Circular No. 13/2011/TT-NHNN dated May 31, 2011 of the State Bank of Vietnam on providing the sale and purchase of foreign currencies by state economic groups and corporations

CIRCULAR

PROVIDING THE SALE AND PURCHASE OF FOREIGN CURRENCIES BY STATE ECONOMIC GROUPS AND CORPORATIONS

Pursuant to June 16, 2010 Law No. 46/2010/QH12 on the State Bank of Vietnam;

Pursuant to June 16, 2010 Law No. 47/2010/QH12 on Credit Institutions; Pursuant to December 13, 2005 Ordinance No. 28/2005/PL-UBTVQH11 on Foreign Exchange;

Pursuant to the Government’s Decree No. 160/2006/ND-CP of December 28, 2006, detailing the Ordinance on Foreign Exchange;

Pursuant to the Government’s Decree No. 96/2008/ND-CP of August 26, 2008, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

Pursuant to the Government’s Resolution No. 11/NQ-CP of February 24, 2011, on measures to curb inflation, stabilize marco-economy and assure social security;

The State Bank of Vietnam (below referred to as the State Bank) guides the purchase and sale of foreign currencies by state economic groups and corporations as follows:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular provides for the performance of the obligation to sell foreign currencies to licensed credit institutions by state economic groups and corporations and their right to buy foreign currencies within the sold amounts from these licensed credit institutions to meet their lawful needs for foreign currencies.

Article 2. Subjects of application

The sale and purchase of foreign currencies provided in this Circular apply to state economic groups and corporations, including their non-credit institution members which are state-owned enterprises (below referred to as organizations).

Article 3. Interpretation of terms

In this Circular, the terms below are construed as follows:

1. Licensed credit institution means a credit institution or foreign bank branch operating in Vietnam and licensed for foreign exchange operations under law.

2. Obligation to sell foreign currencies means that an organization is obliged to sell to licensed credit institutions foreign-currency amounts earned from its lawful foreign-currency revenue sources and the credit balance on its deposit accounts opened at different licensed credit institutions.

3. Right to buy foreign currencies means that an organization is entitled to buy foreign currencies within the foreign-currency amount already sold to licensed credit institutions to make current payments and serve other lawful transactions on the condition that it can produce relevant valid dossiers and documents.

3. Lawful foreign-currency revenue sources means an organization’s revenues from current transactions and other lawful transactions (other than revenues from capital transactions) specified in the Government’s Decree No. 160/2006/ND-CP of December 28, 2006, detailing the Ordinance on Foreign Exchange.

5. Credit balance on foreign-currency deposit accounts of an organization includes the credit balance of demand deposits and time deposits of the organization at licensed credit institutions.

6. Foreign currencies means freely convertible foreign currencies.

7. Lawful foreign-currency need means a lawful need for making foreign- currency payments or paying foreign-currency collaterals or deposits for obligations according to current law.

Article 4. Sources of foreign currencies to be sold by organizations to licensed credit institutions

1. The credit balance of demand and time deposits on foreign-currency accounts of an organization at licensed credit institutions by July 1, 2011.

2. Foreign currencies in the forms of promissory note, deposit certificate, credit note, bond or another valuable paper (below referred to as valuable paper) according to current law which an organization has purchased from licensed credit institutions or other institutions. Upon the maturity of such valuable papers, the organization shall transfer the collected foreign- currency amounts (both principal and interest) into its foreign-currency deposit accounts opened at licensed credit institutions.

3. Foreign currencies which an organization has provided as entrusted loans or entrusted investment. In this case, an organization may not extend entrustment contracts. Upon the expiration of the entrustment period, the organization shall transfer the collected foreign-currency amounts (both principal and interest) into its foreign-currency deposit accounts at licensed credit institutions.

4. An organization is not obliged to sell to licensed credit institutions the foreign-currency deposit amount which, by July 1, 2011, is placed on its account as collateral, deposit or guarantee for the performance of future debt obligations. Upon the expiration of the collateral, deposit or guarantee placement period, if this period is not extended or these foreign-currency amounts are neither used nor used up to pay for the debt obligation, the organization shall transfer this foreign-currency amount into its foreign- currency deposit account at licensed credit institutions.

5. Other lawful foreign-currency revenue sources.

Article 5. Principles of the sale and purchase of foreign currencies

1. Every month, organizations shall balance their lawful foreign-currency revenues and needs and then sell surplus amounts to licensed credit institutions.

