1. Direct Investment Capital Account

A “Direct Investment Capital Account” is a payment account in foreign currency or Vietnamese Dong opened by a foreign direct investment enterprise or foreign investor at an authorized bank to conduct transactions related to foreign direct investment activities in Vietnam, as stipulated in Articles 5, 6, and 7 of Circular 06/2019/TT-NHNN on foreign exchange management for foreign direct investment activities in Vietnam.

2. Entities Permitted to Open and Use Direct Investment Capital Accounts Include:

• Foreign direct investment enterprises as defined in Clause 2, Article 3 of Circular 06/2019/TT-NHNN on foreign exchange management for foreign direct investment activities in Vietnam.
• Foreign investors participating in Business Cooperation Contracts (BCC).
• Foreign investors directly implementing Public-Private Partnership (PPP) projects in cases where no project enterprise is established (hereinafter referred to as foreign investors directly implementing PPP projects).

What Constitutes a Foreign Direct Investment Enterprise?

Circular 06/2019/TT-NHNN defines a foreign direct investment enterprise as follows:

1. An enterprise established in the form of investment to establish an economic organization, in which there is a foreign investor who is a member or shareholder and must carry out procedures for obtaining an Investment Registration Certificate in accordance with investment law;
2. An enterprise not falling under the case specified in point (a) of this clause, with a foreign investor owning 51% or more of the charter capital of the enterprise, including:

• • Enterprises in which a foreign investor contributes capital, purchases shares, or buys a capital contribution portion (in sectors and industries subject to conditional or unconditional investment and business activities applicable to foreign investors), resulting in the foreign investor owning 51% or more of the charter capital of the enterprise;
  • Enterprises established after a division, merger, or consolidation, resulting in the foreign investor owning 51% or more of the charter capital of the enterprise;
  • Newly established enterprises in accordance with specialized legal regulations;

        3. Project enterprises established by foreign investors to implement Public-Private Partnership (PPP) projects in accordance with investment law.

Note: The “minimum 51% charter capital” threshold in Circular 06 is based on the corresponding threshold in the Law on Investment 2020 when considering the conditions of economic organizations with foreign investment capital to carry out investment activities. Currently, Law on Investment 2020 has adjusted this threshold to “more than 50% charter capital.” However, during the period in which Circular 06 has not been adjusted, investors need to note the threshold from “more than 50% charter capital” to below “51% charter capital.” In principle, ; Law on Investment 2020, being a document with higher legal value, will apply the “more than 50% charter capital” threshold.

3. Principles for Using Direct Investment Capital Accounts

a) Foreign investors and Vietnamese investors are permitted to contribute investment capital in foreign currency or Vietnamese Dong according to the investment capital contribution stipulated in the following documents:

• Investment Registration Certificate (IRC)
• License for establishment and operation in accordance with specialized legal regulations (for foreign direct investment enterprises established and operating under specialized law)
• Notification of meeting conditions for capital contribution, share purchase, or capital contribution purchase by foreign investors
• PPP contract signed with a competent state agency
• Other documents proving the capital contribution of foreign investors in accordance with the law

b) Resident Vietnamese investors are allowed to contribute investment capital using their own foreign currency sources.

c) The contribution of investment capital in cash by foreign investors and Vietnamese investors must be made via transfer into the direct investment capital account.

d) Transactions for withdrawal of investment capital, repayment of principal, interest, and fees; and foreign loans and repayments must comply with the legal provisions on foreign borrowing and repayment by enterprises.

e) The use of profits distributed to foreign investors within the territory of Vietnam must ensure compliance with regulations on foreign exchange management and other relevant legal provisions.

Legal Basis:

• Law on Investment 2020
• Circular 06/2019/TT-NHNN on foreign exchange management for foreign direct investment activities in Vietnam
• Ordinance on Foreign Exchange 2005 (amended by Clause 1, Article 1 of the Amending Ordinance on Foreign Exchange 2013)