The banks shall have to pay foreign currency interests on foreign currency amounts already deducted and transferred from the foreign currency deposit account to the account "money in safe-keeping and awaiting settlement" according to the regulations of the bank where such account is opened.

2.4. When performing the obligation to sell foreign currencies from their current revenue sources according to the provisions of this Circular, organizations may retain a minimum foreign currency amount to maintain their foreign currency deposit accounts according to the regulations of the bank where such accounts are opened.

3. Modes of foreign currency purchase and sale:

3.1. Foreign currency purchase and sale with immediate delivery (Spot): Spot transactions shall be effected between banks and organizations within 3 days after foreign currency amounts are credited into organizations’ foreign currency deposit accounts.

3.2. Term foreign currency purchase and sale (Forward):

a/ Term of the purchase and sale of foreign currencies from current revenue sources subject to the compulsory sale according to the provisions of agreements signed between banks and organizations must be compatible with the payment time limit of export or service contracts with foreign countries in order to ensure that foreign currency amounts from current revenue sources shall, upon their transfer into organizations’ accounts, be immediately sold to banks.

b/ Regarding contracts for purchase and sale of foreign currencies from current revenue sources subject to the compulsory sale according to the provisions of agreements signed between banks and organizations before the effective date of this Circular, the organizations shall have to immediately sell their foreign currency amounts to banks according to the prescribed percentage as soon as such foreign currency amounts are credited into their foreign currency accounts.

Section 2. CURRENT REVENUE SOURCES NOT SUBJECT TO THE OBLIGATORY SALE OF FOREIGN CURRENCIES TO BANKS

1. Current revenue sources not subject to the obligatory sale of foreign currencies:

a/ Revenues from financial donations and non-refundable aids under the agreements between residents and donors;

b/ Revenues of parties undertaking entrusted exportation under entrusted export contracts. In these cases, the entrustors shall still have to perform the obligation to sell foreign currencies to banks;

c/ Revenues from the temporary import for re-export under goods sale/purchase contracts signed with foreign countries. Particularly for the revenue from price differences in foreign currencies arising from such operation, the obligation to sell foreign currencies to banks must be performed;

d/ Revenues from deposits and collateral by non-residents and revenues collected on behalf of non-residents;

e/ Foreign currencies of economic organizations, which are transferred into Vietnam by overseas Vietnamese or foreigners in order to help their families or next of kin or for other charity purposes, to be received under the State Bank’s permission;

f/ Current revenue sources not subject to compulsory sale under the Prime Minister’s decisions.

2. Papers proving foreign currency revenue sources, which are not subject to obligatory sale:

a/ For Point 1 (a): The agreement on financial donation or non-refundable aid signed with the donor or papers related to aid or financial donation source;

b/ For Point 1 (b): The entrusted export contract signed between the entrustor and entrustee;

c/ For Point 1 (c): The contract for temporary import for re-export, signed between the parties, and the Trade Ministry’s written permission for provision of temporary import and re-export services for such kind of goods;

d/ For Point 1 (d): The contract for goods and service purchase and sale that contains provisions on deposit or collateral; and the agreement on authorized collection between organization-residents and non-residents;

e/ For Point 1 (e): Vietnam State Bank’s permit for the economic organization to provide service of receiving and delivering foreign currencies transferred by overseas Vietnamese and foreigners into Vietnam;

f/ For Point 1 (f): The Prime Minister’s decision permitting the non-performance of the obligation to sell foreign currencies.

Papers and vouchers evidencing cases not subject to the compulsory sale of foreign currencies must be the originals or notarized copies. In cases where the notary public refuses to make notarization, banks may request organizations to produce the originals or copies affixed with written certification and seals of such organizations. The written certification must state that the content of copies and that of the original are the same. Organizations shall be held responsible before law for errors and/or omissions. For a paper or voucher with many pages, the concerned organization must inscribe its certification on each page.

Section 3. ORGANIZATIONS’ RIGHT TO BUY FOREIGN CURRENCIES

1. The right to buy foreign currencies

a/ Residents being Vietnamese economic organizations, Vietnam-based credit institutions, foreign companies’ branches, foreign contractors, contractors joining partnerships with foreign parties, State agencies, armed force units, political organizations, socio-political organizations, socio-professional organizations, social funds and charity funds of Vietnam, when having a demand for foreign currencies to meet the requirements of their current transactions, capital transactions and other licensed transactions, shall be entitled to buy foreign currencies from banks, provided that they can produce valid papers and vouchers.

b/ Residents being foreign-invested enterprises and foreign parties to business cooperation contracts, when having the demand for foreign currencies to meet the requirements of their current transactions, capital transactions and other licensed transactions, shall be entitled to buy foreign currencies from banks, provided that they can produce valid papers and vouchers.

