You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

June 30, 2025

Vietnam’s New Foreign Indirect Investment Regulations Explained

Subscribe to Updates

On April 29, 2025, the State Bank of Vietnam (SBV) issued Circular No. 03/2025/TT-NHNN (Circular 03), which provides detailed guidance on the opening and use of Vietnamese dong (VND) accounts by non-resident foreign investors engaging in indirect investment activities in Vietnam. Circular 03, which took effect on June 16, 2025, amends Circular No. 06/2019/TT-NHNN of the SBV on the management of foreign exchange for foreign direct investment activities in Vietnam (Circular 06) and replaces Circular No. 05/2014/TT-NHNN of the SBV guiding the opening and use of indirect investment capital accounts for implementation of foreign indirect investment activities in Vietnam (Circular 05).

Below are some of the key points of Circular 03.

Change of Account Name

Circular 03 renames “indirect investment capital account” to “indirect investment account” (IIA). This change aligns with the terminology used in other legislation, ensuring consistency across Vietnam’s legal framework governing foreign exchange and investment activities. Additionally, by removing the word “capital,” the new term better encompasses the full range of transactions that may be conducted through these accounts, such as share transfer and other forms of indirect investment-related activities. This helps prevent misinterpretation and facilitates compliance for foreign investors operating in Vietnam.

Account Types

Circular 03 clearly delineates account types and investor residency status as follows:

  • For non-resident foreign investors: The opening and use of investment accounts in VND is for carrying out transactions related to indirect investment activities.
  • For resident foreign investors: Credit and debit transactions are made through payment accounts in VND in accordance with relevant laws.

Additional Permitted Uses of IIAs

In addition to the cash inflows and outflows authorized under Circular 05, Circular 03 introduces more cash transactions that can be conducted via IIAs. These include:

  • Receiving interest and other legal income when conducting stock purchase transactions that do not require sufficient funds when placing orders by foreign institutional investors under the securities law.
  • Receiving funds for deposits or collateral related to stock purchases, as well as refunds of such deposits.
  • Receiving transfers from previously opened IIAs at other licensed banks.
  • Payment of losses and other expenses incurred from purchasing securities that do not require sufficient funds when placing orders by foreign institutional investors.
  • Payment of fees, charges, taxes, administrative penalties, and other expenses associated with foreign indirect investment activities in Vietnam.

These changes aim to improve transparency for foreign investors by clearly defining the purposes of money transfer orders, as well as enable authorized banks to verify, document, and process transactions more effectively.

Fixing Mismatch

Circular 03 updates Circular 06 to align with the foreign ownership thresholds provided in the current Law on Investment. Specifically, it changes references from “51% or more” to “more than 50%,” and from “below 51%” to “equal to or below 50%,” fixing a mismatch in the classification of foreign ownership thresholds.

Additionally, Circular 03 introduces a 12-month transitional period from its effective date (i.e., by June 16, 2026), allowing companies previously exempt under Circular 06 time to open a Direct Investment Capital Account (DICA). During this period, foreign investors may continue using their existing IIAs to carry out capital contributions and share acquisition transactions until the new DICA is officially opened.

Simplified IIA Opening Procedures

Under the prevailing law, documents issued in foreign countries must be legalized for use in Vietnam. However, Circular 03 removes this legalization requirement for documents submitted by foreign investors to open IIAs for investment in the Vietnamese securities market, allowing them to submit notarized and certified documents under Vietnamese law or foreign law within 12 months of the submission date of the IIA opening application.

The translation of foreign-language documents into Vietnamese is also no longer required, but is subject to mutual agreement between licensed banks and foreign investors. However, licensed banks must ensure the accuracy and compliance with Circular 03 of foreign-language documents, and provide certified or notarized translations if requested by the competent authorities.

These reforms aim to streamline the administrative process and shorten the timeline for the document preparation of foreign investors to open IIAs.

Opening Multiple IIAs

Under Circular 05, foreign investors were only allowed to open one IIA for their indirect investment activities. This could cause difficulties for foreign investors (especially investment funds or organizations managed by many fund management companies) to separately manage their investment portfolios.

To address this issue, Circular 03 permits multiple IIAs to be opened by foreign investors corresponding to the different issued securities trading codes, subject to regulatory conditions and applicable to the following subjects:

  • Foreign securities companies;
  • Foreign investment funds;
  • Foreign organizations managed by many foreign fund management companies; and
  • Investment organizations under foreign governments, or financial or investment organizations under an international financial organization of which Vietnam is a member.

These amendments will facilitate foreign investors in monitoring and managing their investment portfolios on the Vietnamese stock market.

Other Changes

Circular 03 adds the following new principles:

  • Opening a joint IIA by two or more foreign holders is not
  • All money transfer orders related to foreign indirect investment in Vietnam must specify the purpose of the transfer. This requirement enables commercial banks to verify, compare, and retain relevant documentation, thereby ensuring proper execution of the transaction in accordance with regulatory guidelines.

Circular 03 also removes the list of indirect investment forms in Vietnam (e.g., capital contribution and acquisition, bonds or other securities trading, etc.) that was specified in Circular 05.

Outlook

Circular 03 aims to significantly modernize Vietnam’s foreign exchange management, address evolving challenges in foreign indirect investment, and promote the country’s appeal to foreign investors. This is expected to be a catalyst for further reforms in Vietnam’s financial and investment sectors.

