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THE STATE BANK
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SOCIALIST REPUBLIC OF
VIET NAM
Independence - Freedom – Happiness
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No: 08/1998/TT-NHNN7
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Hanoi, September 30,
1998
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CIRCULAR
GUIDING THE IMPLEMENTATION OF DECISION No.173/1998/QD-TTg OF
SEPTEMBER 12, 1998 OF THE PRIME MINISTER
On September 12, 1998, the Prime Minister issued
Decision No.173/1998/QD-TTg on the obligation to sell and the right to buy
foreign currency(ies) of residents being organizations; the State Bank of
Vietnam hereby, pursuant to Article 7 of that Decision, guides the
implementation of that Decision as follows:
I. GENERAL PROVISIONS:
1. "Current revenue sources" are
sources of revenues earned by residents from non-residents in forms of goods,
services, incomes from direct investment, incomes from investment in valuable
papers, interests on foreign loans and deposits, one-way money transfer and
similar transactions.
2. "Revenues from capital
transactions" are revenues from the transfer of capital into Vietnam,
direct investment, investment in valuable papers, borrowing and retrieval of
foreign loans, and other investment forms prescribed by Vietnamese law which
increase the credit assets of the residents from non-residents.
3. "Financial supports and humanitarian
aids" in this Circular are understood as non-refundable financial supports
and aids from non-residents to residents.
4. The time to fulfill the selling obligation:
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II. OBJECTS OF APPLICATION:
Subject to this Circular shall be:
1. State enterprises, private enterprises,
companies, cooperatives and other economic organizations of all economic
sectors of Vietnam, foreign-invested enterprises and foreign parties to
business cooperation contracts which are supported by the Vietnamese Government
in balancing their foreign currency(ies) and branches of foreign companies,
foreign contractors, domestic contractors joining partnership with foreign ones
(hereafter referred to as economic organizations).
2. State agencies, armed forces units, political
organizations, socio-political organizations, social organizations,
socio-professional organizations, social funds and charity funds of Vietnam,
which operate in Vietnam (hereafter referred to as the non-profit
organizations).
3. "Licensed banks" are banks based in
Vietnam and licensed by the State Bank to carry out foreign exchange activities
(hereafter referred to as banks).
III. CASES EXEMPT FROM THE
OBLIGATION TO SELL FOREIGN CURRENCIES:
1. The following foreign currency amounts shall
not be sold:
a) Revenue sources from financial supports
and/or humanitarian aids according to treaties or agreements with foreign
countries;
b) Revenues of the entrusted exporters under the
entrusted export contracts (in this case, the entrusting parties shall have to
fulfill the selling obligation and the entrusted parties shall have to sell
revenues earned from entrustment charges;
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d) Down-payments, escrow deposits and/or
advances made by non-residents and amounts collected on non-residents’ behalf;
e) Revenues earned from capital transactions.
2. Papers proving non-sale cases:
a) For Point 1(a): the originals or notarized
copies of the treaties or agreements signed with foreign countries or papers
related to the financial supports or humanitarian aids;
b) For Point 1(b): the originals or notarized
copies of the entrusted export contracts between the entrusting and entrusted
parties;
c) For Point 1(c): the originals or notarized
copies of the goods purchase and sale contract signed between parties and the
Ministry of Trade’s written permits for temporary import for re-export
services;
d) For Point 1(d): the originals or notarized
copies of the contracts which contain provisions on escrow deposits,
downpayments or advances.
e) For Point 1(e): the originals or notarized
copies of contracts or vouchers related to the revenues earned from capital
transactions.
IV. THE OBLIGATION OF
ORGANIZATION-RESIDENTS TO SELL FOREIGN CURRENCY(IES)
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1. The prescribed selling percentages:
a) The economic organizations shall have to sell
80% of their foreign currency amounts earned from current revenue sources to
the banks within 15 (fifteen) working days from the date such foreign
currency(ies) are credited to their deposit accounts.
b) The non-profit organizations shall have to
sell all their foreign currency amounts earned from current revenue sources to
the banks within 15 (fifteen) working days from the date such foreign
currency(ies) are credited to their deposit accounts.
