Socialist Republic of Vietnam

GOVERNMENT

No. 173-1998-QD-TTg Hanoi, 12 September 1998 (as amended 1 December 1998 and 30 August 1999)
DECISION ON OBLIGATIONS TO SELL AND RIGHTS TO PURCHASE FOREIGN CURRENCY OF RESIDENTS BEING ORGANIZATIONS

The Prime Minister

Pursuant to the Law on the Organization of the Government dated 30 September 1992;

In order to implement article 12 and clauses 1 and 2 of article 13 of Decree 63-1998-ND-CP of the Government dated 17 August 1998 on foreign exchange control;

On the proposal of the Governor of the State Bank;

Decides:


Article 1 Obligations to Sell Foreign Currency of Residents Being Organizations

1. Residents being Vietnamese economic organizations, foreign invested enterprises and foreign parties to business co-operation contracts ensured by the Government of Vietnam to receive assistance in balancing their foreign currency requirements, foreign company branches, foreign contractors and contractors in partnership with foreign parties must sell at least fifty (50) per cent of the amount of foreign currency derived from current sources of income to authorized banks immediately upon transfer or payment of such amounts of foreign currency into the foreign currency accounts opened by the organizations at banks.

Any existing foreign currency balance of accounts which is derived from current sources of income prior to the date on which this Decision becomes effective shall also be subject to the obligation to sell foreign currency at the rate provided for above; the State Bank of Vietnam shall provide guidelines for this purchase and sale.

2. Residents being State bodies, units of the armed forces, political organizations, socio-political organizations, social organizations, socio-professional organizations, social funds and charitable funds of Vietnam must sell all amounts of foreign currency derived from current sources of income to authorized banks immediately upon transfer or payment of such amounts of foreign currency into the foreign currency accounts opened by the organizations at banks.

With respect to any existing foreign currency balance of accounts prior to the date on which this Decision becomes effective, the amount of foreign currency required to maintain a foreign currency account as stipulated by the bank at which such account is opened shall be permitted to be retained and the remainder shall be sold to authorized banks. All existing amounts of foreign currency in accounts of such organizations shall be sold within fifteen (15) working days from the date on which this Decision becomes effective.

3. Residents being foreign invested enterprises and foreign parties to business co-operation contracts which are not ensured by the Government of Vietnam to receive assistance in balancing their foreign currency requirements do not have to perform the obligation to sell foreign currency as provided for in clause 1 of this article.

4. All amounts of foreign currency derived from current sources of income in the form of financing or humanitarian aid of residents being the above organizations shall not be subject to the obligation to sell foreign currency and shall be subject to agreements undertaken by the residents and financing parties.

Article 2 Rights to Purchase Foreign Currency of Residents Being Organizations

1. Residents being Vietnamese economic organizations, credit institutions in Vietnam, foreign invested enterprises and foreign parties to business co-operation contracts ensured by the Government of Vietnam to receive assistance in balancing their foreign currency requirements, foreign company branches, foreign contractors, contractors in partnership with foreign parties and other economic organizations with foreign owned capital carrying on business activities in Vietnam, State bodies, units of the armed forces, political organizations, socio-political organizations, social organizations, socio-professional organizations, social funds and charitable funds of Vietnam shall, upon having foreign currency requirements in order to satisfy current transactions or other authorized transactions as stipulated, be permitted to purchase foreign currency from authorized banks upon presentation of proper papers and source documents to banks.

2. Residents being foreign invested enterprises and foreign parties to business co-operation contracts which are not ensured by the Government of Vietnam to receive assistance in balancing their foreign currency requirements shall, upon having foreign currency requirements in order to satisfy current transactions or other authorized transactions as stipulated and having obtained approval from the State Bank of Vietnam, be permitted to purchase foreign currency from authorized banks upon presentation of proper papers and source documents to the banks.

Article 3 Purchase and Sale of Foreign Currency of the State Budget

1. The foreign currency fund account of the State Budget must be opened at the State Bank of Vietnam for the purpose of receiving revenue and making payment of expenditure in foreign currency of the State Budget.

2. Every year, the Ministry of Finance and the State Bank of Vietnam shall agree upon a plan for purchase and sale of foreign currency for the State Budget on the basis of the foreign currency revenue and expenditure plan of the State Budget.

Every quarter, the Ministry of Finance and the State Bank of Vietnam shall carry out the purchase and sale of foreign currency on the basis of the foreign currency revenue and expenditure plan and the agreed annual plan for purchase and sale of foreign currency.

Article 4 Responsibilities of Authorized Banks

Upon purchase or sale of foreign currency, authorized banks shall have the following responsibilities:

1. To guide and activate residents being organizations to perform the obligation to sell foreign currency in accordance with this Decision. Where a resident being an organization fails to perform the obligation to sell foreign currency within the stipulated period, the authorized bank shall deliver a notice reminding the resident being an organization to perform the obligation. Where the resident being an organization continues to fail to perform the obligation to sell foreign currency within five working days of the notice, the authorized bank shall purchase the foreign currency at the rate provided for in this Decision.

2. To satisfy foreign currency requirements of residents being organizations as provided for in article 2 of this Decision.

3. To display foreign currency buying and selling rates in accordance with regulations of the State Bank; the display of exchange rates shall be deemed to be a commitment in foreign exchange transactions with clients.

4. To purchase or sell foreign currency at the displayed exchange rates.

5. To ensure the maintenance of foreign currency and Vietnamese dong positions at the end of each day in accordance with regulations of the State Bank and to purchase and sell foreign currency in the inter-bank market in order to ensure the foreign currency position at the end of each day within the stipulated rates.

6. To sell foreign currency to residents being organizations on the basis of the policy on preferential treatment with respect to importation made by the Government from time to time and the provisions in relation to sale of foreign currency provided for in Decree 63-1998-ND-CP of the Government dated 17 August 1998 and legal instruments providing guidelines for the implementation of the Law on Foreign Investment in Vietnam.

Article 5 Applicable Forms of Foreign Exchange Transactions

The purchase and sale of foreign currency between clients and banks shall be carried out in the forms of spot exchange transactions, forward exchange transactions and swap exchange transactions in accordance with regulations of the State Bank of Vietnam.

Article 6 Effectiveness

1. This Decision shall be of full force and effect as of the date of its signing.

2. All previous provisions in relation to obligations to sell foreign currency and rights to purchase foreign currency of residents being organizations which are inconsistent with this Decision are hereby repealed.

Article 7 Implementation of this Decision

The Governor of the State Bank shall be responsible for providing guidelines for the implementation of this Decision.

Ministers, heads of ministerial equivalent bodies and Government bodies, and chairmen of people’s committees of provinces and cities under central authority shall be responsible for the implementation of this Decision.


The Prime Minister of the Government


PHAN VAN KHAI