Vietnamese banking and credit system consists of Central Bank – also referred as Vietnam State Bank and other banks. The Vietnam state bank executes the state management role relating to currency and banking activities. It issues money and deals with monetary associated services for the government as roles of the state banking management agency as well as the central bank. Financial institutions include banks and non-banking institutions implement their roles in capital mobilisation, credits, payment and fund activities and other financial businesses. Apart from banking systems, there are non-credit institutions in Vietnam. These institutions (including credit and non-credit) shall be entitled to operations only when meeting all legal requirements and having certificate of establishment and operation granted by the Vietnam state bank.
After joining WTO, banking areas have been developed within the 7 year plan framework with revised policies relating to international commitments, enhancing opportunities for foreign investors. Foreign credit institutions can operate in Vietnam under forms of joint venture, 100% foreign capital businesses or having branches or representative office in Vietnam (yet representative office of credit institutions shall not be entitled to do business in Vietnam). Apart from establishing new credit institutions, foreign investors shall be entitled to buy shares of Vietnamese commercial banks with the total maximum shares of 30% of which shareholding proportion of a foreign credit organisation and associated individuals of the foreign credit organisation do not exceed 10% and that shareholding proportion of foreign investors who are not foreign credit institutions do not exceed 5% of the registered capital of a Vietnamese bank.
In aspects of foreign currency, the government of Vietnam is responsible for issuing policies on foreign currency at macro level while the Vietnam state bank as role of the central bank is responsible for executing these policies. Banks and non credit institutions shall be entitled to provide services relating to foreign currency in domestic and international markets when meeting all requirements or conditions requested by the Vietnam state bank in terms of registered operations or operation certificates.
Foreign exchange rate
The state bank provides daily notice of foreign exchange rates in public media means between Vietnamese dong and US dollar. Directors or general directors of credit institutions shall be entitled to fix buying and selling rates with immediate transfer (SPOT) of Vietnamese dong to other currencies following the principles of 1) for USD dollar, the exchange rate can not exceed the amplitude of ±5% (previously it was not allowed to reach over the amplitude of ±03%) compared with the average exchange rate among banks in the market applied to the transaction dates as noticed by the State bank. For other currencies, general directors or directors of credit institutions shall be entitled to run business relating to foreign currency.
Foreign currency transaction
In Vietnam, all transactions, payments, listing and advertisement of residents or non-residents in foreign currency shall not be allowed, except for transactions with credit institutions or payments through intermediaries including authorised payment or authorised money collection, certain product wholesales or other necessary transactions approved by the Prime Minister. Additionally, all payments in foreign currency shall be prohibited except for payments to hotels, restaurants, supermarkets when customers use credit cards. However, final transactions between these institutions, individuals and banks must be made in Vietnamese dong.
Open and use bank accounts
Legislative system of Vietnam stipulates that all foreign companies or parties must open a bank account in foreign currency in a specific bank which has certificate of foreign currency business in order to carry out transactions relating to capital transfers. Additionally investors shall be permitted to open foreign currency and Vietnamese dong accounts with banks authorized to operate in Vietnam. Investors may also open accounts with foreign banks with approval from the State Bank of Vietnam.
Transfer or capital and profits out of Vietnam
Offshore capital transfer (legal capital, re-investment capital and profits etc) could be conducted when the investors complete all financial obligations to the government of Vietnam. Foreign investors when completing all taxation obligations to the government of Vietnam, transfer of their profits shall not be taxed.