2. The selling procedures:
a) When foreign currency(ies) earned from
current revenue sources of organization-residents are credited to their deposit
accounts, the banks shall have to immediately deduct the foreign currency
amounts which must be sold as prescribed from such revenue sources and transfer
them to "custody" accounts, and at the same time notify their clients
of the foreign currency amounts which must be sold, so that procedures for
selling foreign currency(ies) can be carried out.
Organization-residents with current revenue
sources which shall not be sold as stipulated in Point 1, Part III of this
Circular shall send to the banks, where they opened foreign currency accounts,
vouchers defined in Point 2, Part III to prove that such revenue sources are
exempt from being sold. The banks shall, after receiving vouchers proving the
non-sale foreign currency revenue sources, have to return such foreign currency
amounts to the organizations’ deposit accounts.
b) Within 15 (fifteen) working days from the
date foreign currency amounts are credited to the deposit accounts, if the
above-said organizations fail to sell foreign currency amounts to the banks as
prescribed or fail to produce vouchers proving the non-sale revenue sources,
the banks shall send notices reminding the organizations to fulfill their
obligation to sell foreign currency(ies) within 5 (five) subsequent working
days.
Past above-said 5-day time limit, if the
organizations still fail to fulfill the obligation to sell their foreign
currency amounts, the banks shall buy the foreign currency amounts kept on the
"custody" accounts.
c) Within 15 (fifteen) working days from the
date the foreign currency amounts are credited to the deposit accounts,
organizations that need foreign currency(ies) to pay for transactions when they
become due shall be entitled to use the credit balance currently available on
their deposit accounts for that purspose. If the credit balance on deposit
accounts is not enough to pay for such transactions, the banks shall allow the
organizations to use the foreign currency amounts on the "custody"
accounts to pay the deficit, after the organizations produce all relevant
papers.
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B. THE OBLIGATION TO SELL FOREIGN CURRENCY(IES)
EARNED FROM CURRENT REVENUE SOURCES BEFORE THE EFFECTIVE DATE OF DECISION
NO.173/1998/QD-TTG (SEPTEMBER 12, 1998) OF WHICH THE CREDIT BALANCE IS
AVAILABLE ON DEPOSIT ACCOUNTS
1. The prescribed selling percentages:
a) By the end of October 5, 1998 at the latest,
the economic organizations shall have to sell to the banks 80% of their foreign
currency amounts earned from current revenue sources before September 12, 1998,
which are still reflected on the deposit account credit balance.
b) By the end of October 5, 1998 at the latest,
the non-profit organizations shall have to sell to the banks all their foreign
currency amounts earned from current revenue sources before September 12, 1998,
which are still reflected on the deposit account credit balance.
2. The selling procedures:
a) The banks shall have to determine the volume
of foreign currency(ies) earned from the revenue sources arising before
September 12, 1998 (including those other than current revenue sources) and
still remaining on the credit balance of deposit accounts of the economic
organizations and/or non-profit organizations, and promptly transfer the
above-said determined foreign currency amounts from the deposit accounts to
"custody" accounts according to the following percentage: 80% of the
determined foreign currency amounts for economic organizations, and 100% for
non-profit organizations. At the same time, the banks shall have to promptly
notify the organizations thereof so that the latter can fulfill the foreign
currency selling obligation by the end of October 5, 1998 at the latest.
b) Until before October 5, 1998, the
organizations having non-sale foreign currency revenue sources as stipulated in
Point 1, Part III shall have to send vouchers and complete proving such revenue
sources according to guidance in Point 2 Part III to the banks where they
opened accounts.
The banks shall calculate the foreign currency
amounts which must be sold by organizations, as follows:
- For economic organizations
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- For non-profit organizations
A = B - C
In which:
A: The foreign currency amounts which must be
sold;
B: The credit balance from revenue sources
arising before September 12, 1998, which is available on the deposit account at
the end of September 30, 1998;
C: The foreign currency amounts which must not
be sold as stipulated.
