Decision No. 689/2004/QD-NHNN dated June 07, 2004 of the State Bank promulgating the regulation on payment for goods and service trading and exchange in border areas and border-gate economic zones between Vietnam and China

DECISION

PROMULGATING THE REGULATION ON PAYMENT FOR GOODS AND SERVICE TRADING AND EXCHANGE IN BORDER AREAS AND BORDER-GATE ECONOMIC ZONES BETWEEN VIETNAM AND CHINA

THE STATE BANK GOVERNOR

Pursuant to Vietnam State Bank Law No. 01/1997/QH10 of December 12, 1997 and Law No. 10/2003/QH11 of June 17, 2003 Amending and Supplementing a Number of Articles of the Vietnam State Bank Law;

Pursuant to the Agreement on goods trading in border areas, signed on October 19, 1998 between the Government of the Socialist Republic of Vietnam and the Government of the People's Republic of China;

Pursuant to the payment and cooperation agreement signed on October 16, 2003 between the State Bank of Vietnam and the People's Bank of China;

Pursuant to the Prime Minister's Decision No. 252/2003/QD-TTg of November 24, 2003 on management of goods trading across borders with the bordering countries;

On the basis of the direction of the Prime Minister in the Government Office's Official Dispatch No. 290/VPCP-KTTH of January 16, 2003 on the collection of money of the bordering countries;

At the proposal of the director of the Foreign Exchange Management Department;

DECIDES:

Article 1.- To promulgate together with this Decision the Regulation on payment for goods and service trading and exchange in border areas and border-gate economic zones between Vietnam and China.

Article 2.- This Decision takes effect 15 days after its publication in the Official Gazette. The State Bank's Circular No. 06/TT-NH8 of March 18, 1994 guiding the May 26, 1993 Vietnam-China payment and cooperation agreement between the State Bank of Vietnam and the People's Bank of China ceases to be effective.

Article 3.- The director of the Office, the director of the Foreign Exchange Management Department, the heads of the units of the State Bank, the directors of the State Bank's provincial/municipal branches, the general directors (directors) of commercial banks shall have to implement this Decision.

REGULATION

ON PAYMENT FOR GOODS AND SERVICE TRADING AND EXCHANGE IN BORDER AREAS AND BORDER-GATE ECONOMIC ZONES BETWEEN VIETNAM AND CHINA

(Promulgated together with the State Bank Governor's Decision No. 689/2004/QD-NHNN of June 7, 2004)

Chapter I

GENERAL PROVISIONS

Article 1.- Scope of regulation

1. This Regulation regulates the following activities:

a/ Payment for goods and service trading and exchange across borders between Vietnamese traders and Chinese traders under the agreement on goods trading in border areas between the Government of the Socialist Republic of Vietnam and the Government of the People's Republic of China (hereinafter called payment for cross-Vietnam-China border export and import).

b/ Payment for sale of goods and provision of services for China yuan (CNY) by Vietnamese enterprises in border areas and border-gate economic zones in the provinces bordering on China.

c/ Opening of CNY accounts by Vietnamese traders and opening and use of Vietnam dong (VND) accounts by Chinese traders at licensed Vietnamese banks in border areas.

d/ Establishment and operation of CNY exchange agency counters.

2. Payment for goods trading and exchange among border inhabitants and payment for goods trading in border markets, border-gate markets and markets in border-gate economic zones shall be made in VND and CNY by the modes agreed upon by purchasers and sellers in conformity with the currency management regulations of the bordering countries. The carrying of VND and CNY through border gates must comply with the current regulations on carrying of foreign currencies and Vietnam dong in cash on exit and entry.

3. Payment for export and import of goods and services between Vietnamese traders and Chinese traders other than the subjects defined at Point a, Clause 1 of this Article may be made in forms of via-bank payment in freely convertible foreign currencies according to international practices or in other forms permitted by the State Bank and shall not be subject to the regulation of this Regulation.