c/ For residents being foreign-invested enterprises and foreign parties to business cooperation contracts, that invest in particularly important projects under the Government’s programs, the Prime Minister shall consider and decide the foreign currency balance for each project. Banks shall have to satisfy the foreign currency demands of foreign-invested enterprises and foreign parties to business cooperation contracts, for which the foreign currency balance shall be ensured as already decided by the Prime Minister. In cases where their existing foreign currency sources are not enough to satisfy the demands, they shall report such to the State Bank for supplement to foreign currency sources.

d/ Residents being foreign-invested enterprises and foreign parties to business cooperation contracts that invest in infrastructure construction projects or other important projects shall be considered and decided by the Prime Minister to have their foreign currency balance ensured on the basis of the proposal of the Vietnam State Bank Governor when banks are incapable of satisfying their foreign currency demands.

2. Papers necessary for the purchase of foreign currencies:

When buying foreign currencies to meet requirements of their current transactions, capital transactions or other licensed transactions, organizations shall have to produce to banks the following valid papers and vouchers for each kind of transaction:

a/ For payment for import of foreign goods and/or services: The contract for import of foreign goods and/or services; the Prime Minister’s import permit (for goods items on the list of goods banned from import), or permit or quota of the Trade Ministry or a specialized managing ministry (for the import of goods items on the list of goods subject to conditional import), the establishing decision, the business registration, the complete set of vouchers including letter of credit (if any), invoice, bill of lading and vouchers related to the import of goods and/or services.

b/ For payment for entrusted export or import of goods and/or services to the party undertaking the entrusted export or import: The export or import entrustment contract and vouchers related to entrusted export or import.

c/ For refund of compensations related to export of goods and/or services: The goods and service export contract, payment notice, written complaint, written record and papers related to the settlement of a dispute or complaint.

d/ For transfer of deposits for overseas bidding: The relevant contract(s), papers and vouchers related to the overseas bidding.

e/ For payment of membership fees to international organizations, registration fees for international conferences: The written approval of the competent agency and other relevant papers.

f/ For expenses related to charges and expenditures for the setting up and operation of representative offices abroad: The competent agency’s approval permitting the setting up of offices abroad and papers related to the payment of assorted charges and expenditures of such offices.

g/ For expenses related to the registration of trademarks, use copyright over invention patents, consultancy services: The relevant contract and papers related to the payment to foreign countries.

h/ For expenses related to the sending of individuals working in organizations abroad for work, study, survey, symposiums, ...: The competent agencies’ papers permitting such individuals to go abroad and papers related to the payments abroad and other relevant papers.

i/ For repayment of principals, interests and charges for foreign loans: The capital borrowing contract already approved and other relevant papers.

j/ For transfer of foreign currencies abroad by foreign-invested enterprises and foreign parties to business cooperation contracts: Depending on each foreign currency use purpose, the papers prescribed in the State Bank’s Circular No.04/2001/TT-NHNN of May 18, 2001 guiding the foreign exchange management applicable to foreign-invested enterprises and foreign parties to business cooperation contracts must be produced.

k/ For other current transactions and licensed transactions, the banks shall specify vouchers required for the purchase of foreign currencies on case-by-case basis.

Papers and vouchers submitted to banks for buying foreign currencies must be the originals or notarized copies. In cases where the notary public refuses to make notarization, banks may request organizations to produce the originals or copies affixed with written certification and seals of such organizations. The written certification must state that the content of copies and that of the original are the same. Organizations shall be held responsible before law for any errors. For a paper or voucher with many pages, the concerned organization must inscribe its certification on each page.

Section 4. RESPONSIBILITIES OF BANKS

Banks, when buying or selling foreign currencies with organizations according to the provisions of this Circular, shall have to strictly observe the following regulations:

1. To guide, urge and notify organizations to perform the obligation to sell foreign currencies to banks, and buy such foreign currencies according to the provisions of this Circular;

2. To meet the organizations’ foreign currency demands in compliance with the provisions in Section 3, Chapter II of this Circular and in compatibility with the actual value that must be paid by the organizations. Particularly, the sale of foreign currencies for payment for capital transactions shall comply with the current regulations.

3. To post up the buying and selling rates according to Vietnam State Bank’s regulations. The posting up of exchange rates shall be considered a commitment on foreign currency transaction with organizations;

4. Daily, to report to Vietnam State Bank (the Foreign Exchange Management Department) on exact foreign currency amounts bought and sold in the day, to maintain the foreign exchange status or Vietnam dong status, conduct the foreign currency purchase and/or sale with organizations, other banks and Vietnam State Bank on the inter-bank foreign currency market in order to meet organizations’ foreign currency demands and to maintain the day-end foreign exchange status according to Vietnam State Bank’s regulations;