Circular No. 26/2009/TT-NHNN dated December 30, 2009 of the State Bank providing for the sale and purchase of foreign currencies by a number of state groups and corporations

THE STATE BANK OF VIETNAM

Circular No. 26/2009/TT-NHNN of December 30, 2009, providing for the sale and purchase of foreign currencies by a number of state groups and corporations

Pursuant to Point 3 of the Prime Minister’s Document No. 2578/TTg-KTTH of December 23, 2009, providing for the sale of foreign currencies by a number of state groups and corporations;

The State Bank of Vietnam (SBV) provides the following guidance:

Section I

GENERAL PROVISIONS

1. Scope of regulation and subjects of application

1.1. This Circular provides for the performance of the obligation to sell foreign currencies to licensed credit institutions by state groups and corporations and their right to re-buy foreign currencies within the sold foreign-currency amount from licensed credit institutions to satisfy their lawful needs for foreign currencies.

1.2. The sale and purchase of foreign currencies prescribed in this Circular apply to the following state groups and corporations (including their non-credit institution member enterprises in which the state capital accounts for over 50% as prescribed in the 2005 Enterprise Law):

a/ Vietnam Oil and Gas Group

b/ Vietnam National Coal-Mineral Group

c/ Vietnam National Chemical Group (Vietnam Chemical Corporation)

d/ Southern Airports Corporation

e/ Vietnam Southern Food Corporation

f/ Vietnam Northern Food Corporation

g/ Lilama Corporation.

2. Interpretation of terms

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

2.1. Organization means a state group or corporation (including its member enterprises in which the state capital accounts for more than 50% as prescribed in the 2005 Enterprise Law).

2.2. Licensed credit institution means a credit institution operating in Vietnam and licensed to conduct foreign exchange activities under law.

2.3. Obligation to sell foreign currencies means that an organization is obliged to sell to a licensed credit institution foreign currencies collected from its current sources and credit balance on its deposit accounts opened at the institution.

2.4. Right to buy foreign currencies mean that an organization is entitled to buy foreign currencies from a licensed credit institution for current payment and other lawful transactions on the basis of producing relevant valid dossiers and documents.

2.5. Current revenue sources mean an organization’s revenues from current transactions prescribed in the Government’s Decree No. 160/2006/ND-CP of December 28, 2006, detailing the Ordinance on Foreign Exchange.

2.6. Credit balance on a foreign-currency deposit account of an organization includes the credit balance on demand deposits and the credit balance on time deposits of an organization at a licensed credit institution.

2.7. Managed account means a foreign-currency account opened by a licensed credit institution for each organization so as to buy foreign currencies from credit deposits of such organization under this Circular.

2.8. Foreign currencies means freely convertible foreign currencies.

3. Scope of foreign currency sale and purchase:

3.1. Sources of foreign currencies to be sold by an organization to a licensed credit institution:

a/ Foreign currencies on time deposit accounts of an organizations at a licensed credit institution as of December 31, 2009.

b/ Foreign currencies on demand deposit accounts of an organization at a licensed credit institution as of December 31, 2009.

c/ Foreign currencies collected from current transactions from January 1, 2010.

3.2. Cases in which an organization is entitled to buy foreign currencies from a licensed credit institution:

When its demand for foreign currency for lawful purposes (making payments or paying collaterals or deposits) in a month is larger than its existing credit balance on foreign-currency deposit accounts and foreign currency revenues in that month, an organization is permitted to buy the deficit amount for use under this Circular.

4. Principles on the sale and purchase of foreign currencies:

4.1. Organizations shall sell foreign currencies in the form of time deposits and demand deposits as of December 31, 2009, to licensed credit institutions with which they open foreign-currency deposit accounts.

4.2. Organizations shall buy foreign currencies from licensed credit institutions to which they have 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 does not exceed the foreign currency amount that it has sold to licensed credit institutions under this Circular.

4.3. After buying the whole amount of foreign currencies it has sold to licensed credit institutions under this Circular, an organization that wishes to buy more foreign currencies shall conduct the sale and purchase of foreign currencies between it and licensed credit institutions on the basis of mutual agreement under relevant current regulations on foreign exchange management.

4.4. 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 SBV’s regulations on maintenance of foreign exchange status at the time of sale-purchase of foreign currencies to/from organizations. If the foreign exchange status of a licensed credit institution exceeds the prescribed level as a result of the purchase of foreign currencies from organizations, the institution shall immediately sell the excessive foreign-currency amount to the SBV at the foreign-currency buying rate announced by the SBV in the inter-bank market at the time of transaction. The SBV shall re-sell this foreign currency amount to the licensed credit institution upon request at the selling rate announced by the SBV in the inter-bank market at the time of transaction for sale to organizations.

