Vietnam has emerged as a highly attractive destination for foreign investors due to its stable political environment, abundant workforce, promising market potential, competitive costs, strategic geographical location, and its deepening integration into the global economy. The Free Trade Agreements (FTAs) signed by Vietnam, particularly the Vietnam-EU Free Trade Agreement (EVFTA), have significantly enhanced the attractiveness of Vietnam’s investment and business environment. Below is a comprehensive guide on transferring foreign direct investment (FDI) capital into Vietnam in accordance with prevailing legal provisions.
1. Forms of Foreign Direct Investment in Vietnam
Pursuant to Article 21 of the Investment Law 2020, effective from January 1, 2021, the following are the recognized forms of foreign direct investment in Vietnam:
- Establishing a new economic organization.
- Contributing capital, purchasing shares, or acquiring stakes in an economic organization.
- Implementing investment projects.
- Investing under Business Cooperation Contracts (BCCs).
- Other investment forms or new types of economic organizations as stipulated by the Government.
2. Opening a Direct Investment Capital Account
2.1. Entities Required to Open a Direct Investment Capital Account
Foreign direct investment (FDI) enterprises are required to open direct investment capital accounts and include the following:
- Enterprises established with the participation of foreign investors and required to obtain an Investment Registration Certificate as mandated by the Investment Law.
- Enterprises where foreign investors hold 51% or more of the charter capital, including:
- Enterprises receiving capital contributions, shares, or stakes from foreign investors resulting in foreign ownership of 51% or more.
- Enterprises newly established following mergers, consolidations, or divisions, where foreign investor ownership reaches 51% or more.
- Enterprises established in accordance with specialized legal regulations applicable to specific sectors.
- Foreign investors directly implementing BCCs or PPP (Public-Private Partnership) projects without establishing a project enterprise.
2.2. Requirements for Opening a Direct Investment Capital Account
- Foreign investors must open a direct investment capital account denominated in foreign currency at a licensed bank in Vietnam to facilitate lawful transaction activities related to their investment.
- Each type of foreign currency used for capital contribution must correspond to a single direct investment capital account opened at one bank.
- In the case of investment in Vietnamese Dong, investors are permitted to open a direct investment capital account in Vietnamese Dong at the same bank holding their foreign currency account.
- For investors involved in multiple BCCs or PPP projects, separate accounts must be opened for each respective contract or project.
2.3. Documentation Required for Opening a Payment Account
The following documents are required to open a direct investment capital account:
- A formal application for opening a payment account, along with a registration form for the seal and signature sample (as per the annexes provided in relevant Circulars).
- Legal documents demonstrating the lawful establishment and operation of the entity applying for the account, such as the Charter, Establishment Decision, Business Registration Certificate, or Investment Registration Certificate.
- Documents proving the legal status of the authorized representative, including: Appointment Decision, Identity Card, Citizen Identification Card, or valid Passport.
- Documents related to the chief accountant or person in charge of accounting, including: Appointment Decision, Identity Card, Citizen Identification Card, or valid Passport.
Note: All documents must be submitted as original copies or certified true copies. Documents in foreign languages must be translated into Vietnamese and notarized in compliance with applicable laws.
The application dossier must be submitted to the State Bank of Vietnam or its local branch, and the processing time is typically within one working day.
3. Fund Transfers for Investment Preparation Activities
Upon being granted the Investment Registration Certificate, Operating License, or a notification confirming compliance with capital contribution requirements, foreign investors are permitted to transfer funds from abroad or from their domestic payment accounts in Vietnam to finance lawful expenses related to investment preparation. These expenses may include:
- Transferring all or part of the funds into charter capital contributions.
- Converting the funds into foreign loans for the FDI enterprise, in accordance with regulations on foreign borrowing and debt repayment.
- Refunding the investor the remaining amount of funds transferred into Vietnam after deducting lawful expenses.
In cases where the project is not approved, or the investor decides to discontinue the project, the investor is entitled to transfer the remaining funds, including accrued interest (if any), back to their home country after deducting all lawful expenses related to investment preparation activities.
The above guidelines provide a detailed framework for transferring foreign direct investment capital into Vietnam. Investors are advised to strictly adhere to the relevant laws and regulations to ensure smooth and compliant investment activities.
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