Pursuant to Notice No. 84/TB-VPCP dated 13 April 2011 issued by the Government Office, on 7 April 2011, the Vietnamese Prime Minister (PM) presided over a Government meeting on the management of foreign currency and Vietnamese commercial banks selling shareholding to foreign investors. Amongst other things, he instructed the State Bank of Vietnam to implement the following tasks:

  • To report and propose to the PM for his decision, whether to permit commercial banks to sell up to 20 percent of their charter capital to foreign strategic investors

  • To review, amend and supplement the legal framework on foreign exchange controls with the following objectives: i) operating the foreign currency market appropriately and flexibly in terms of supply and demand; ii) increasing payment ability of the market; iii) encouraging export; reducing trade deficit; improving the international payments balance; iv) and increasing foreign currency reserves. Specific measures are as follows:

    • To submit to the Government in the third quarter of 2011 a decree to replace Decree 134/2005/ND-CP of the Government dated 1 November 2005 on the control of non-Government guaranteed foreign loans and loan repayments of enterprises, in order to ensure strict control of foreign borrowing by enterprises and, in particular, by State Economic Groups and State Corporations

    • In June 2011, to issue a circular guiding foreign exchange controls applicable to foreign loans made by credit institutions and the repayment of such loans

    • To issue regulations on the foreign currency status holdings of credit institutions permitted to conduct foreign exchange business activities, by reducing the restrictions on the overall status of foreign currency credit and debit at credit institutions

    • To issue a regulation providing that the maximum foreign currency cash a resident is permitted to carry overseas is USD 5,000 before being required to make a customs declaration

    • To amend the Ordinance on Foreign Exchange Control to provide for stricter management to overcome the dollarisation situation

    • In the second quarter of 2011, to issue regulations on commercial banks satisfying the legitimate and lawful currency requirements of enterprises and citizens at a reasonable level, taking into account the current socio-economic conditions of Vietnam

    • To issue and implement regulations ceasing the activities of mobilising of, and lending in gold

  • To set the ceiling interest rate on foreign currency deposits of individuals at 3 percent, and to increase the compulsory level of reserves of foreign currency deposits by 2 precent

  • To preside over co-ordination with the Ministry of Industry and Trade (MOIT) and other relevant bodies to establish an Inter-Ministerial Group to strictly monitor and control the flow of foreign currency lent and paid, pursuant to a list to be proposed by the MOIT

For inquiries related to this Legal Update, please contact:

Dao Nguyen (dao.nguyen@mayerbrown.com)

Jim Dao (jim.dao@mayerbrown.com)

Thinh Dan (thinh.dan@mayerbrown.com)

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