4.5. In case a licensed credit institution does not have enough Vietnam dong amounts to buy foreign currencies from organizations, it may sell the foreign currency amount which it is unable to buy to the SBV at the foreign-currency buying rate announced by the SBV in the inter-bank market at the time of transaction. The SBV shall re-sell this foreign currency amount to the licensed credit institution at the foreign currency selling rate announced by the SBV in the inter-bank market at the time of transaction for sale to organizations.

4.6. The exchange rates applicable to the sale and purchase of foreign currencies between licensed credit institutions and organizations comply with the SBV’s current regulations.

4.7. For foreign currency amounts which licensed credit institutions buy from organizations and then sell to the SBV under Points 4.4 and 4.5, Section I of this Circular, these institutions may apply the rate applied in selling foreign currencies to the SBV to make payment to organizations. Similarly, for foreign currency amounts which they buy from the SBV for re-sale to organizations upon request, licensed credit institutions may sell these foreign currency amounts to organizations at the rate at which they have bought foreign currencies from the SBV.

Section II

OBLIGATION TO SELL FOREIGN CURRENCIES ON DEPOSIT ACCOUNT CREDIT BALANCE

5. Foreign currency amounts to be sold:

5.1. For the credit balance on time deposit accounts of organizations at licensed credit institutions as of December 31, 2009 (except amounts paid as collateral, deposit or guarantee for debt obligations in the future): Organizations shall immediately sell 30% of the credit balance on foreign-currency time deposit accounts as of December 31, 2009. Organizations shall sell the remaining foreign currency amount to licensed credit institutions within the first 2 months of 2010.

5.2. For the credit balance on demand deposit accounts of organizations at licensed credit institutions as of December 31, 2001: Organizations may retain the foreign currency amount which is needed to make payment and the foreign currency amount which they currently retain for the purposes of collateral, deposit or guarantee for debt obligations in the future. They shall immediately sell the remaining foreign currency amount to licensed credit institutions.

6. Procedures for sale of foreign currencies on deposit account credit balance under Point 5, Section II of this Circular:

6.1. For the credit balance on time deposit accounts as of December 31, 2009:

a/ Licensed credit institutions shall accurately determine and freeze the credit balance on foreign-currency time deposit accounts of organizations at their institutions at the time of December 31, 2009.

b/ Licensed credit institutions shall transfer 30% of the foreign currency amount on organizations’ foreign-currency time deposit accounts to a managed account. At the same time, they shall immediately notify organizations to sell the foreign currency amount already transferred to the managed account to the institutions no later than January 6, 2010.

c/ After January 6, 2010, if organizations fail to sell the foreign currency amount already transferred to the managed account to licensed credit institutions, the latter may immediately buy this foreign currency amount and, at the same time, record credit in organizations’ Vietnam-dong accounts opened at the institutions. In case organizations have not yet opened Vietnam-dong accounts at licensed credit institutions, the latter may open Vietnam-dong accounts for organizations in order to promptly buy their foreign currencies and request organizations to complete procedures for opening Vietnam-dong accounts according to the institutions’ regulations.

d/ No later than March 1, 2010, licensed credit institutions shall reach agreement with organizations on the plan on purchase of the remaining foreign currency amounts of organizations and take the initiative in implementing these plans under this Circular.

e/ For the credit balance on time deposit accounts, at the time of purchase, licensed credit institutions shall pay interests on the foreign-currency amounts to be sold by organizations at the interest rate equal to the interest rate committed for the deposit term and calculate interest amounts based on the actual number of days the foreign currency amounts are deposited at licensed credit institutions. Licensed credit institutions shall pay these interest amounts in foreign currencies to organizations, which constitute foreign-currency revenues of organizations in the month and shall be calculated according to Section III of this Circular.

