Opening a Direct Investment Capital Account is a mandatory requirement for foreign direct investment (“FDI”) enterprises and foreign investors directly implementing PPP projects according to the provisions of Clause 1, Article 5 of Circular 06/2019/TT-NHNN. This account is not only a means to conduct financial transactions related to investment activities but also serves as a basis for competent authorities to manage and supervise investment capital flows. The following article by TNTP offers detailed information regarding the opening of a Direct Investment Capital Account for transferring foreign investment capital into Vietnam.
1. What is a Direct Investment Capital Account?
A direct investment capital account (DICA) is a payment account opened in foreign currency or Vietnamese dong at authorized banks, designated for foreign investors and FDI enterprises. The primary purpose of this account is to handle legal receipts and payments related to foreign direct investment activities in Vietnam.
The opening and use of a DICA shall be carried out upon receipt of an investment license issued by a competent state authority. Typically, this account can only be opened after completing all required legal investment procedures. Investors are required to fulfill their capital contribution obligations in alignment with the Investment Registration Certificate, the Establishment and Operation License (in specialized legal sectors), the Notification on Meeting the condition for Capital Contribution, Share Purchase, Capital Contribution Acquisition, Public-Private Partnership (PPP) contracts, and other relevant documentation that is comply with legal framework on capital contribution.
However, during the investment preparation phase, before obtaining an official approval, foreign investors may still transfer funds into Vietnam. These funds can be transferred from the investor’s account abroad or from their existing foreign currency or VND payment account opened at an authorized bank in Vietnam. The purpose of such transfers is to cover legitimate expenses incurred during the investment preparation in Vietnam.
2. Entities Eligible to Open a Direct Investment Capital Account for Transferring Foreign Investment Capital into Vietnam
A DICA can be opened by FDI enterprises or foreign investors, depending on the specific circumstances. The determination of the entity authorized to open and use the DICA depends on the form of investment, specifically:
2.1. Enterprises with Foreign Direct Investment
For enterprises with foreign direct investment, a DICA must be opened when investing in a project through the establishment of a company. According to Clause 2, Article 3 of Circular 06/2019/TT-NHNN, enterprises with foreign direct investment include:
• Enterprises established through investment in economic organizations where foreign investors hold ownership requiring the issuance of an Investment Registration Certificate.
• Enterprises where foreign investors hold 51% or more of charter capital through capital contribution, share purchase, or capital contribution acquisition, but are not required to obtain an Investment Registration Certificate.
• Enterprises established by foreign investors to implement PPP projects in accordance with investment laws.
2.2. Foreign Investors Engaging in Direct Investment without Establishing an Enterprise
Foreign investors who do not establish a company in Vietnam but participate in the following investment forms are still required to open a DICA:
• Foreign investors engaging in Business Cooperation Contracts (BCC).
• Foreign investors directly implement PPP projects without establishing a project company.
Thus, a DICA is a mandatory requirement for both types of foreign investors mentioned above to ensure capital flow management and compliance with foreign exchange control regulations.
3. Principles for Opening a Direct Investment Capital Account for Transferring Foreign Investment Capital into Vietnam
Pursuant to Clause 2, Clause 3, Article 5 of Circular 06/2019/TT-NHNN, opening a DICA must adhere to the following regulations:
Firstly, the DICA must be opened at a commercial bank authorized to conduct foreign exchange operations in Vietnam.
Secondly, only one DICA can be opened for each type of currency, specifically:
• For capital contributions made in a specific foreign currency, only one DICA in that currency may be opened at an authorized bank.
• If the enterprise invests in Vietnamese dong (VND), it may open one DICA in VND at the same bank where the foreign currency DICA is opened.
Thirdly, foreign investors participating in multiple BCC contracts or implementing multiple PPP projects must open separate DICAs for each contract or project.
Fourthly, when a foreign loan is in a different currency from the DICA, FDI enterprises may open an additional loan repayment account in the loan currency at the same bank that holds their DICA. This allows them to handle transactions in compliance with legal regulations.
Compliance with these guidelines ensures the legal integrity of investment transactions and reducese the risk of violating foreign exchange management regulations.
4. Opening and changing a Direct Investment Capital Account for Transferring Foreign Investment Capital into Vietnam
The procedure for opening a DICA is governed by the regulations of the State Bank of Vietnam concerning the opening and use of payment accounts at financial institutions. Investors must directly contact an authorized bank for detailed guidance on the required procedures and documentation.
According to Clause 4, Article 5 of Circular 06/TT-NHNN, to change the authorized bank holding the DICA, account holders must follow these steps:
• Step 1: Open a new DICA at another authorized bank.
• Step 2: Transfer the entire balance from the existing DICA to the newly opened account.
• Step 3: Close the previous DICA.
The new account at the alternative bank may only be used for receipt and expenditure transactions as prescribed in Articles 6 and 7 of Circular 06/2019/TT-NHNN after completing the account transfer procedures.
Investors must fully comply with these procedures to ensure legal compliance and avoid disruptions in financial transactions related to investment activities in Vietnam.
Opening a DICA for transferring foreign investment capital into Vietnam is a critical legal requirement. Investors must adhere to the prescribed principles and procedures to mitigate legal risks. We hope this article on Regulations on Opening a Direct Investment Capital Account for Transferring Foreign Investment Capital into Vietnam has provided valuable insights to our readers. Should you require further assistance, please do not hesitate to contact us.
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