Press Release on issuance of Circular No.31/2018/TT-NHNN
Hanoi, December 18, 2018 – The Governor of the State Bank of Vietnam (SBV) issued Circular No.31/2018/TT-NHNN guiding the forex management for overseas investments in the oil and gas industry (Circular 31/2018/TT-NHNN). This newly issued Circular replaces Circular No. 36/2013/TT-NHNN dated December 31, 2013 stipulating the opening and the use of foreign currency accounts for overseas direct investments.
1. The need for the issuance of the new Circular:
Previously, regulations on forex management for overseas investments in the oil and gas industry were stipulated in Decree No.121/2007/ND-CP dated July 25, 2007 of the Government regulating the overseas direct investments in the oil and gas industry (Decree 121) and Decree No.17/2009/ND-CP dated February 16, 2009 of the Government amending and supplementing a number of articles of Decree 121 (Decree 17); as well as the SBV’s Circular No. 36/2013/TT-NHNN dated December 31, 2013 stipulating the opening and the use of foreign currency accounts for overseas direct investments (Circular 36).
On November 15, 2017, the Government issued Decree No.124/2017/ND-CP regulating the overseas investments in the oil and gas industry (Decree 124), which replaces Decree 121 and Decree 17. In Decree 124, the SBV is assigned to provide detailed guidance on a number of substances as follows: (i) Guiding principles of transferring foreign currencies abroad before being granted the Certificate of registration for overseas investment; (ii) Guidance on the forex management of overseas transferred foreign currencies for investments (after receiving the Certificate of registration for overseas investment); (iii) The reporting regime. Therefore, the SBV’s issuance of Circular No.31/2018/TT-NHNN replacing Circular 36 is aimed at providing guidance on the above-mentioned substances.
2. Main substances of Circular 31/2018/TT-NHNN:
Circular 31/2018/TT-NHNN is composed of 8 Chapters and 25 Articles providing guidance on the following main substances:
(1) Transferring foreign currencies abroad before the investment:
Decree 124 stipulates the cases of transferring foreign currencies abroad before the investment, which have to be permitted by the SBV, namely: (i) Transferring foreign currencies abroad for market research, seeking opportunities and preparing for the investment with the amount exceeding USD 500,000; (ii) Transferring foreign currencies abroad for bidding in the international market or other forms of guarantee with the amount exceeding USD 2 million. On that basis, Circular 31/2018/TT-NHNN stipulates the following substances: (i) Principles for transferring foreign currencies to overseas before the investment; (ii) Principles for approving foreign currency transfers to overseas for investments; (iii) Specific regulations on the form for requesting a foreign currency transfer to overseas before the investment made by the investor, and the form for approving a foreign currency transfer to overseas before the investment issued by the SBV; (iv) Principles of opening and using a foreign currency account before the investment and the transactions of revenues and expenditures via this account. At the same time, the new Circular also stipulates that the credit institutions are required to report to the SBV on the transactions via the investor’s foreign currency account before the investment.
(2) About currencies for overseas investments:
Decree 124 allows the use of foreign currencies and Vietnamese dongs for overseas investments in the oil and gas industry. On that basis, Circular 31/2018/TT-NHNN stipulates in details the currencies for overseas investments in the oil and gas industry, namely: (i) Foreign currencies, and (ii) Vietnamese dongs in case of transferring investment capital to a country or territory that has signed a bilateral/multilateral arrangement with Vietnam allowing the use of Vietnamese dongs in payment and money transfer transactions. At the same time, the new Circular also stipulates the opening and use of an investment account in Vietnamese dongs and the transactions of revenues and expenditures via this account.
(3) Principles of opening and use of an investment account after the investor has been granted the Certificate of registration for overseas investment, and the transactions of revenues and expenditures allowed via this investment account.
(4) Registration and registration for changes in the forex transactions: the sequences, procedures and dossiers have already been stipulated in Decree 124, therefore, Circular 31 only provides guidance regarding the form of registration and registration for changes in the forex transactions at the SBV, and the SBV’s authority in confirming the registration of forex transactions.
(5) Responsibilities of the investor for transferring the profit and investment capital to Vietnam via the investment account; and stipulating the utilization of the profits generated overseas in compliance with the current laws on investment and forex; responsibilities of investors, permitted credit institutions and the SBV entities; the reporting regime applied to the investors and the relevant organizations.
Translated by Le Hang