6.2. For the credit balance of demand foreign-currency deposit accounts as of December 31, 2009:

a/ Within 5 working days after December 31, 2009, organizations shall produce to licensed credit institutions dossiers and documents to prove the reasonability of the foreign currency amount which they need to retain for making payment in January 2010 and the foreign-currency amount which they currently keep for collateral, deposit or guarantee purpose. Licensed credit institutions shall base themselves on these dossiers and documents to determine the accurate foreign currency amount which organizations need to retain on their demand deposit accounts on December 31, 2009.

b/ After subtracting the foreign-currency amount to be retained as prescribed at Item a, Point 6.2 above, licensed credit institutions shall transfer the remaining foreign currency amount on organizations’ demand deposit accounts as of December 31, 2009, to a managed account. At the same time, they shall immediately notify organizations to sell the foreign currency amount transferred to the managed account to the institutions no later than January 13, 2010.

c/ After January 13, 2010, if organizations fail to sell the foreign-currency amount already transferred to the managed account to licensed credit institutions, the latter may immediately buy this amount according to the method prescribed at Item c, Point 6.1, Section II of this Circular.

d/ Licensed credit institutions shall pay interests in foreign currencies at the interest rates and based on the actual number of days foreign currencies are deposited at the institutions. These interest amounts shall be accounted as foreign currency revenues of organizations in January 2010.

Section III

OBLIGATION TO SELL FOREIGN CURRENCIES FROM CURRENT REVENUE SOURCES

7. Foreign currency amounts to be sold:

7.1. Organizations are not obliged to sell to licensed credit institutions foreign currency amounts which are deposited on accounts as a collateral, deposit or guarantee for debt obligations in the future as of December 31, 2009. Upon the expiration of the collateral, deposit or guarantee duration, if this duration is not extended or the foreign currency amount is neither used nor used up to pay for debt obligations, it shall be considered an increase in foreign currency revenue and accounted as new foreign currency revenue under Section III of this Circular.

7.2. For foreign currency revenues arising from January 1, 2010, after balancing their foreign currency demands and foreign currency amounts used as collateral, deposit or guarantee in the month, organizations shall promptly sell the remaining amount to licensed credit institutions under this Circular.

8. Procedures for the sale of foreign currencies:

8.1. Within the first 5 working days of the month, organizations shall work out plans on foreign currency use (for making payment or paying collaterals or deposits) in the month and send these plans to licensed credit institutions, enclosed with dossiers and documents proving the reasonability of their foreign currency demands.

8.2. Licensed credit institutions shall base themselves on dossiers and documents produced by organizations to determine the foreign currency amounts which organizations need to retain from their current revenues in the month to meet their foreign currency demands.

8.3. When receiving organizations’ foreign-currency revenues, licensed credit institutions shall record credit in organizations’ foreign-currency deposit accounts and freeze the credit balance to serve the sale and purchase of foreign currencies under Section III of this Circular. They shall balance foreign currency revenues and foreign currency demands of organizations in the month. If the collected revenues and the existing credit balance on organizations’ accounts exceed the foreign-currency amount to be used by organizations in the month under the determined plan, licensed credit institutions shall immediately notify such to organizations so as to buy the excessive foreign currency amount within 3 working days from the date of notification. Past this time limit, if organizations fail to sell the excessive foreign-currency amount, licensed credit institutions shall buy this amount under Item c, Point 6.1, Section II of this Circular.

8.4. After foreign currency demands in a month have been determined, if wishing to use more foreign currencies in this month, organizations shall notify such and send to licensed credit institutions dossiers and documents proving the reasonability of the newly arising demands. Licensed credit institutions shall examine the reasonability of the foreign currency amount to be additionally used in the month so as to obtain accurate data for balancing foreign currency demands with foreign currency amounts collected from current revenue sources of organizations in the month and buy the excessive amount under Point 8.3, Section III of this Circular.

Section IV

ORGANIZATIONS’ RIGHT TO BUY FOREIGN CURRENCIES

9. Organizations may retain foreign-currency amounts collected from their current revenue sources in the month in their foreign-currency deposit accounts to meet their demands as long as they can prove the reasonability of their foreign currency demands in the month.

10. If their foreign currency demands to make payment or pay deposits or collaterals in the month are larger than the collected revenues and the existing credit balance, organizations may buy the deficit from licensed credit institutions as long as they can produce valid documents to prove the lawfulness of their foreign currency demands to licensed credit institutions.

11. Procedures for the purchase of foreign currencies:

Licensed credit institutions shall examine the reasonability of organizations’ foreign currency demands and sell foreign currencies to them under this Circular and relevant regulations.

Section V

RESPONSIBILITIES OF CREDIT INSTITUTIONS

12. To buy and sell foreign currencies from/to organizations:

12.1. To balance capital sources for buying and selling foreign currencies from/to organizations under this Circular and relevant regulations on foreign exchange management.