The banks shall compare the foreign currency
amounts which must be sold (A) with those on the "custody" accounts.
If the must-be-sold foreign currency amounts are smaller than those on the
"custody" accounts, the banks shall buy such must-be-sold foreign
currency amounts and return the difference to the organizations’ deposit
accounts.
c) After October 5, 1998, if the organizations
still fail to sell their foreign currency amounts to the banks, the banks shall
buy the foreign currency amounts on the "custody" accounts according to
obligation stipulated in Point 4 of Decision No.173/1998/QD-TTg of September
12, 1998 of the Prime Minister.
d) Until before October 5, 1998, organizations
that need foreign currency(ies) to pay for transactions which become due shall
be entitled to use the credit balance available on their deposit accounts for
such purpose. If the credit balance on deposit accounts is not enough to pay
for such transactions, the banks shall allow the organizations to use the
foreign currency amounts on the "custody" accounts to pay the
deficit, after the organizations produce all relevant papers.
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V. THE RIGHT OF THE
ORGANIZATION-RESIDENTS TO BUY FOREIGN CURRENCY(IES)
1. Residents that have a demand for foreign
currency(ies) to meet the requirements of their current transactions and other licensed
transactions as prescribed shall be entitled to buy foreign currency(ies) at
the licensed banks, provided that they can produce valid papers and vouchers to
the banks.
2. When buying foreign currency(ies) to fulfill
due payment obligations in their current transactions or other licensed
transactions, the organization-residents shall have to produce the originals or
notarized copies of the following valid papers and vouchers to the banks:
a) For payments for imported goods and/or
services to foreign parties: the goods and/or service import contracts with
foreign parties; the import permits issued by the Prime Minister (for goods
items on the list of goods banned from import), or permits or quotas issued by
the Ministry of Trade or the specialized managing ministry (for import of goods
items on the list of goods subject to the conditional import); the
establishment decisions, business registrations and complete voucher sets
comprising letters of credit (if any), invoices, bills of lading and vouchers relating
to import of goods and services, are required;
b) For payments for entrusted export and/or
import of goods and services to the organizations undertaking the entrusted
export and/or import: the entrusted export and/or import contracts and vouchers
relating to entrusted export and/or import are required;
c) For reimbursement of compensations related to
export of goods and services: the goods and service export contracts, payment
notices, written complaints, minutes and papers relating to the settlement of
disputes and/or complaints are required;
d) For transfer of deposits for bidding abroad:
the relevant contracts, papers and vouchers relating to the bidding abroad are
required;
e) For expenses for exhibitions, advertising,
commercial and training programs: the relevant contracts, written approvals by
competent agencies, payment notices sent from abroad and other relevant papers
are required;
f) For remittance of international
organizations’ membership fees and registration fees for international meetings:
the written ratification of the competent agencies and other relevant papers
are required;
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h) For expenses relating to the registration of
trademarks and copyright, or the utilization of invention patents and
consultancy services: the relevant contracts and other papers relating to the
payments to foreign countries must be produced;
i) For expenses relating to the sending of
individuals working in organization-residents abroad for work, study, survey, symposium...:
the competent agencies’ papers permitting the overseas trip, papers relating to
the payments made in foreign countries and other relevant papers must be
produced;
j) For the transfer of legal capital and
re-investment capital abroad by foreign investors investing in Vietnam: the
written liquidation records of the investment licensing agencies, the reports
on fulfillment of financial obligations toward the Vietnamese State which are
certified by the competent tax agencies and other relevant papers are required;
k) For the transfer of profits abroad by foreign
investors investing in Vietnam: the financial reports with the certification by
auditing agencies, the written profit-sharing report of the managing boards
(for foreign-invested enterprises being joint ventures), the competent tax
agencies’ certification that the financial obligations toward the Vietnamese
State have been fulfilled, the reports on liquidation of enterprises or
business cooperation contracts which are ratified by the investment licensing
agencies (if the foreign investors transfer profits upon the expiry or
dissolution), and other relevant papers are required;
l) For the repayment of foreign loan capital:
the approved loan contracts and other relevant contracts are required;
m) For other current transactions: the banks
shall specify the vouchers necessary for foreign currency purchase on
case-by-case basis.
