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ベトナム State Bank Expands Individuals' Forex Rights

The State Bank of Vietnam has recently announced Decision 1452 on foreign exchange by credit institutions and for the first time permitted individuals to conduct term foreign exchanges and currency option transactions with banks.
Director Truong Van Phuoc at the Foreign Exchange Management Department of the State Bank says term exchange is suited to those having foreign currency (such as foreign currency depositors), who now can sell currency to a bank over a term for a higher price than selling it at once.

In cases where individuals need to use foreign currency for legitimate purposes, such as studying and treating diseases in foreign countries, they are advised to buy the right to have this currency option to prevent risks caused by changes in the exchange rate.
Tung Lien

Ministry of Tradeが刊行しているようだ。

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ベトナム Forex Changes for the Best
ベトナム関係の情報 空港ラウンジにある雑誌で気になっていたが、検索すると出てくる。

The State Bank of Vietnam’s foreign exchange management policy for further globalization aims at increasing the efficiency of state management and its role in macro regulation, while at the same time improving enterprises' self-control, as outlined by the Enterprise Law. The basis for achieving the goal is to further reform administration and modernize the banking system, including liberalization of non-account transactions.
Liberalization of non-account transactions

The overseas remittance policy has been relaxed. Before 1990, a policy already existed to encourage overseas Vietnamese to send money to Vietnam. The policy, however, proved to be limited and did not actively encourage remittance to the country. Immigrants, for instance, were not free to bring foreign currency into Vietnam and were required to exchange foreign currency withdrawn from banks to Vietnamese dong in a limited amount each time of withdrawal, as well as to pay income tax.

Since 1990, though, these regulations have been scrapped and replaced with more liberal rules, including allowing cash remittance to receivers in foreign currency, while additional organizations, such as post offices, banks, and overseas remittance services companies, may now remit foreign currency. Charge regulations have been made more transparent, while remitted foreign currency does not need to be surrendered (meaning that money receivers are not required to sell foreign currency to banks), while income tax has also been dropped. As a result, overseas remittance increased impressively from US$35 million in 1991 to more than US$2.7 billion in 2003 and an estimated US$3 billion in 2004.

Liberalization of the policy on foreign currency surrender: Given Vietnam's transforming economy, its foreign currency surrender policy is considered a situational solution in order to collect sources of foreign currency at banks to pay for imports, and to reduce speculation and exchange rate pressure. However, the foreign currency surrender policy has been progressively liberalized. In September 1998, the Government announced Decision 173 while the State Bank of Vietnam issued Circular 08 to provide guidelines for observation of surrender regulations. Accordingly, business organizations that are based in Vietnam (not including foreign direct investment enterprises) and are not subject to the Government's balance of foreign currency, must sell 80 percent of their non-account income to banks. Meanwhile, non-economic organizations must sell 100 percent of foreign currency worth of their non-account income.

Following the policy on economic globalization in the trend of liberalizing non-account transactions, the surrender rate was progressively lowered to 50 percent in 1999, 40 percent in 2001, 30 percent in 2002, and zero percent since 2003.

Forex management policy toward capital transactions

Vietnam is in a period of constant change and development, which has led to a lack of domestic capital. Given this situation, capital transactions cannot currently be liberalized, and they continue to be controlled by the State to encourage capital inflows and limit capital transfer abroad.

Policy on foreign loans and foreign debt payment: In 1990, before the Vietnamese economy was opened, most Vietnamese debts were in the public sector. Capital was not optimally invested due to a lack of sufficient attention, careful estimation, sound debt strategy, a proper foreign debt management policy, and accurate predictions of the economy's ability to use capital. For these reasons, Vietnam could not pay its debts with the International Monetary Fund, while exports also reduced sharply due to political instability in other socialist countries.

However, since the economic open-door policy started in 1991, the Government has taken a range of measures to deal with long-standing debts, such as asking for debts to be forgiven, extending debts, making new loans and paying old debts, and setting aside part of the annual state budget for debt payment. As a consequence, Vietnamese debts with the London Club have been reduced by more than 50 percent, while MIB debts also fell by about 65 percent. This was a major step towards successful international integration.

In 1993, the Government announced Decree 58/ND-CP on management of foreign loans and foreign debt payment. In 1998 it issued Decree 90, which substitutes Decree 58 and further defines state agencies' role in managing foreign debts. In addition, more flexible regulations have since been applied to control enterprises' foreign loans and debts, which have given enterprises and banks the initiative in dealing with this issue. For example, the Government has abandoned regulations on interest conditions, enabled enterprises to open other capital accounts to receive and refund loans, and allowed commercial banks to identify L/C (Letter of Credit) safe limits. Management of foreign loans and foreign debt payment has changed from direct to indirect, which has step by step built a foundation for liberalizing capital transactions.

Policy on forex management in the field of foreign investment: In the past, FDI enterprises themselves had to balance foreign currency under their revenue and expenditure plans. Further, they were not allowed to buy foreign currency from banks (not including FDI enterprises operating in the fields of infrastructure or production of goods for import substitutions). Buyers of foreign currency must have a license. By the end of 1990, however, these regulations, including the licensing mechanism, were made null and void. FDI enterprises are now eligible for direct contact with commercial banks to buy foreign currency to meet the demand for non-account transactions.

Policy on foreign investors' indirect investment and Vietnamese enterprises' investment abroad: Vietnam now allows foreign investors to invest in a certain amount of bonds and shares of Vietnamese enterprises (following State Bank Governor Decision 998/QD-NHNN dated September 13, 2002, which stipulates forex management of foreign organizations' and individuals' stock trading at securities trading centers).

Because Vietnam still lacks capital for development investment, overseas investments by Vietnamese enterprises has remained limited, while enterprises intending to invest abroad must acquire a license from the Ministry of Planning and Investment. However, enterprises licensed to invest overseas are allowed to buy foreign currency at the commercial bank system for transferring investment capital abroad.

Overall, along with the process of internationalization, the State Bank's forex management policy has progressively been relaxed by allowing more non-account transactions and gradually liberalized capital transactions in pace with the process of international integration in the field of finance and money.
Source: Monetary Policy Department of the State Bank of Vietnam


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