Chương IV: Chế độ báo cáo

CIRCULAR

GUIDING THE STATE BANK OF VIETNAM’S FOREIGN CURRENCY CONVERSION PROCEDURES FOR PROJECTS GIVEN THE GOVERNMENT UNDERTAKINGS TO PROVIDE GUARANTEE AND ASSISTANCE IN FOREIGN CURRENCY CONVERSION

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law on amendments to the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Law on investment dated November 26, 2014 and the Law on amendments to Article 6 and Appendix 4 regarding the list of conditional business lines of the Law on investment dated November 22, 2016;

Pursuant to the Ordinance on Foreign Exchange dated December 13, 2005 and the Ordinance on amendments to the Ordinance on Foreign Exchange dated March 18, 2013;

Pursuant to the Government’s Decree No. 50/2014/ND-CP dated May 20, 2014 on management of the State foreign exchange reserves;

Pursuant to the Government’s Decree No. 16/2017/ND-CP dated February 17, 2017 defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

At the request of the Director of the Foreign Exchange Management Department;

The Governor of the State Bank of Vietnam promulgates Circular guiding the State Bank of Vietnam’s foreign currency conversion procedures for projects given the government undertakings to provide guarantee and assistance in foreign currency conversion.

Chapter I

GENERAL PROVISIONS

Article 1. Scope

1. This Circular provides guidance on the State Bank of Vietnam ("SBV”)’s procedures for the sale of foreign currency to converting banks serving the foreign currency conversion for projects which are given the Government undertakings to provide guarantee and assistance in foreign currency conversion.

2. If the provisions of the Government Guarantee and Undertakings Agreement on a specific project are contrary to regulations herein, that Agreement shall apply.

Article 2. Regulated entities

1. Investors investing in projects in Vietnam which are given the Government undertakings to provide guarantee and assistance in foreign currency conversion.

2. Project enterprises as defined in Clause 4 Article 3 hereof.

3. Converting banks and licensed credit institutions following the foreign currency conversion procedures for the projects given the Government undertakings to provide guarantee and assistance in foreign currency conversion.

4. SBV’s affiliates.

5. Other organizations and individuals involved in the adoption of the foreign currency conversion procedures.

Article 3. Interpretation of terms

For the purpose of this Circular, the terms below are construed as follows:

1. “Government Guarantee and Undertaking” or “GGU” refers to an agreement which is entered into between a competent authority of Vietnam on behalf of the Government and parties involved in a project.

2. “project” refers to an investment project which is given the Government undertakings to provide guarantee and assistance in foreign currency conversion.

3. “investor” refers to a foreign investor who makes investment in project(s) given the Government undertakings to provide guarantee and assistance in foreign currency conversion.

4. “project enterprises” refers to an enterprise which is duly established by the investor to execute the project in Vietnam.

5. “converting bank” refers to a commercial bank or branch of a foreign bank that is licensed to trade in the foreign exchange market of Vietnam in accordance with applicable laws and designated by the project enterprise or the investor under terms and provisions of the GGU to carry out the conversion of Vietnamese dong (VND) into a foreign currency for the project.

6. “Account No. 1” refers to the project enterprise or investor’s VND account opened at the converting bank for receiving the VND amounts to be converted into a foreign currency according to the Government undertakings specified in the GGU of each project.

7. “Account No. 2” refers to the project enterprise or investor’s foreign currency account opened at the converting bank for receiving the foreign currency amounts to be converted from the VND amounts on the account No. 1 under terms and provisions of the GGU of each project.

8. “exchange rate announcement date” refers to the date in which the converting bank announces the exchange rate from VND to foreign currency for the project enterprise/ the investor under terms and provisions of the GGU of each project.

9. “announced exchange rate” refers to the rate of exchange between a foreign currency and VND announced by the converting bank for the project enterprise/ investor in the exchange rate announcement date. The exchange rate announced by the converting bank must be conformable with SBV's applicable regulations.

10. “payment date” refers to the date in which the VND amounts to be converted shall be credited on the account No. 1 under terms and provisions of the GGU of each project.

11. “conversion request date” refers to the date in which the converting bank requests the SBV in writing to sell foreign currency to carry out undertakings to provide guarantee and assistance in foreign currency conversion for the project enterprise/ investor.

