Vietnam News: FDI firms may open local currency accounts

Posted: November 22, 2013 in Asian Currency Markets
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VietNamNet Bridge – International investors and foreign direct investment (FDI) enterprises operating in the country may be allowed to open investment accounts in Vietnamese dong in addition to those in foreign currency.

The central bank has been passing around a draft circular governing the management of foreign exchange operations related to FDI enterprises in the country.

The draft, which is designed to guide the execution of the amended Ordinance on Foreign Exchange, requires FDI businesses and foreign investors involved in a business cooperation contract in Vietnam to open accounts at one of the banks licensed for foreign exchange transactions to serve their investment operations here in the nation.

One of the noticeable points in the draft is those accounts should not necessarily be in foreign currency as currently regulated. This might be because in reality, foreign partners in Vietnam-foreign joint ventures have been able to contribute capital or take out loans in either Vietnam dong or foreign currency.

This provision in the draft would open the way for FDI companies and international investors to use any legal funding sources in both dong and foreign currency to make capital contributions to domestic projects.

If this came true, foreign investors could take a huge sigh of relief as life would be made much easier for them.

However, if dong is used for capital contribution, FDI businesses or foreign investors involved in business
cooperation contracts would be required to open their accounts in dong at the banks where they currently have foreign currency accounts to conduct legal transactions in dong.

When they move their accounts from one bank to another, they would have to close their accounts at the current institution and transfer all the balance to their new accounts at the new banks.

Source: SGT

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