2. An organization may not declare a single foreign-currency need to different licensed credit institutions for use as a basis for balancing its monthly foreign-currency revenues and expenditures.

3. In case an organization’s lawful foreign-currency needs in a month exceed the current credit balance on its foreign-currency deposit account plus its foreign-currency revenues in the month, it may buy the deficit amount from a licensed credit institution to meet its lawful needs but the to-be-bought amount must not exceed the total foreign-currency amount it has sold to that institution.

4. An organization shall buy foreign currencies from the licensed credit institution to which it has sold foreign currencies. Licensed credit institutions shall monitor and control the sale and purchase of foreign currencies on the principle that the foreign-currency amount an organization is permitted to buy from a licensed credit institution must not exceed the foreign-currency amount it has sold to that institution under this Circular.

5. The time limit for an organization to buy the foreign-currency amount it has sold to a licensed credit institution is 1 year, counting from the month when it sells foreign currencies to the institution.

6. The sale and purchase of foreign currencies between a licensed credit institution and an organization which, after buying the whole foreign- currency amount it has sold to the licensed credit institution under this Circular, still wishes to buy more foreign currencies shall be carried out on the basis of mutual agreement under current regulations on foreign exchange management.

7. Licensed credit institutions shall balance foreign-currency sources for the sale and purchase of foreign currencies to/from organizations under this Circular. They shall ensure compliance with the State Bank’s regulations on maintenance of the foreign exchange status at the time of sale/purchase foreign currencies to/from organizations.

8. The exchange rates applicable to the sale and purchase of foreign currencies between licensed credit institutions and organizations comply with current regulations of the State Bank.

Article 6. Transfer of foreign currencies on foreign-currency deposit accounts of organizations

An organization may transfer foreign currencies from its deposit account at a licensed credit institution to another licensed credit institution when its foreign-currency revenues in a month plus its current foreign-currency credit balance at a licensed credit institution are not sufficient to meet its lawful foreign-currency need already registered with that institution.

In this case, the licensed credit institution which receives foreign currencies shall certify in writing the organization’s lawful foreign-currency need and the deficit foreign-currency amount to serve as a basis for the credit institution which transfers foreign currencies to compare and transfer the deficit foreign-currency amount.

Chapter II

ORGANIZATIONS’ OBLIGATION TO SELL FOREIGN CURRENCIES

Section 1 ORGANIZATIONS’ OBLIGATION TO SELL FOREIGN CURRENCIES IN JULY 2011

Article 7. To-be-sold foreign-currency amounts

1. The credit balance of demand and time deposits on foreign-currency deposit accounts of organizations at licensed credit institutions by July 1, 2011.

2. Foreign-currency revenues specified in Clauses 2, 3, 4 and 5, Article 4 of this Circular which arise in July 2011.

Article 8. Process of selling foreign currencies

1. For deposit credit balance

a/ From July 1, 2011, to July 7, 2011, each organization shall sum up its lawful foreign-currency needs in July 2011 so as to balance and retain a sufficient foreign-currency amount from its foreign-currency time and demand deposit accounts at licensed credit institutions. It shall sell the remaining amount to licensed credit institutions at which it opens foreign- currency deposit accounts;

b/ Licensed credit institutions shall accurately calculate the credit balance on foreign-currency time and demand deposit accounts of organizations at their institutions by July 1, 2011;

c/ Licensed credit institutions may request organizations to file reports (enclosed with documentary proof) on their lawful foreign-currency needs as specified in Clause 1, Article 7 of this Circular and, on that basis, retain on organizations’ foreign-currency deposit accounts foreign-currency amounts sufficient to meet organizations’ lawful needs. Licensed credit institutions shall buy the remaining foreign-currency amounts from organizations;

d/ When purchasing foreign currencies from the credit balance of a time foreign-currency deposit account, a licensed credit institution shall pay interests on the deposited foreign-currency amount at the interest rate equal to that committed for the deposit term and calculate the interest amount based on the actual number of days such foreign-currency amount is deposited at the institution. The licensed credit institution shall pay this interest amount in foreign currencies, which constitutes foreign-currency revenues of the organization in July 1, 2011, and shall be accounted when balancing the organization’s foreign-currency needs in the month;

e/ When purchasing foreign currencies from the credit balance of a demand foreign-currency deposit account, a licensed credit institution shall pay interests in foreign currencies at the interest rate for demand deposits and calculate the interest amount based on the actual number of days such foreign-currency amount is deposited at the institution. This interest amount constitutes foreign-currency revenues of the organization in July 2011, and shall be accounted when balancing the organization’s foreign- currency needs in the month.

