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​ 

June 19, 2024
Vietnam’s financial landscape is set to further transform on July 1, 2024, when the government’s long-awaited Decree No. 52/2024/ND-CP dated May 15, 2024 (“Decree 52”), will officially replace Decree No. 101/2012/ND-CP dated November 22, 2012, on non-cash payments (“Decree 101”). Decree 52 marks an important milestone by introducing the country’s first-ever legal definition of e-money. In addition, the decree brings forth new updates to regulations governing payment and intermediary payment services, laying the groundwork for more comprehensive guidance that will be provided in draft circulars now being developed by the State Bank of Vietnam (SBV). Non-Cash Payment Instruments The new definition of non-cash payment instruments under Decree 52 expands upon the previous definition in Decree 101. Notably, it clearly specifies the issuing entities as payment service providers, financial companies licensed to issue credit cards, and e-wallet service providers. Additionally, the new definition further clarifies that bank cards include debit, credit, and prepaid cards, and adds e-wallets to the list of non-cash payment instruments. Unlawful non-cash payment instruments are still defined as those that are not otherwise specified. E-Money Prior to Decree 52, the concept of e-money lacked a precise legal definition, despite its growing prevalence in forms like prepaid cards and e-wallets. The absence of a clear framework for e-money led to confusion with terms like “cryptpcurrency” and “virtual currency” and left significant ambiguity on whether e-money includes certain instruments, such as online game cards and mobile money. Decree 52 addresses this issue by clearly defining e-money as value in Vietnamese dong (VND) stored electronically and prepaid by customers to banks, foreign bank branches, and e-wallet service providers. It also specifically designates e-wallets and prepaid cards as types of storage mechanisms for e-money. Non-Cash Payment Services Decree 52 categorizes non-cash payment services into services with and without client payment
Read More
June 7, 2024
On March 7, 2024, Laos moved to regulate the management of foreign-currency income from the exportation of goods and services. Effective March 29, 2024, Decision No. 333 (formally the Decision on Management of Income in Foreign Currency from Exportation of Goods and Services No. 333/BOL) from the Bank of Lao PDR (BOL) aims to incentivize the inflow of such foreign currency into Laos and its sale to licensed commercial banks. Decision No. 333 sets minimum required proportions for importing income in foreign currency derived from the exportation of goods and services, as well as the timeframe for doing so. It also stipulates the requirements for selling such foreign currency to commercial banks in Laos and the minimum proportions that must be sold. Importing Foreign-Currency Income Exporters must receive payments from abroad via bank transfer into a dedicated bank account designated for import-export business activities within the timeline specified in the sale-purchase agreement, but not exceeding 180 days from the date of export. Each sector must import income in foreign currency into the Lao PDR according to the minimum proportion of currency to be imported, and it must be done within the required timeframes, as specified in the table below. The ratios and timeframes are subject to change depending on the circumstances. If exporters cannot comply with the required ratio and timeline, exporters must provide relevant explanatory documents for the BOL’s consideration. Selling Foreign-Currency Income Exporters of goods and services must sell at least the minimum required proportion of their foreign-currency income (see table below) to a commercial bank in Laos. This foreign currency exchange must occur within three working days of receiving the foreign currency into the dedicated bank account in Laos. The selling rate will be determined by the prevailing rate of the commercial bank on the day
Read More
June 3, 2024
On May 24, 2024, the Central Bank of Myanmar (“CBM”) issued a public notice warning individuals against participating in the sale, purchase, exchange, or transfer of unregulated digital currencies, as well as unauthorized money transfers. The CBM has indicated its readiness to enforce regulations by closing bank accounts and pursuing legal action, which may result in imprisonment, fines, or both, in accordance with the Central Bank of Myanmar Law, the Anti-Money Laundering Law and the Financial Institutions Law. The CBM is the sole legal entity authorized to issue currency in Myanmar, as stipulated in the Central Bank of Myanmar Law. The CBM does not recognize digital currencies as official currency, nor has it granted permission to financial institutions within Myanmar to trade them. The existing legal framework, comprising the Foreign Exchange Management Law and the Financial Institutions Law, further cements the illegality of cryptocurrency transactions within the nation’s borders. Four years ago, in May 2020, the CBM issued Notification No. 9/2020, prohibiting all persons residing in Myanmar from engaging in the sale, purchase, or exchange of unregulated digital currencies. The list of prohibited currencies includes widely recognized cryptocurrencies such as Bitcoin (BTC), Litecoin (LTD), Ethereum (ETH), and Perfect Money (PM), with a particular emphasis on transactions conducted through personal Facebook accounts and web pages. Before the issuance of the 2020 notification, the CBM had announced that anyone engaging in digital currency transactions did so at their own risk, but no enforcement measures were being taken at the time. However, after the 2020 notification was issued, the CBM has pursued legal action against persons involved in illegal currency conversion and unauthorized hundi money transfers using Tether (USDT). These enforcement measures have included shutting down bank accounts and initiating legal proceedings under the Anti-Money Laundering Law and the Financial Institutions Law.
Read More
May 30, 2024
A bank guarantee or bond is a powerful tool that provides contractual parties with security and assurance. Bank guarantees are commitments made by a bank (as a guarantor) on behalf of a customer (as an obligor) to a beneficiary to ensure that certain contractual obligations will be fulfilled. If the customer fails to comply with these obligations, the bank can compensate the beneficiary up to the amount specified in the bank guarantee. Bank guarantees are widely used in Thailand as a form of security and are common in construction agreements and government procurement contracts, among others. If the beneficiary (e.g., a project owner) concludes that the counterparty in the agreement (e.g., a contractor) has breached the underlying contract in some way, the beneficiary will demand payment from the bank pursuant to the guarantee. Collecting on a Guarantee and Preventing Payment In the context of construction and procurement agreements, there are two types of bank guarantees—conditional and unconditional. A conditional bank guarantee means that the project owner must satisfy certain agreed-upon conditions (e.g., provision of proof of the breach, proof of damages, or even consent from the contractor) to demand payment. An unconditional bank guarantee means that the bank must compensate the project owner for the demanded amount (up to the limit specified in the bank guarantee) without any conditions. When a project owner concludes that a contractor has breached the underlying contract (often for nonperformance or failure to comply with a representation or warranty), the project owner will demand payment from the bank holding the guarantee. Upon receiving such a demand, Thai banks will usually inform the contractor and ask if it has any objections. Even if the bank guarantee is unconditional, in practice, a bank may be reluctant to make payment if the contractor, as the bank’s customer,
Read More