Related Professionals

Practices

Banking and Finance

Corporate/M&A

Location

RELATED INSIGHTS​ 

September 16, 2024
On July 23, 2024, the State Bank of Vietnam (SBV) published a draft circular regulating the implementation of open (publicly available) application programming interfaces, or Open APIs, in the banking industry (Draft Circular) to collect public comments. Open APIs in the banking sector are APIs of banks that allow third parties to process data for their own use or to provide products and services to customers. Urgent need Currently, the development of Open APIs in Vietnam is fragmented, with each bank using different API standards and security standards. There is no common standard for information technology systems, information storage, security, connectivity, or legal frameworks. Therefore, the promulgation of a regulation on Open APIs is urgently needed to create a clear legal basis and guidance for electronic banking transactions, especially in connecting to bank information systems and processing customer data safely, and creating new, innovative products and services to meet the increasing needs of customers. Cooperation of banks required The Draft Circular requires banks to provide Open API services to third parties for connection to the bank system and data processing. Banks have the right to refuse or suspend Open API services if third parties do not meet specified conditions. However, banks will be responsible for ensuring the quality and security of data, providing tools for customer data queries and revocation of third-party data processing rights, and coordinating with third parties and authorities to resolve issues. The Draft Circular standardizes Open API functions for all banks according to the Open API function list and the technical standards list specified in the Draft Circular. Open API service contract The template Open API service contract between banks and third parties using Open API services must have certain required contents such as provisions regarding confidentiality, data use purpose, and that the security level
Read More
August 20, 2024
On June 28, 2024, the State Bank of Vietnam (SBV) issued Circular No. 19/2024/TT-NHNN to amend certain regulations of Circular No. 08/2023/TT-NHNN dated June 30, 2023 (‘Circular 08”), on conditions for foreign loans not guaranteed by the government (“Circular 19”). Circular 19 took effect on July 1, 2024, and provides changes in relation to, among other things, foreign loans to pay for goods import contracts and letters of credit. Foreign Loans to Pay for Goods Import Contracts Circular 08 exempts foreign loans in the form of deferred payment for imported goods (a buyer-seller relationship) from applicable foreign loan conditions. Circular 19 adds provisions regarding foreign loans taken out by non-bank borrowers (a buyer-seller-lender relationship) to make the deferred payments for goods import contracts for the implementation of an investment project, production or business plan, or other project. In this case, the foreign loan’s purpose is determined to be for implementing an investment project, production or business plan, or other project; and the borrower can exclude medium- and long-term foreign loan balances arising from the deferred payment in the import contracts when calculating the foreign loan limit. In addition, the borrower is allowed to borrow from foreign lenders to pay for the goods import contract via letters of credit. However, it is worth noting that other requirements relating to the loans are still applied to the borrower, such as foreign loan agreement, currency, and records/reporting obligations Letters of Credit Following the reclassification of letter of credit (L/C) activities from a “payment service” to “extension of credit” under the Law on Credit Institutions 2024, Circular 19 supplements L/C activities into the current foreign loan regulatory framework, including adding foreign loans between credit institutions and branches of foreign banks (as issuing banks) and non-resident banks (as reimbursing banks) where issuing banks are
Read More
August 12, 2024
With the growing prominence of ESG (Environmental, Social, and Governance) factors, businesses in Vietnam are increasingly recognizing their importance in driving global demand, societal impact, and economic value. A comprehensive acknowledgment of ESG-related legal requirements is critical for investors and companies operating in Vietnam to meet stakeholder expectations and ensure compliance. Our guide provides a basic overview of the rapidly evolving ESG landscape in Vietnam, covering a range of key issues for companies doing business in the country: What is ESG, and what does the ESG legal framework look like in Vietnam? Who needs to follow ESG regulations in Vietnam? What are the benefits of ESG compliance? How can enterprises enhance ESG best practices in Vietnam? Please click on the link below to view the full article.
Read More
August 5, 2024
Thailand has continued to face economic challenges since the COVID-19 pandemic, and some businesses have struggled to survive. One of most important measures that indebted businesses in Thailand can take is to file a business rehabilitation petition with the Bankruptcy Court. The Bankruptcy Act B.E. 2483 (1940) provides “automatic stay” measures to protect the debtors that have entered the business rehabilitation process, and during this time creditors have duties and rights under the Bankruptcy Act as well. Once Thailand’s Bankruptcy Court accepts a rehabilitation petition and issues an order for rehabilitation, the debtor is under this automatic stay protection against actions from the creditor to seek debt repayments, and the creditors are only allowed to pursue their debt repayments by submitting a debt repayment application to the official receiver within one month of publication of the plan preparer’s appointment in the Government Gazette. These are general conditions specified in the Bankruptcy Act. However, there are several practical precautions that are not specified in the Bankruptcy Act but that creditors should take during rehabilitation. Below are several steps creditors need to consider taking at various stages of the rehabilitation process. 1. Appointing a local Thai representative to act on behalf of the creditor in the rehabilitation The rehabilitation process requires much more than just submitting the debt repayment application within the fixed one-month period and then waiting for the result. It also involves contacting, meeting, and discussing with the official receiver, plan preparer, other creditors, or debtor representative to investigate or settle any arguments on the debt. Moreover, the language used in all the processes and documents is usually Thai. In practice, creditors—especially foreign creditors—should authorize a Thai attorney or representative through a valid power of attorney (POA) to represent them during all the rehabilitation proceedings. This includes the investigative
Read More