Press release on the issuance of Circular No.32/2018/TT-NHNN
On December 18th 2018, the Governor of the State Bank of Vietnam (SBV) issued Circular No.32/2018/TT-NHNN guiding the SBV's foreign currency conversion procedures for the projects under Government Guarantee & Undertaking (GGU) and Government’s support for foreign currency conversion (hereinafter referred to as Circular No.32/2018/TT-NHNN), which replaces Decision No. 218/2002 / QD-NHNN dated March 22nd 2002 of the Governor of the SBV prescribing the procedures of converting Vietnamese dongs into US dollars and the transfer thereof abroad for projects guaranteed and undertaken by the Government (Decision 218).
The necessity of issuing the Circular:
In 2002, the SBV issued Decision 218 guiding the procedures of converting into foreign currencies for projects which are guaranteed by the Government for 100% of the foreign currency conversion demands. However, since 2011 till now, the foreign currency conversion guarantee mechanism have changed; whereby some projects are guaranteed by the Government with the rate ranging between 30% and 70% of the foreign currency conversion demands, and some projects are only guaranteed with a rate of 30%. Hence, the foreign currency conversion procedures prescribed in Decision 218 are no longer appropriate. In addition, the legal grounds for issuing Decision 218 have expired and therefore it is necessary to be replaced by another legal document.
Therefore, the issuance of a Circular in replacement of Decision 218 is necessary to timely guide the procedures of foreign currency conversion between the SBV and the Bank conducting the conversion.
Circular No.32/2018/TT-NHNN consists of the following main substances:
1. Regulations on the implementation principles, whereby: (i) Project-implementing enterprises, investors shall proactively conduct foreign currency conversion in the market, and shall report to the SBV on the conversion demands and the designated bank for conducting the conversion, (ii) The bank conducting the conversion shall identify and report to the SBV on the amounts of Vietnamese dongs that need to be guaranteed, support the remaining amounts to be converted.
2. Regarding the foreign currency conversion procedures: the Circular stipulates 02 Procedures for the SBV to sell foreign currencies to the bank conducting the conversion, corresponding to the guaranteed amount and support for foreign currency conversion of the Government, including: (i) The procedures applicable to foreign currency conversion demands guaranteed by the Government; (ii) The procedures applicable to foreign currency conversion demands committed conversion support by the Government.
3. At the same time, the Circular regulates the responsibilities of the entities under the SBV, the bank conducting the conversion, the project-implementing enterprises, the investors, and the statistical reporting regime applicable to the project-implementing enterprises, the investors and the bank conducting the conversion.
Translated by VA