Opening Direct Investment Account: A Must for FDI Businesses

Specifically, according to the State Bank, based on the provisions of the amended Ordinance on foreign exchange, the draft Circular stipulates that FDI and foreign investors who participate in a business cooperation contract must open a direct investment account in a licensed credit institution to conduct foreign exchange transactions relating to direct investment activities in Vietnam.

 

Differing from previous regulations, the draft Circular does not demand that the direct investment account be in foreign currency. This provision enables FDI businesses and foreign investors to use legal capital sources in either foreign currency or VND in Vietnam to make capital contribution.

 

However, according to the draft, in the case of investing in VND, FDI businesses and foreign investors who participate in a business cooperation contract must open the VND direct investment account at licensed credit institution where they had opened the direct investment account in foreign currencies before.

 

When doing that, the FDI and foreign investor must close the existing account and transfer the entire balance on it to the new one.

 

Also according to the draft circular, foreign investors are allowed to move abroad authorised capital, direct investment capital, reinvestment capital, liquidation capital of investment projects (due to expiration or early dissolution), investment project transference capital, interest and foreign borrowing costs, as well as other legal revenues related to FDI activities in Vietnam through direct investment accounts; except for some special cases such as transfer payments of investment capital outside the territory of Vietnam among foreign investors who are not working in FDI enterprises; FDI enterprises and foreign investors must close direct investment accounts if they terminate direct investment in Vietnam (liquidation or dissolution of businesses before term) or if they transfer funds which leads to the change in legal entity of FDI business.