Article 2.- Subjects of application

This Regulation applies to the following subjects:

1. Vietnamese traders, including:

a/ Enterprises established and operating under Vietnamese law provisions;

b/ Business households permitted to conduct cross-Vietnam-China border export and import according to law provisions.

2. Vietnamese commercial banks;

3. Chinese traders (including organizations and individuals) trading and/or exchanging goods and/or services in border areas and border-gate economic zones with Vietnamese traders.

Article 3.- Opening and use of accounts

1. Vietnamese traders conducting cross-Vietnam-China border export and/or import activities or granted by the State Bank permits for sale of goods and/or provision of services for CNY in cash may open CNY accounts at licensed Vietnamese banks that make payments in VND and CNY for cross-Vietnam-China border export and import according to the following provisions:

a/ Dossiers and procedures for opening accounts shall comply with the guidance of the banks where accounts are opened in accordance with current regulations.

b/ CNY accounts shall be used as follows:

Revenues:

- Revenues from export of goods and services;

- Revenues being the proceeds in CNY in cash from the sale of goods and provision of services for CNY as prescribed in Article 10 of this Regulation;

- Revenues from the purchase of CNY at licensed banks;

- Other revenues permitted by law.

Expenditures:

- Expenditures on payment for import of goods and services;

- Expenditures on sale of CNY to banks or CNY exchange counters;

- Cash withdrawn for payment of salaries, bonuses and allowances to foreigners working for organizations or expenses to individuals sent on overseas working missions or study, and expenses for other purposes permitted by law.

2. Chinese traders conducting cross-Vietnam-China border export and/or import activities may open VND accounts at licensed Vietnamese banks that make payments in VND and CNY for cross-Vietnam-China border export and import. The opening and use of VND accounts by Chinese traders shall comply with the following provisions:

a/ Dossiers and procedures for opening accounts shall comply with the guidance of the banks where accounts are opened in accordance with current regulations.

b/ VND accounts shall be used as follows:

Revenues:

- Revenues from the sale of goods and services;

- Revenues from the sale of CNY or freely convertible foreign currencies to banks;

- Other revenues permitted by Vietnamese laws.

Expenditures:

- Expenditures on payment for goods and services;

- Expenditures on purchase of CNY for transfer back to China;

- Withdrawn cash for spending in Vietnam.

3. Vietnamese traders that open CNY accounts and freely-convertible foreign currency accounts at Chinese commercial banks must observe the current regulations on foreign exchange management. Vietnamese traders are strictly forbidden to open accounts at Chinese commercial banks without the State Bank's permission.

Article 4.- Forms of payment for cross-Vietnam-China border export and import

1. The State Bank encourages traders of the two countries to make via-bank payments for cross-Vietnam-China border export and import in the following forms:

a/ Payments via the two countries' licensed banks in freely convertible foreign currencies in accordance with international practices (including banks headquartered inside or outside the provinces bordering on China);

b/ Payments in freely convertible foreign currencies or in VND through Chinese traders' accounts opened at licensed Vietnamese banks in accordance with the provisions of Article 3 of this Regulation;

c/ Payments in VND and CNY via licensed banks that make payments in VND and CNY for cross-Vietnam-China border export and import;

d/ Payments by barter mode (the difference is paid via banks).

2. The payment in cash (freely convertible foreign currencies, CNY or VND) shall comply with a separate guidance of the State Bank.

Article 5.- Payment currencies

Currencies used for payment for cross-Vietnam-China border export and import may be freely convertible foreign currencies, VND or CNY. Traders of the two countries may select appropriate payment currencies in accordance with the provisions of this Regulation and other law provisions.

Chapter II

PAYMENT FOR CROSS-VIETNAM-CHINA BORDER EXPORT AND IMPORT

Article 6.- Via-bank payments in freely convertible foreign currencies in conformity with international practices

When using freely convertible foreign currencies as payment currencies for cross-Vietnam-China border export and import, Vietnamese and Chinese traders may select the banks headquartered inside or outside the border provinces for making payments according to international practices in accordance with their respective countries' foreign exchange management regulations.