3. The purchase of foreign currency(ies) by
foreign-invested enterprises and foreign parties to business cooperation contracts,
which are not supported by the Vietnamese State in balancing their foreign
currency demands, shall be effected according to the current regulations.
4. Organization-residents subject to Decision
No.37/1998/QD-TTg of February 14, 1998 which sold foreign currency(ies) to
banks before the effective date of Decision No.173/1998/QD-TTg shall, within 6
(six) months from the date of selling foreign currency(ies) under Decision
No.37/1998/QD-TTg, be entitled to buy back the foreign currency amounts
previously sold to banks.
VI. FOREIGN CURRENCY PURCHASE
AND/OR SALE WITH THE STATE BUDGET
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VII. THE RESPONSIBILITIES OF
BANKS
The banks, when purchasing and/or selling
foreign currency(ies) as stipulated in this Circular with their clients, shall
have to strictly comply with the following regulations:
1. To guide, urge and notify the
organization-residents to fulfill their obligation to sell foreign
currency(ies) to banks; and purchase foreign currency(ies) as stipulated in
this Circular;
2. To satisfy the foreign currency demands of
organization-residents as stipulated in Part V of this Circular to the extent
of the actual value of payments made by such clients and shall sell foreign
currency(ies) to the clients only when the payments become due. Particularly,
the sale of foreign currency(ies) for making payments for capital transactions
shall be effected according to the current regulations;
3. To post up the buying and selling rates
according to the State Bank’s regulations, the posting up of exchange rates
shall be considered a commitment on foreign currency transactions with the
clients;
4. To accurately report daily to the Central
State Bank on the foreign currency amounts bought and sold in the day, thus
ensuring the maintenance of the foreign exchange status or Vietnam Dong status,
and conduct the purchase and/or sale of foreign currency(ies) with the clients,
other licensed banks and the State Bank on the inter-bank market to meet the
legitimate demand of the clients and ensure that the foreign exchange status at
the end of the day be maintained within the prescribed limit.
5. To detect the violation acts committed by
banks or organization-residents against the stipulations of this Circular and
inform the Central State Bank thereof so that the latter takes handling
measures.
VIII. THE RESPONSIBILITIES OF
ORGANIZATION-RESIDENTS:
1. To strictly make the sale of foreign
currency(ies) according to provisions of this Circular;
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3. To make truthful declarations according to
provisions of this Circular;
4. To detect banks’ or organization-residents’
violations of provisions of this Circular and inform the Central State Bank
thereof so that the latter takes handling measures.
If the above-said banks and
organization-residents commit violations of provisions of this Circular, they
shall, depending on the seriousness of the violations, be handled according to
the Ordinance on Handling of Administrative Violations, suspended from foreign
exchange business operations or deprived of their operation licenses. If they
commit serious violations, they shall be examined for penal liability.
IX. IMPLEMENTATION PROVISIONS:
1. This Circular takes effect from September 30,
1998. All previous stipulations on foreign exchange management which are
contrary to this Circular are now annulled.
2. The heads of departments and bureaus, the
chief of the office and the chief inspector of the Central State Bank, the
directors of the provincial/municipal State Bank branches, the general
directors (directors) of the commercial banks, joint venture banks, joint-stock
banks and foreign bank branches shall, within their respective functions, have
to implement, organize and guide the implementation of this Circular.
3. The ministries, branches and agencies
attached to the Government and the provincial/municipal People’s Committees
shall, within their respective functions and tasks, have to coordinate with one
another in implementing this Circular.
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