Currency regulations on state control over foreign currency in Vietnam

CIRCULAR LETTER Series of 1994

TO : All Authorized Agent Banks

Attached for your information and guidance, is a copy of the Department of Foreign Affairs, Office of Asian and Pacific Affairs letter of September 22, 1994 conveying the Philippine Embassy in Hanoi's report about the currency regulations on state control over foreign currency in Vietnam.

Please disseminate the contents of the attached letter to all your branches, offices and all concerned.

EDGARDO P. ZIALCITA Officer In-Charge

OFFICE OF ASIAN AND PACIFIC AFFAIRS

22 September 1994

Sir :

The Philippine Embassy in Hanoi reported on 9 August that a decision was issued by Vietnamese Prime Minister Vo Van Kiet amending current regulations on state control over foreign currency. The decision requires all foreign currencies generated form export services to foreign countries or any other source within Vietnam by all Vietnamese organization and enterprises must be deposited into authorized accounts at selected Vietnamese banks starting 1 October 1994.

The decision, made public early this month, stated further that the only entities/sectors allowed to open foreign currency accounts in overseas banks are:

banks and financial companies accredited by the State Bank of Vietnam;

civil aviation;

merchant marine;

post and telecommunications;

insurance companies

foreign invested enterprises; and

Vietnamese companies authorized by the Vietnamese Government to operate branches abroad.

The State Bank of Vietnam was also tasked to grant licenses to those qualified of opening their own foreign currency accounts abroad, as well as to control these accounts' activities.

The decision also specified that organizations and enterprises are allowed to retain part of the foreign currency deposit for business purposes, while the remainder must be sold to authorized foreign exchange banks and financial companies. With the exception of these authorized banks and companies, no Vietnamese organization is allowed to directly lend, trade in or transfer foreign currency.

Hence, from now on, payment for goods and services shall be made only in Vietnamese currency, including those shops and organizations which were formerly authorized to receive foreign currency. Only duty-free shops, service agencies at ports of entry, and places authorized by the Prime Minister and licensed by the State Bank can receive payment in foreign currency.

The State Bank Governor was also directed to oversee and control the operation of foreign exchange counters in hotels and urban centers where foreign currency can easily be exchanged for the Vietnamese currency. (Dong).

Very truly yours,

For the Secretary of Foreign Affairs:

ERLINDA F. BASILIO Acting Assistant Secretary