2. For other lawful foreign-currency revenues arising in July 2011, licensed credit institutions shall comply with Clauses 2, 3, 4, 5 and 6, Article 10 of this Circular.

Section 2: OBLIGATION TO SELL FOREIGN CURRENCIES EARNED AFTER JULY 2011

Article 9. To-be-sold foreign-currency amounts

Foreign-currency revenues specified in Clauses 2, 3, 4 and 5, Article 4 of this Circular which arise after July 2011.

Article 10. Process of selling foreign currencies

1. Within the first 5 working days of a month, each organization shall work out a plan on its lawful foreign-currency needs in the month and send this plan together with documents proving the lawfulness of its foreign- currency needs to licensed credit institutions.

2. Licensed credit institutions shall base themselves on documents produced by organizations to calculate foreign-currency amounts which organizations need to retain from their lawful foreign-currency revenues in the month to meet their lawful foreign-currency needs.

3. When receiving foreign-currency revenues of an organization, a licensed credit institution shall make credit entries in the organization’s foreign- currency deposit account and balance the organization’s foreign-currency revenues collected in the month with its lawful foreign-currency needs. If the collected foreign-currency revenues plus the current credit balance on the organization’ deposit account exceed the foreign-currency amount to be used by the organization in the month under the registered plan, the licensed credit institution shall notify such to the organization so as to buy the excessive foreign-currency amount within 3 working days from the date of notification.

4. Past the 3-working day time limit specified in Clause 3 of this Article, if the organization fails to sell the excessive foreign-currency amount to the licensed credit institution, the licensed credit institution shall immediately buy this amount and, concurrently, make a credit entry in the organization’s Vietnam-dong deposit account opened at the institution. In case the organization has not yet opened a Vietnam-dong deposit account at the licensed credit institution, the institution shall open a Vietnam-dong deposit account for the organization in order to purchase foreign currencies and request the organization to complete procedures for opening the Vietnam- dong deposit account according to the institution’s regulations.

5. In case the last day of the 3-working day time limit specified in Clause 3 of this Article falls on any day within the first 5 working days of the subsequent month, the organization may retain the excessive foreign- currency amount on its foreign-currency account as long as it can produce documents to prove the lawfulness of its needs to use such foreign-currency amount within the first 5 working days of that month.

6. After its foreign-currency needs in a month have been identified, if wishing to use more foreign currencies in this month, the organization shall notify such and send to the licensed credit institution documents proving the lawfulness of such change for the latter to know and carry out the sale and purchase of foreign currencies with the organization under this Circular.

Chapter III

ORGANIZATIONS’ RIGHT TO BUY FOREIGN CURRENCIES

Article 11. Rights to retain foreign currencies on deposit accounts

Organizations may retain on their foreign-currency deposit accounts foreign-currency amounts from their lawful revenues in a month to meet their needs as long as they can prove the lawfulness of their foreign- currency needs in this month.

Article 12. Right to buy foreign currencies

1. In case the lawful foreign-currency needs in a month of an organization exceed its collected foreign-currency revenues plus the current credit balance of its foreign-currency deposit account, the organization may buy from licensed credit institutions the deficit amount which, however, must not exceed the foreign currency amount which it has sold to the credit institutions, provided that that it can produce valid documents to the credit institutions.

2. In case an organization needs to purchase a large foreign-currency amount (under licensed credit institutions’ regulations) to meet its lawful foreign-currency needs, it shall notify such to licensed credit institutions at least 5 working days prior to the date of purchase.

Chapter IV

RESPONSIBILITIES OF LICENSED CREDIT INSTITUTIONS AND ORGANIZATIONS

Article 13. Responsibilities of licensed credit institutions

1. To examine documents produced by organizations to accurately calculate foreign-currency amounts to be retained from the credit balance of organizations’ time and demand deposit accounts by July 1, 2011, to meet their lawful foreign-currency needs and buy the remaining amounts from organizations under this Circular.