12. “conversion date” refers to the date in which the SBV sells the foreign currency derived from the Fund for exchange rate stabilization and gold market management to the converting bank for serving the foreign currency conversion by the project enterprise/ investor.

13. “SBV's selling rate" refers to the rate of exchange between the foreign currency and VND determined by the converting bank in the conversion date. The rate determined by the converting bank as prescribed in this Clause must be conformable with SBV's applicable regulations.

14. “converting bank's foreign exchange position” refers to the foreign exchange position determined in the business date before the conversion request date.

Chapter II

FOREIGN CURRENCY CONVERSION PROCEDURES

Article 4. Foreign currency conversion rules

1. The project enterprise/ investor shall proactively convert the VND amounts on the account No. 1 into the foreign currency on the foreign exchange market to serve the purposes defined in the GGU.

2. On the exchange rate announcement date, the project enterprise/ investor shall inform the SBV (Operations Center) of the VND amounts to be converted and one (01) converting bank designated to carry out foreign currency conversion for the project.

3. If the converting bank's foreign exchange position is negative or positive but unable to serve the foreign currency conversion for projects at the same time, the converting bank or the project enterprise/ investor (via the converting bank) shall determine the remaining VND amounts to be converted for carrying out the foreign currency conversion according to Article 5 hereof.

4. Based on the project enterprise/ investor and the converting bank’s request for assistance in conversion of the remaining VND amounts determined according to Clause 3 of this Article, the SBV shall consider selling foreign currency to the converting bank in accordance with regulations laid down in Article 5 hereof.

Article 5. Foreign currency conversion procedures

1. With regard to the foreign currency conversion guaranteed by the Government:

a) Step 1: If the project enterprise/ investor is unable to carry out the foreign currency conversion on the market, within the time limit prescribed in the GGU of each project, the project enterprise/ investor (via the converting bank) shall determine and report the remaining VND amounts to be converted under the Government guarantee according to regulations in Clause 3 Article 4 hereof to the converting bank, accompanied by the invoice prescribed in the GGU of each project;

b) Step 2: On the conversion request date, the converting bank shall send an official dispatch, accompanied by the invoice (prescribed in the GGU of each project) requesting the SBV (Operations Center) to sell an amount of foreign currency equivalent to the determined remaining VND amount to be converted;

c) Step 3: Within the time limit prescribed in the GGU of each project, on the conversion date, based on terms and provisions of the GGU, the converting bank’s foreign exchange position prescribed in Clause 3 Article 4 hereof and other regulations herein, the SBV (Operations Center) shall examine the invoice and relevant documents, and sell foreign currency derived from the Fund for exchange rate stabilization and gold market management to the converting bank according to the announced exchange rate.

Within the time limit prescribed in this Point, the project enterprise/ investor is entitled to carry out the foreign currency conversion on the market. In case the project enterprise/ investor has made successful foreign currency conversion transactions on the market, the SBV shall sell the remaining foreign currency amount to be converted under the Government guarantee after examining relevant invoices and documents;

d) Step 4: Within two (02) business days from the conversion date, the converting bank shall sell foreign currency and transfer foreign currency amounts to the account No. 2 or an overseas account (under terms and provisions of the GGU of each project) of the project enterprise or the investor according to the announced exchange rate.

2. With regard to foreign currency conversion assisted by the Government:

a) Step 1: Within two (02) weeks from the payment date, the project enterprise/ investor shall carry out the foreign currency conversion on the market;

b) Step 2: Within two (02) weeks from the payment date, if the VND amounts to be converted cannot be converted into foreign currency on the market, the project enterprise/ investor (via the converting bank) shall determine and report the remaining VND amounts to be converted under the Government assistance according to regulations in Clause 3 Article 4 hereof to the converting bank, accompanied by the invoice prescribed in the GGU of each project;

c) Step 3: On the conversion request date, the converting bank shall send an official dispatch, accompanied by the invoice (prescribed in the GGU of each project) requesting the SBV (Operations Center) to sell an amount of foreign currency equivalent to the determined remaining VND amount to be converted under the Government assistance;

d) Step 4: Within two (02) weeks from the conversion request date, based on terms and provisions of the GGU, the converting bank’s foreign exchange position prescribed in Clause 3 Article 4 hereof and other regulations herein, the SBV (Operations Center) shall examine the invoice and relevant documents, and sell foreign currency derived from the Fund for exchange rate stabilization and gold market management to the converting bank according to the SBV’s selling rate.

