On April 14, 1999 the Government issued Decree No. 22/1999/ND-CP stipulating the overseas investment by Vietnamese enterprises, the State Bank of Vietnam hereby concretely guides the management of foreign exchange in Vietnamese enterprises with overseas investment capital as follows:

I. SUBJECTS OF APPLICATION

1. This Circular applies to Vietnamese enterprises permitted to make overseas direct investment, including enterprises established under the State Enterprise Law; cooperatives established under the Cooperative Law; and enterprises established under the Enterprise Law (hereinafter collectively called enterprises).

2. This Circular does not apply to the following subjects:

a/ Foreign-invested enterprises and foreign parties to business cooperation contracts.

b/ Vietnamese enterprises making overseas investment in the forms of credit lending, share purchase, banking and insurance.

II. OPENING AND USE OF ACCOUNTS

3. In order to realize overseas investment projects, enterprises must open foreign currency deposit accounts at banks licensed to conduct foreign exchange operations (hereinafter called licensed banks). All transactions of transferring money abroad and into Vietnam, which are related to the enterprises� overseas investment activities, must be effected through these accounts:

Revenues:

a/ Foreign currencies transferred from the enterprises� foreign currency deposit accounts for making investment capital contribution or transferring investment capital abroad;

b/ Profits, turnover divided to the enterprises and other lawful incomes earned from their overseas investment activities and transferred back into Vietnam;

c/ Investment and re-investment capital transferred back into Vietnam.

Expenditures:

a/ Expenditures transferred abroad as investment capital contribution or investment capital for implementation of investment projects;

b/ Expenditures transferred into the enterprises� foreign currency deposit accounts;

c/ Foreign currencies sold to banks licensed to conduct foreign exchange operations.

4. The opening and use of overseas foreign currency accounts for overseas investment projects shall comply with the regulations of the host countries and serve only transactions related to the activities of overseas investment projects.

Where enterprises wish to open overseas foreign currency accounts, they must comply with the provisions in Section 1, Chapter V, Part Two of Circular No. 01/1999/TT-NHNN7 of April 16, 1999 of the State Bank, guiding the implementation of the Government�s Decree No. 63/1998/ND-CP of August 17, 1998 on foreign exchange management.

III. TRANSFER OF INVESTMENT CAPITAL ABROAD, TRANSFER OF PROFITS, INVESTMENT AND RE-INVESTMENT CAPITAL BACK INTO VIETNAM

5. Enterprises must register with the State Bank�s branches in the provinces or cities where they are headquartered for the opening of foreign currency accounts and the tempo of transfer of investment capital abroad. A dossier consists of:

- An application for registration of accounts and transfer of investment capital abroad;

- The business registration certificate (a notarized copy);

- The license for overseas investment, issued by a competent Vietnamese body (a notarized copy);

- The written approval of investment by the host country (attached with a Vietnamese translation stamped and signed by the general director or director);

- The document stating the tempo of investment capital contribution (inscribed in the charter or joint-venture contract or business cooperation contract already approved by a competent body of the investment-receiving country (if any) or the plan on the tentative tempo of investment capital contribution, made by the enterprise licensed to make investment abroad).

Within five working days after the date of receipt of complete and valid dossiers, the State Bank�s provincial/municipal branches shall have to certify the account opening and registration of the tempo of transfer of investment capital abroad, which shall serve as basis for the Vietnamese investors to transfer their investment capital abroad via their accounts already opened at licensed banks for the execution of the investment projects.

6. Enterprises may only use the source of foreign currencies in their foreign currency deposit accounts opened at licensed banks for making overseas investment capital contribution according to the provisions in the investment licenses granted by the competent bodies.

7. Annually, enterprises with overseas investment capital shall have to transfer profits and other lawful incomes back home within six months after the end of the fiscal year of the host country.

Where they are unable to transfer profits and other lawful incomes back into Vietnam within the above-mentioned time limit, enterprises must make reports explaining the reason(s) therefor to the State Bank�s branches of the provinces or cities where they are headquartered.