2. To guide, urge and notify organizations of the sale and purchase of foreign currencies under this Circular.

3. To monitor and control so as to ensure adherence to the principles applicable to the foreign-currency amounts to be sold and bought and the purchase and sale time limits specified in this Circular.

4. To use foreign-currency deposit accounts opened by organizations at their institutions for buying and selling foreign currencies from/to organizations under this Circular.

5. To examine and control documents for buying and selling foreign currencies from/to organizations under this Circular and relevant laws paying special attention to documents of application for purchase of foreign currencies to meet lawful foreign-currency needs.

6. To detect violations of this Circular committed by organizations and promptly report them to the State Bank for handling.

7. To preserve documents related to the sale and purchase of foreign currencies under this Circular to serve examination and audit work.

8. To make reports to the State Bank according to this Circular.

Article 14. Responsibilities of organizations

1. To strictly comply with regulations on the sale and purchase of foreign currencies provided in this Circular.

2. To accurately declare their lawful foreign-currency needs in a month so as to request licensed credit institutions to allow them to retain their foreign-currency revenues to pay their foreign-currency expenditures in the month. Chairmen of the boards of directors and directors general (directors) of organizations shall take responsibility for the accuracy, truthfulness and validity of documents proving their lawful foreign-currency needs and balance their foreign-currency revenues and expenditures in the month so as to buy or sell foreign currencies from/to licensed credit institutions under this Circular.

3. When selling or buying foreign currencies, to produce adequate documents according to regulations and requests of licensed credit institutions. In case these documents are confidential, organizations shall produce written commitments on the truthfulness and accuracy of their lawful foreign-currency needs, containing the certification of chairmen of the boards of directors and directors general (directors) of the organizations, which shall be used as a basis for the sale or purchase of foreign currencies by licensed credit institutions.

4. To preserve documents related to the sale and purchase of foreign currencies under this Circular to serve examination and audit work.

5. To make lists of their member enterprises governed by this Circular and send them to licensed credit institutions at which they have opened foreign- currency deposit accounts to serve the sale and purchase of foreign currencies. To immediately notify any changes in these lists to licensed credit institutions to serve the sale and purchase of foreign currencies under this Circular.

6. To guide and request their member enterprises to abide by provisions of this Circular on the sale and purchase of foreign currencies.

Chapter V

REPORTING REQUIREMENTS AND INSPECTION AND HANDLING OF VIOLATIONS

Article 15. Reporting requirements

1. Licensed credit institutions shall make reports on amounts of foreign currencies sold to or bought from organizations in July 2011 according to form No. 1 provided in this Circular (not printed herein) and send them to the State Bank (the Foreign Exchange Management Department) no later than August 15, 2011.

2. Licensed credit institutions shall make monthly reports on amounts of foreign currencies sold to or bough from organizations according to form No. 2 provided in this Circular (not printed herein) and send them to the State Bank (the Foreign Exchange Management Department) within the first 10 days of the subsequent month.

3. When necessary, licensed credit institutions shall report on the sale and purchase of foreign currencies to/from organizations at the State Bank’s request.

4. Licensed credit institutions shall report to the State Bank any arising matters related to the sale and purchase of foreign currencies for consideration and settlement.

Article 16. Inspection

When necessary, the State Bank may inspect the sale and purchase of foreign currencies between licensed credit institutions and organizations under this Circular. Licensed credit institutions and organizations shall supply all necessary dossiers and documents so as to assure timely and effective inspection.

Article 17. Handling of violations

Organizations and licensed credit institutions that violate this Circular shall be handled according to law, depending on the severity of their violations

Chapter VI

ORGANIZATION OF IMPLEMENTATION

Article 18. Implementation provisions

This Circular takes effect on July 1, 2011, and replaces the State Bank’s Circular No. 26/2009/TT-NHNN of December 30, 2009, providing the sale and purchase of foreign currencies by a number of state groups and corporations.

Article 19. Organization of implementation

1. The Chief of the State Bank Office, the chief inspector-supervisor of the Banking Inspection and Supervision Agency, heads of units and directors of provincial-level branches of the State Bank, chairmen of the boards of directors and directors general (directors) of licensed credit institutions and chairmen of the boards of directors and directors general (directors) of organizations shall implement this Circular.

2. Ministries, sectors and agencies managing organizations shall, according to their functions and tasks, participate in directing the implementation of this Circular.-