Article 7.- Payments in freely convertible foreign currencies or VND via Chinese traders' accounts opened at banks in Vietnam

Chinese traders having freely-convertible foreign currency accounts and VND accounts at licensed banks in Vietnam in accordance with the provisions of this Regulation and other law provisions may use these accounts to make payments for cross-Vietnam-China border export and import.

Article 8.- Payments in VND and CNY via banks licensed by the two countries in border areas

1. The use of VND and CNY in payments for cross-Vietnam-China border export and import shall comply with the following regulations:

a/ The licensed Vietnamese banks in the border provinces may reach agreement with the Chinese banks on the opening of VND accounts or CNY accounts at one another in service of payment to traders of the two countries.

b/ The licensed banks of the two parties may reach agreements on payment technologies and modes, account management modes, maximum balances on accounts not against the law provisions of each country. Where the account balances exceed the maximum balance, the banks of the two parties may reach agreement on converting such excess amounts into freely convertible foreign currencies or the currency of each party for remittance back home.

c/ The VND - CNY exchange rates shall be decided by the general directors or directors (or their lawfully authorized persons) of the licensed banks.

d/ The licensed Vietnamese banks that make payments in VND and CNY for cross-Vietnam-China border export and import may export and import CNY and VND in cash in service of business operations without having to ask for the State Bank's permission but must carry out procedures to make declaration to the border-gate customs when exporting or importing cash.

2. The examination of payment dossiers and documents shall be agreed upon by the banks of the two parties in accordance with the current foreign exchange management regulations. For cases of making payments for cross-border export or import without purchase and sale contracts, the traders must produce customs declarations and relevant papers proving that the goods have been actually exported or imported.

Article 9.- Payment by barter mode

Vietnamese traders conducting cross-Vietnam-China border export and/or import may reach agreement on payments by barter mode according to the following provisions:

1. Traded or exchanged goods must comply with each country's current law provisions on management of exports and imports;

2. The currencies used for payment of differences in barter transactions may be freely convertible currencies, VND or CNY.

3. The differences in barter transactions shall be paid by the above-said modes. Vouchers on the payment of such differences shall be the same as those for export and import payment and suitable to each payment form.

Chapter III

PROVISIONS ON SALE OF GOODS FOR CNY AND ESTABLISHMENT OF CNY EXCHANGE AGENCY COUNTERS

Article 10.- Sale of goods and provision of services for CNY in cash

1. Enterprises dealing in the sale of duty-free goods or the provision of services exclusively for foreigners in border areas and border-gate economic zones (including enterprises headquartered in other localities but opening duty-free shops or providing services exclusively for foreigners in the above-said areas) shall be considered and granted permits by the State Bank to collect CNY in cash.

2. Dossiers and procedures for grant of permits to collect CNY in cash:

a/ Enterprises falling into the subjects defined in Clause 1 of this Article, if wishing to collect CNY in cash, must send dossiers of application for permits to collect CNY in cash to the State Bank (the Foreign Exchange Management Department). A dossier comprises:

- The application for a permit to collect CNY in cash (made according to a set form);

- A competent agency's document permitting the enterprise to sell duty-free goods or provide services for foreigners.

- The written opinion of the State Bank's provincial/municipal branch (in the locality where the enterprise wishes to sell goods or provide services for CNY in cash).

b/ Within 15 working days after receiving the complete and valid dossiers, the State Bank shall consider and grant permits to collect CNY in cash to the enterprises (made according to a set form). If refusing to grant such permits, the State Bank shall issue written replies, clearly stating the reasons therefor.

3. The enterprises, which are granted by the State Bank the permits to collect CNY in cash from the sale of goods and/or provision of services, must remit the collected CNY amounts into bank accounts within 7 (seven) working days as from the date they collect such CNY amounts in cash (except for the CNY amounts permitted to be left in their funds). The levels of CNY funds in cash for daily use shall be agreed upon by the enterprises and the account-managing banks.