Enterprises shall have to perform the obligation to transfer foreign currencies back home with regard to profits and other lawful incomes from their overseas investment activities according to the Government�s regulations in each period.

8. Upon completion of projects or dissolution ahead of time, or due to non-implementation of projects, enterprises must transfer their investment capital, re-investment capital and amounts collected from the liquidation thereof back home within six months after the date of completion of such liquidation and report to the State Bank�s branches of the provinces or cities where they are headquartered on the situation of the transfer of their capital, profits and other lawful incomes back into Vietnam.

Where they are unable to transfer capital back into Vietnam within the above time limit, enterprises must make reports explaining the reason(s) therefor to the State Bank�s branches of the provinces or cities where they are headquartered.

9. Where enterprises use their profits for re-investment or prolong the overseas investment duration, after obtaining the written approval of the Ministry of Planning and Investment, they must register with the State Bank�s branches of the provinces or cities where they are headquartered the situation on the use of their profits for re-investment or prolongation of the investment duration.

10. When effecting the transfer of investment capital abroad at the request of enterprises, licensed banks shall have to check the written certifications of the enterprises� registration of foreign currency account-opening and transfer of investment capital abroad as prescribed at Point 5 of this Circular. Licensed banks may transfer investment capital abroad only when enterprises have such written certifications by the State Bank�s branches of the provinces or cities where they are headquartered.

IV. INFORMATION REPORTING AND VIOLATION HANDLING

11. Annually, within six months after the end of the fiscal year of the host country, enterprises must send to the State Bank�s branches of the provinces or cities where they are headquartered the financial statements (including the asset balance sheets and the business results, profits or losses, of the enterprises), certified by an auditing body or competent body of the host country.

12. Annually, not later than the fifteenth of January (for last six months� reports) and the fifteenth of July (for first six months� reports), enterprises with overseas investment projects shall have to report to the State Bank of Vietnam (the Foreign Exchange Management Department) and its branches in the provinces or cities where they are headquartered on the situation of their operation and execution of overseas investment capital.

13. Annually, not later than the fifteenth of January (for last six months� reports) and the fifteenth of July (for first six months� reports), licensed banks (through their head offices) shall have to report to the State Bank of Vietnam (the Foreign Exchange Management Department) on the situation of the transfer of money abroad and back into Vietnam, related to the enterprises� overseas investment activities.

14. Within 30 days after the effective date of this Circular, enterprises which have carried out overseas investment projects must register their accounts and tempo of overseas investment capital contribution according to the provisions of Point 5 of this Circular, and, at the same time, report on the situation of the execution of overseas investment capital till such point of time to the State Bank�s branches in the provinces or cities where they are headquartered.

15. Annually, not later the twentieth of January (for last six months� reports) and the twentieth of July (for first six months� reports), the State Bank�s provincial/municipal branches shall have to report to the State Bank Governor (through the Foreign Exchange Management Department) on the situation of the overseas investment by enterprises based in their localities (the situation of the account opening and capital transfer registration, the situation of the execution of overseas investment capital, advantages, difficulties and proposed solutions).

16. If enterprises with overseas investment capital or licensed banks violate the provisions of this Circular, they shall, depending on the seriousness of their violations, be sanctioned according to the provisions of the Government�s Decree No. 20/2000/ND-CP of June 16, 2000 on the sanctioning of administrative violations in the monetary and banking field, or be handled according to other current law provisions.

V. IMPLEMENTATION PROVISIONS

17. This Circular takes effect 15 days after its signing and replaces the provisions of Section II, Chapter III, Part Four of Circular No. 01/1999/TT-NHNN7 of April 16, 1999 of the State Bank guiding the implementation of the Government�s Decree No. 63/1998/ND-CP on foreign exchange management.

18. The heads of the units under the State Bank of Vietnam, the directors of the State Bank�s provincial/municipal branches, the general directors (directors) of credit institutions, the general directors (directors) of enterprises with overseas investment capital shall, within the scope of their functions, have to organize and guide the implementation of this Circular.

For the State Bank Governor
Deputy Governor
DUONG THU HUONG