What is the definition of “Direct investment account” in Vietnam?

What is the definition of “Direct investment account” in Vietnam?

Pursuant to Clause 5, Article 3 of the Circular 06/2019/TT-NHNN stipulating definition of “Direct investment account” as follows:

5. “Direct investment account” means foreign currency or Vietnamese dong demand accounts opened by FDI enterprises and foreign investors at authorized banks to perform transactions regarding the foreign direct investment in Vietnam under the regulations stated in Article 5, 6 and 7 of this Circular.

Opening and using direct investment accounts in Vietnam:

Pursuant to Article 5 of the same Circular stipulating opening and using direct investment accounts in Vietnam as follows:

1. The following entities shall open and use direct investment accounts include:

a) Enterprises with foreign direct investment capital as prescribed in clause 2 Article 3 of this Circular.

b) Foreign investors participate in BCC or directly implement PPP projects without establishing project enterprises (hereinafter referred to as foreign investors directly implementing PPP projects);

2. An investor specified in clause 1 of this Circular shall open the direct investment account as follows:

a) Open a foreign currency account at one (01) authorized bank in order to receive and make payments in that currency during the process of foreign direct investment in Vietnam;

b) Only 01 (one) direct investment account may be opened for a foreign currency at one (01) authorized bank;

c) In case of investing in Vietnamese dong, the investor open one (01) direct investment account in Vietnamese dong at the authorized bank where the direct investment account in foreign currency is opened in order to receive and make payment in VND during the process of foreign direct investment in Vietnam;

d) In case the foreign investor participates in several BCCs or directly implements several PPP projects, such foreign investor shall open a direct investment account for each BCC or PPP project.

3. If the currency of an overseas loan is different from the currency of the FDI enterprise’s direct investment account, it may open other direct investment accounts of the loan currency at authorized banks where they have already held direct investment accounts in order to perform their receipt and expenditure transactions regarding foreign loans in accordance with regulations of law on overseas loan receipt and repayment of enterprises;

4. In case the authorized bank is changed, the account holder prescribed in clause 1 of this Article shall:

a) Open another direct investment account at another authorized bank;

b) Transfer all the balance from old direct investment accounts into the new ones and close the former;

c) Direct investment accounts at other authorized banks shall only be used for performing receipts and expenditures transactions prescribed in Article 6,7 of this Circular after the process prescribed in point a,b of this clause is completed.

5. Procedures for the opening and closing of direct investment accounts must adhere to regulations of the State Bank of Vietnam (hereinafter referred to as the State Bank) on opening and using of demand accounts at payment service providers.

6. The enterprises prescribed in point b, c clause 2 Article 3 of this Circular shall close their direct investment accounts, and their non-resident foreign investors who hold shares/stakes at such enterprises shall open accounts of indirect investment for receipts and expenditures transactions in accordance with regulations on foreign exchange management of foreign indirect investment in Vietnam in the following cases;

a) After the transfer of shares, contributed capital or issuance of additional shares in order to raise the charter capital of an FDI enterprise, the rate of owned shares, contributed capital of foreign investors at such enterprise is below 51% ;

b) After stocks of the public company with FDI are listed or registered for transactions on securities market.