Within the time limit prescribed in this Point, the project enterprise/ investor is entitled to carry out the foreign currency conversion on the market. In case the project enterprise/ investor has made successful foreign currency conversion transactions on the market, the SBV shall sell the remaining foreign currency amount to be converted under the Government assistance after examining relevant invoices and documents;

dd) Step 5: The converting bank shall sell foreign currency and transfer foreign currency amounts to the account No. 2 or an overseas account (under terms and provisions of the GGU of each project) of the project enterprise or the investor according to the SBV’s selling rate.

Chapter III

RESPONSIBILITY OF RELEVANT PARTIES

Article 6. Responsibility of SBV’s affiliates

1. Responsibility of the SBV’s Operations Center:

a) Fulfill duties of the Operations Center in the course of performance of the foreign currency conversion procedures prescribed in Article 5 hereof;

b) Submit reports to the SBV’s Governor (and the Foreign Exchange Management Department and the Financial Policy Department) on the sale of foreign currencies derived from the Fund for exchange rate stabilization and gold market management to project enterprises and investors immediately upon the completion of each transaction.

2. Responsibility of the Foreign Exchange Management Department:

By March 31 every year, cooperate with relevant agencies in submitting reports to the SBV’s Governor for submission to the Prime Minister on the sale of foreign currencies to projects given the Government to provide guarantee and assistance in foreign currency conversion.

3. Responsibility of the Finance and Accounting Department:

Cooperate with the Operations Centers in recording accounting operations performed during the sale of foreign currencies to projects given the Government to provide guarantee and assistance in foreign currency conversion.

Article 7. Responsibility of converting banks

1. Carry out the foreign currency conversion procedures for projects given the Government to provide guarantee and assistance in foreign currency conversion according to GGU and regulations herein.

2. Assume responsibility for the faithfulness and accuracy of documents/ vouchers submitted by project enterprises and investors so as to ensure the compliance of the foreign currency conversion for projects with GGU and regulations herein.

Article 8. Responsibility of project enterprise/ investors

1. Determine the amount of foreign currency to be converted under the Government guarantee or assistance, and report it to the SBV via converting banks according to regulations in Article 4 and Article 5 hereof.

2. Assume responsibility for the faithfulness and accuracy of documents/ vouchers sent to converting banks and SBV for using as the basis for performing the foreign currency conversion in accordance with regulations herein.

Chapter IV

REPORTING

Article 9. Reports submitted by converting banks

1. By the 20^th of each month, the converting bank must report the SBV (the Foreign Exchange Management Department, the Financial Policy Department and the Operations Center) on:

a) The sale of foreign currencies to project enterprise/ investors during the converting month;

b) The estimated amount of foreign currency to be converted for project enterprises/ investors in the next month.

2. Quarterly (by the 03^rd of the first month of the reporting quarter), the converting bank must submit reports to the SBV (the Foreign Exchange Management Department, the Financial Policy Department and the Operations Center) on the estimated amounts of foreign currency to be converted by project enterprises/ investors in the next quarter and the foreign currency balancing plan to meet such amounts.

Article 10. Reports by project enterprises/ investors

1. Quarterly (by the 03^rd of the first month of the reporting quarter), the project enterprise/ investor must submit reports to the SBV (the Foreign Exchange Management Department and the Operations Center) on its estimated amounts of foreign currency to be converted in the next quarter.

2. Every year (by January 05), the project enterprise/ investor must submit reports to the SBV (the Foreign Exchange Management Department and the Operations Center) on its estimated amounts of foreign currency to be converted in the year.

Article 11. Ad-hoc reports

Project enterprises, investors, converting banks and licensed credit institutions must submit ad-hoc reports in emergencies or at the request of the SBV.

Chapter V

IMPLEMENTATION

Article 12. Effect

1. This Circular comes into force from February 01, 2019.

2. This Circular supersedes the Decision No. 218/2002/QD-NHNN dated March 22, 2002 by the SBV’s Governor.

Article 13. Implementation organization

Chief of the Ministry’s Office, the Director of Foreign Exchange Management Department, heads of the SBV’s affiliates, Chairpersons of the Management Boards, Chairpersons of the Member Boards, General Directors (Directors) of licensed credit institutions shall be responsible for implementing this Circular.

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