On 12 March 2014 the State Bank of Vietnam enacted Circular No. 05/2014/TT-NHNN (Circular 5) guiding the opening and use of indirect investment accounts to implement transactions relating to indirect investment activities in Vietnam. Circular 5 only governs the indirect investment activities of foreign investors who are non-residents. Resident foreign investors may conduct their indirect investment activities in accordance with current regulations on securities and other relevant law.

According to Circular 5, forms of foreign indirect investment in Vietnam comprise:

  • Capital contribution to, and purchase and sale of, shareholding and capital contribution portions in Vietnamese enterprises without directly participating in management and executive operation. Such Vietnamese enterprises may be on the transaction registration market and the listed securities market or be unlisted [or] not registered for trading on the Vietnamese securities market;
  • Purchase and sale of bonds and other types of securities on the Vietnamese securities market;
  • Purchase and sale of other valuable papers denominated in VND issued by a resident being an organization licensed to issue [such valuable papers] within the territory of Vietnam;
  • Entrustment of investment  in VND via a  fund  management   company, securities company, credit institution and foreign bank branch or other institution licensed  to  conduct  professional  activity  of  investment  entrustment;
  • Capital contribution or transfer of capital contribution by a foreign investor (not directly participating in management) via a securities investment fund or fund management  company; and
  • Other forms of indirect investment stipulated by law.

Regardless of whatever form, foreign investors must comply with general principles when investing indirectly in Vietnam as follows:

Transactions relating to indirect investment activities of foreign investors have to conduct via only one indirect investment capital account at an authorized credit institution (Account) in every time. This Account is used for the certain revenue and disbursement transactions relating to foreign indirect investment activities as listed in Circular 5:

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The balance in the Account is not permitted to be converted into a term deposit and/or savings deposit at a credit institution or foreign bank branch.

All indirect investment activities of foreign investors in Vietnam must be conducted in VND. In case of remitting capital, profit and other lawful income overseas gained from indirect investment activities, foreign investors are entitled to use VND in their Account to purchase foreign currency to remit overseas.

Circular 5 took effect on 28 April 2014, and replaced Circular No. 03/2004/TT-NHNN of the Governor of the State Bank of Vietnam, dated 25 May 2004, providing guidelines on foreign exchange control in respect of capital contribution and purchase of shares by foreign investors in Vietnamese enterprises.