Article 11.- Establishment of CNY exchange agency counters

1. Enterprises operating in the domains of tourism, entertainment and leisure services, hotels, restaurants, supermarkets, transport, gold, silver and gems and enterprises regularly providing goods and/or services for foreigners in border areas or border-gate economic zones may establish CNY exchange agency counters for the licensed Vietnamese banks operating in border areas or border-gate economic zones.

2. The conditions for establishment of CNY exchange agency counters, the dossiers and procedures for grant of CNY exchange permits, grant of additional permits and matters related to the CNY purchase, the CNY exchange rate, the handling of fake money,... shall comply with the provisions of the Regulation on the operation of foreign currency exchange counters, promulgated together with the State Bank Governor's Decision No. 1216/2003/QD-NHNN of October 9, 2003.

CNY exchange agency counters shall only purchase CNY but not resell to customers. The levels of the balances of CNY funds at the CNY exchange agency counters and the time limits for re-sale of CNY to the agency-authorizing banks shall be agreed upon by the CNY exchange agency counters and the authorizing banks.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 12.- Organization of implementation

The State Bank's branches in border provinces shall thoroughly grasp the contents of the Regulation, seek the directing opinions of the local Party Committees and administrations, organize and conduct the popularization of this Regulation on the mass media; disseminate and guide it to enterprises in the localities; take initiative in coordinating with such concerned agencies as trade, finance, customs, police, border guard in well organizing the payment for cross-Vietnam-China border export and import as well as the implementation of other contents of this Regulation.

The general directors (directors) of licensed banks shall direct their banks' branches in the Vietnam-China border provinces to take initiative in contacting the Chinese commercial banks in order to reach agreements on setting up the agency relationships for making payments in freely convertible currencies, VND and CNY according to this Regulation, meeting the demands for payment for cross-border export and import among traders of the two countries.

Article 13.- Information and reporting regime

1. Quarterly, on the 10^th day of the first month of the subsequent quarter at the latest, enterprises which are granted by the State Bank the permits to collect CNY in cash must send reports on the collection and use of CNY in cash in the quarter (made according to a set form) to Vietnam State Bank (the Foreign Exchange Management Department) and its branches in the border provinces where the enterprises collect CNY in cash.

2. Quarterly, on the 10^th day of the first month of the subsequent quarter at the latest, enterprises having CNY exchange agency counters shall have to send reports on the CNY purchase (made according to a set form) to the State Bank's provincial/municipal branches in the localities.

3. Quarterly, on the 10^th day of the first month of the subsequent quarter at the latest, banks or banks' branches making payments with China under this Regulation shall sum up payments already made under this Regulation and send reports thereon (made according to a set form) to the State Bank's provincial/municipal branches in the localities.

4. Quarterly, on the 10^th day of the first month of the subsequent quarter at the latest, banks engaged in exporting and/or importing CNY and VND through Vietnam-China border gates must send reports on the CNY and VND export and/or import (made according to a set form) to the State Bank (the Foreign Exchange Management Department).

5. Quarterly, on the 15^th day of the first month of the subsequent quarter at the latest, the State Bank's provincial/municipal branches shall sum up the payments made under the provisions of this Regulation and send report thereon (made according to a set form) to Vietnam State Bank (the Foreign Exchange Management Department).

6. Quarterly, on the 15^th day of the first month of the subsequent quarter at the latest, the State Bank's provincial/municipal branches shall sum up the grant of permits to establish CNY exchange agency counters, the CNY purchase in their loca-lities, and send report thereon (made according to a set form) to Vietnam State Bank (the Foreign Exchange Management Department).

7. Any problems arising in the course of implementation of this Regulation should be immediately reported in writing to the State Bank Governor for timely handling measures.

Article 14.- Examination and handling of violations

1. The State Bank's provincial/municipal branches shall coordinate with the concerned agencies in examining, managing and supervising the implementation of the provisions of this Regulation by licensed banks, organizations and individuals in their localities.

2. Organizations and individuals committing acts of violating this Regulation shall, depending on the nature and seriousness of their violations, be disciplined, administratively handled or examined for penal liability; if causing damage, they must pay compensations therefor according to law provisions.