When Foreign Currency Usage not Forbidden in Vietnam?

Foreign currency is a form of foreign exchange, the currency of another country or the common currency currently used in international and regional payments are collectively referred to as foreign currency. Cash foreign currency includes banknotes and coins. Banking and finance lawyers are always asked if an organization could use foreign currency on contract or for conducting certain business transactions, in Vietnam or abroad.

In order to ensure convenience in conducting transactions in Vietnam, ensure the rights of the State Bank and limit smuggling crimes, Foreign Exchange Ordinance provided: “within the territory of Vietnam, usage of foreign currency is not allowed in most cases for example foreign currency are not allowed in agreements, in making payments. Further, foreign currency even is not allowed in listings, advertisements, quotation, pricing. These apply for both residents and non- residents except for cases permitted in accordance with regulation of the State bank of Vietnam.”

However, there are some special cases where the Government allows individuals and organizations to use foreign currency when conducting transactions in the Vietnamese territory. Vietnam State Bank issued instructions that stipulate that residents are allowed to contribute capital in foreign currency by transfer in order to perform foreign investment projects in Vietnam. Residents being entities with legal person status are allowed to conduct internal transfer of capital in foreign currency between their accounts with accounts of their dependent units that have no legal person status and vice versa.

Non-residents are allowed to transfer in foreign currency for other non-residents; are allowed to denote prices in contracts in foreign currency and payment of export goods and services in foreign currency by transfer for residents. For foreign investors in Vietnam, foreign investors may deposit or escrow deposit in foreign currency by transfer when participating in auctions in the following cases:

(i) Purchase of shares in equitized state-owned enterprises approved by the Prime Minister;

(ii) Purchase of shares or contributed capital by the State in state-owned enterprises or divestment state-owned enterprises approved by the Prime Minister;

(iii) Purchase of shares or contributed capital of a State-owned enterprise to invest in another enterprise for divestment approved by the Prime Minister.

In case of winning the auction, the foreign investor shall transfer investment capital in accordance with the provisions of law on foreign exchange management to pay for the value of buying shares or contributed capital. In case of unsuccessful auction, foreign investors are allowed to transfer overseas the deposit or deposit in foreign currency after deducting related expenses, if any.

Except for the cases prescribed by the State Bank, acts of using foreign currency while performing transactions in the territory of Vietnam will be sanctioned depending on the seriousness of the violation. Therefore, individuals and organizations should pay attention to avoid unfortunate risks that may occur.

Readmore: https://antlawyers.vn/library/when-foreign-currency-usage-not-forbidden-in-vietnam.html

Vietnam is Still a Favorite Destination for Japanese Investors | ANT Consulting

Survey of Japan External Trade Organization (JETRO) published today in Hanoi shows that there are up to 70% of Japanese enterprises want to invest in Vietnam and expand their production in Vietnam, the highest rate among surveyed countries. 

Specifically, if 69.8% of Japanese enterprises surveyed in Vietnam think that they will expand their business in Vietnam, this rate in China is only 48.7%, Malaysia is 54% and Thailand is 52.2%. 

This is also the second year in a row, the result of Vietnam ranked first in this index.      

Evaluating the above results, according to Chief Representative of JETRO in Vietnam, even for enterprises established before 2010, there were 67.1% of businesses with the motto of expanding production, this is a relatively high rate, showing very positive signals. 

It shows that Vietnam continues to be an important investment destination, Japanese businesses are doing business effectively in Vietnam and putting high expectations on the potential and growth potential of this country. 

In the study of the Ministry of Planning and Investment, Japanese enterprises are interested in Vietnam based on the advantage of labor costs, the level of support from the government as well as the people, the economic scale is constantly increasing. In particular, the fact that Vietnam becomes partner in many free trade agreements is also a channel for Japanese businesses to access new markets. 

Commenting on the survey results, according to Deputy Minister of Planning and Investment, with nearly 70% of Japanese enterprises want to expand production in Vietnam, the highest rate in the surveyed countries have clearly reflected the stable economic environment, as well as the attractiveness of Vietnam for Japanese businesses. 

In addition, the number of Japanese businesses that make profits has increased to 65.3% in the context of foreign invested enterprises generally reported a loss of 52%. 

Towards 2019, the Government of Vietnam will submit to the National Assembly for amendments to the Investment Law and the Enterprise Law, perfecting the legal corridor for domestic and foreign enterprises to invest in business.