New Circular to permit foreign investor deposits in foreign currency for investments in state-owned enterprises in Vietnam


In brief 2 min read

A new Circular issued by the State Bank of Vietnam will allow non-resident foreign investors to use foreign currency for deposits, or escrow deposits, when participating in an auction for the purchase of shares or capital contribution in connection with the equitisation or divestment of state owned enterprises (SOEs). Partner Melissa Keane and Senior Associate Hieu Nguyen report.


The use of foreign currencies within the territory of Vietnam is currently restricted under Circular 32/2013/TT-NHNN, issued by the State Bank of Vietnam (the SBV) on 26 December 2013 (Circular 32). Circular 32 embodies the basic principle that unless expressly permitted by law, all transactions, payments, quotations, advertisements, pricing and other similar activities are not allowed to be conducted in Vietnam using foreign currency.

Currently, Circular 32 does not allow foreign investors who are non-residents in Vietnam to make a deposit or escrow deposit in foreign currency in connection with its purchase of an interest upon the equitisation or divestment of SOEs without SBV approval, which is only granted on a case-by-case basis.

Changes under the new Circular

Having recognised this restriction poses a challenge for foreign investors wishing to participate in SOE equitisations and divestments, the Vietnamese Government's latest Circular (issued on 29 March 2019) now adds this particular scenario to the list of circumstances where the use of foreign currencies is permissible under Circular 32. Specifically, the new Circular permits non-resident foreign investors to pay a deposit or escrow deposit in foreign currency in Vietnam in the following cases:

  1. purchase of shares in an SOE in a Prime Minister approved equitisation;
  2. purchase of shares or a portion of capital contribution of the State in an SOE, or in an enterprise with State capital, upon a Prime Minister approved divestment; and
  3. purchase of shares, or a portion of capital contribution, of an SOE invested in another company upon a Prime Minister approved divestment.

If the auction is successful, the foreign investor is required to follow the relevant investment procedures in accordance with the foreign currency ordinance and SBV's other regulations when completing full payment of the value of the shares or capital contribution being acquired. If not successful, the foreign investor is entitled to remit the foreign currency deposit amounts outside of Vietnam after deducting any other relevant expenses. 

This new Circular will come into effect from 13 May 2019 and is expected to further facilitate and encourage foreign investors to participate in the Vietnamese Government's divestment plan for SOEs in Vietnam. See also our recent paper on Privatisation in Vietnam discussing the Vietnamese Government's ambitious equitisation and state capital divestment plans.