State Bank of Vietnam: New Circular to Better Manage Foreign Investment Protocols

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The new circular will regulate the opening and use of Vietnamese Dong-denominated accounts for foreign investors, to conduct foreign indirect investment activities in Vietnam, VNS reported.

For upgrading and developing the Vietnamese stock market, the Prime Minister has assigned the SBV to preside over and coordinate with the Ministry of Finance, the State Securities Commission and relevant agencies to review and propose amendments and supplements to legal regulations. This should simplify procedures and shorten the time of opening indirect investment capital accounts for foreign investors to create favorable conditions for foreign investors when participating in the Vietnamese stock market.

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On the other hand, the currently foreign exchange management circular for foreign indirect investment activities, regulated in Circular 05/2014/TT-NHNN issued in 2014, is deemed to be no longer appropriate. The circular was based on the Investment Law in 2005, Securities Law 2006 and Law on Credit Institutions 2010, which have been replaced by the Investment Law 2020, the Securities Law 2019 and the Law on Credit Institutions 2024.

The amended draft circular will simplify procedures for opening indirect investment accounts of foreign investors, regulate the opening of online indirect investment accounts and allow foreign investors to open many indirect investment accounts corresponding to their granted securities transaction codes.

According to the draft circular, foreign indirect investment activities are carried out in accordance with the provisions of the country’s laws on investment securities and other relevant laws. All revenue and expenditure of transactions related to foreign indirect investment activities in Vietnam by foreign investors must be carried out through Vietnamese Dong-denominated accounts. The draft circular also stressed that the balance in indirect investment accounts of a foreign investor cannot be transferred to term deposits and savings deposits.

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