12.2. To examine dossiers and documents produced by organizations to determine the accurate foreign currency amounts to be retained to meet their reasonable demands; to buy the remaining amounts from organizations under this Circular.

12.3. To open a managed account for each organization so as to buy foreign currencies from organizations under this Circular.

12.4. To use foreign currency deposit accounts opened by organizations at their units to buy and sell foreign currencies from/to organizations under this Circular.

13. When buying and selling foreign currencies under this Circular:

13.1. To guide, urge and notify organizations of the sale and purchase of foreign currencies under the SBV’s regulations in this Circular;

13.2. To monitor and control so as to ensure the principle on the amounts of foreign currencies to be sold and bought under this Circular.

13.3. To maintain their foreign exchange status according to the SBV’s current regulations.

13.4. To examine and control documents when buying and selling foreign currencies from/to organizations under this Circular and current law, paying special attention to organizations’ demands to buy foreign currencies.

13.5. To detect violations of regulations on the sale and purchase of foreign currencies committed by organizations and promptly report them to the SBV for handling.

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

13.7. To satisfy the SBV’s reporting requests under this Circular.

Section VI

RESPONSIBILITIES OF ORGANIZATIONS

14. Organizations have the following responsibilities and obligations:

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

14.2. To accurately declare foreign currency use demands in the month so as to request licensed credit institutions to allow them to retain foreign currency revenues to balance their foreign-currency revenues and expenditures in the month. Chairmen of the boards of directors and directors general (directors) of organizations shall take responsibility for the accuracy and reasonability of the balance of foreign-currency revenues and expenditures in the month so as to sell and buy foreign currencies from/to licensed credit institutions under this Circular.

14.3. When selling and buying foreign currencies, to comply with regulations and produce documents according to regulations and as requested by licensed credit institutions.

14.4. To keep documents related to the sale and purchase of foreign currencies as prescribed in this Circular to serve inspection and audit.

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

Section VII

REPORTING REQUEST

15. Licensed credit institutions shall report on the sale and purchase of foreign currencies to the SBV for summing up and reporting to the Prime Minister. These reports include:

15.1. A report on the amount of foreign currencies bought under Items b and c, Point 6.1, Section II of this Circular, regarding the total amount of foreign currencies bought from the credit balance on time deposit accounts of organizations. This report will be made according to form No. 01 (not printed herein) and sent to the SBV (the Foreign Exchange Management Department and the Transaction Bureau) no later than January 8, 2010.

15.2. A report on the amount of foreign currencies bought under Items b and c, Point 6.1, Section II of this Circular, regarding the total amount of foreign currencies bought from the credit balance on demand deposit accounts of organizations. This report will be made according to form No. 02 (not printed herein) and sent to the SBV (the Foreign Exchange Management Department and the Transaction Bureau) no later than January 15, 2010.

15.3. A monthly report on the amount of foreign currencies sold to and bought from organizations in the month. This report will be made according to form No. 03 enclosed to this Circular (not printed herein) and sent to the SBV (the Foreign Exchange Management and the Transaction Bureau) within the first 5 working days of the subsequent month.

15.4. In case of making irregular reports on data on and the situation of the sale and purchase of foreign currencies to/from organizations and other related contents, licensed credit institutions shall comply with the SBV’s requests.

16. The SBV shall sum up data on the sale and purchase of foreign currencies between licensed credit institutions and organizations for reporting to the Prime Minister on a regular basis or when necessary.

Section VIII

INSPECTION, AND HANDLING OF VIOLATIONS

17. The SBV and concerned agencies shall examine the sale and purchase of foreign currencies between organizations and licensed credit institutions under this Circular on a regular basis or when necessary. Organizations and licensed credit institutions shall supply all necessary documents so as to ensure timely and effective examinations.

18. If violating this Circular, organizations and licensed credit institutions shall be handled according to law, depending on the severity of their violations.

19. Organizations and licensed credit institutions shall report any problems arising in the sale and purchase of foreign currencies under this Circular to the SBV for consideration and settlement.

Section IX

ORGANIZATION OF IMPLEMENTATION

20. This Circular takes effect on the date of its signing.

21. Organization of implementation:

21.1. All amendments or supplementations to this Circular shall be decided by the Governor of the SBV.

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

21.3. Ministries, branches and agencies that manage organizations shall, according to their functions and tasks, coordinate with one another in directing the implementation of this Circular.-

For the Governor of the State Bank
Deputy Governor
NGUYEN VAN BINH