1. Directinvestment from abroad into Vietnam

– Notion:

Foreign direct investment (FDI) in Vietnam is the investment capital of foreign investors and participation in the management of investment activities in Vietnam.

– Characteristics of FDI enterprises:

• The amount of investment capital of FDI companies in Vietnam is usually not large compared to other investment recipient countries;
• FDI investment in Vietnam currently accounts for the majority of Korea, China, and Japan,… (the rest account for a relatively small proportion);
• The types of enterprises of FDI companies investing in Vietnam are mainly Single-member Limited Liability Companies and Two-member or more Limited Liability Companies;
• The size of FDI companies is mainly small and medium. These FDI companies focus on industries such as electronic components, garments, garment processing, logistics, usually industries that require a lot of workers and construction area,…

Currently, in Vietnam, it is allowed to establish various types of foreign-invested enterprises. For each different type of enterprise, the conditions, procedures, and order of registration for the establishment of FDI enterprises will be different. Outstanding in the fields of electronics, chemicals, oil and gas exploitation, and telecommunications. Directinvestment from abroad and new business methods have created a vibrant competitive market in the country. It is both a challenge and a driving force for domestic enterprises to innovate product quality and apply modern business methods.

2. DICA

DICA (or Direct Investment Capital Account) is an abbreviation of direct investment capital account, which is a payment account in foreign currency or in Vietnamese dong opened by foreign direct investment (FDI) enterprises and foreign investors at licensed banks in Vietnam to carry out transactions related to foreign direct investment activities in Vietnam Vietnam.

FDI enterprises and foreign investors are the group of subjects that must open a DICA account. In the past, when referring to FDI enterprises, many people often only thought of enterprises with 100% foreign investment capital or foreign investors as members/shareholders from the beginning and were granted Investment Registration Certificates. However, this is not complete. Pursuant to Clause 1, Article 5 of Circular 06/2019/TT-NHNN stipulating that the subjects of opening and using DICA accounts are foreign-invested enterprises or foreign investors, specifically as follows:

– The first group of subjects, foreign-directed investment enterprises, includes:

• Enterprises may be established in the form of investment in the establishment of economic organizations, in which foreign investors are members or shareholders and must carry out procedures for issuance of investment registration certificates in accordance with the law on investment;
• Enterprises other than those mentioned above have foreign investors owning 51% or more of the charter capital of the enterprise.

– The second group of subjects, foreign investors participating in BBC contracts.

– The third group of subjects, foreign investors directly implementing PPP projects in case of not establishing project enterprises.

According to Clause 2, Article 5 of Circular 06/2019/TT-NHNN, the above three groups of subjects are required to open a DICA account in foreign currency at 01 (one) licensed bank to carry out lawful revenue and expenditure transactions in foreign currencies related to foreign direct investment activities in Vietnam. Corresponding to the type of foreign currency in which investment capital is contributed, only 01 (one) DICA account in that foreign currency may be opened at 01 (one) licensed bank. In case of making investment in Vietnam dong, 01 (one) DICA account in Vietnam dong may be opened at the authorized bank where the DICA account in foreign currency has been opened to carry out lawful revenue and expenditure transactions in Vietnam dong related to foreign direct investment activities in Vietnam. If a foreign investor participates in many BCC contracts or directly implements many PPP projects, the foreign investor must open a separate DICA account corresponding to each BCC contract or PPP project.

3. Guidelines for using DICA

– Foreign investors and investors may contribute investment capital in foreign currencies or Vietnamese dong according to their contributed capital according to the following papers:

• Investment Registration Certificate (IRC)
• License for establishment and operation under specialized laws;
• Notice of satisfaction of conditions for capital contribution, share purchase or repurchase of contributed capital of foreign investors
• PPP contracts;
• Other documents proving that the capital contribution of foreign investors is in accordance with the provisions of law.

– Residents who are Vietnamese investors may contribute investment capital in their own foreign currencies;

– Foreign investors and Vietnamese investors contribute investment capital in cash through bank transfer to DICA;

– Transactions of collecting capital withdrawals, payment of principal, interest and fees; foreign loan and debt repayment accounts of foreign direct investment enterprises prescribed by the law on foreign borrowing and debt repayment of enterprises;

– Foreign investors using profits shared in the territory of Vietnam must comply with regulations on foreign exchange management and relevant provisions of law.

4. Procedures for opening a DICA

Step 1: Submit 01 set of dossier directly or by post or electronic means to the bank that is allowed to open an account.

Step 2: The bank checks and compares the documents in the account opening dossier and requests the completion of the dossier (if any).

Step 3: The bank and the foreign investor enter into an agreement to open and use DICA.

Step 4: The bank announces the number, name of the payment account, and the start date of the account.

Step 5: The bank collects the seal sample, signature sample, digital certificate (if any) of the account holder or the account holder’s legal representative.

Above is the content of KALF’s consultation on Foreign Direct Investment in Vietnam and DICA. All of our above advice is based on applicable legal regulations. If you have any questions or requests about legal issues, please contact us for timely answers.