Vietnam

On June 25, 2015 the State Bank of Vietnam promulgated Circular No. 07/2015/TT-NHNN on bank guarantees, effective as of August 9, 2015 (Circular 07), to replace Circular No. 28/2012/TT-NHNN dated October 3, 2012 (Circular 28). The main provisions of Circular 07 are summarised below, with key changes highlighted:

Guarantees for sale and grant of hire purchase of residential houses yet to be built
Under the Law on Real Estate Business No. 66/2014/QH13, dated November 25, 2014 (2014 LREB), before the developer of a real estate project sells or grants hire purchase of residential houses yet to be built, the financial obligations of the developer towards the purchaser where the developer fails to hand over residential houses according to an undertaken schedule to the purchaser must be guaranteed by a capable commercial bank.

Circular 07 provides in details the conditions for a commercial bank providing a guarantee to the developer of a real estate project for sale or grant of hire purchase of residential houses yet to be built as follows:

  • The residential houses yet to be built are eligible to be sold or hire purchased under the 2014 LREB;
  • The sale and purchase or hire purchase contract relating to the residential house stipulates that the developer is obliged to make reimbursement to the purchaser or hire purchaser if the developer is in breach of the obligation to handover the residential house in accordance with the agreed schedule;
  • The commercial bank assesses the developer as capable of implementation in accordance with the schedule of the project and using advance payments or other sums paid by purchasers or hire purchasers to the developer for correct purposes;
  • The commercial bank is licensed by the State Bank of Vietnam to carry out bank guarantee activities;
  • The agreement issuing a guarantee signed with the developer and/or the guarantee undertaking must be consistent with the provisions of the 2014 LREB;
  • The guarantee undertaking must be effective until a date at least 30 days after the handover date of residential houses to purchasers or hire purchasers.
    These new regulations aim to ensure the enhanced responsibilities of the developer for handing over residential houses according to their commitment to the customers.

Language to be used
Unlike Circular 28 which stipulates that all guarantees must be issued in the Vietnamese language, Circular 07 allows that in the case of a guarantee with a foreign element, the related parties are permitted to agree on use of a foreign language. In the case of use of a foreign language, the documents must be translated into Vietnamese (certified by the legal representative of a credit institution or foreign bank branch), accompanied by foreign language versions if requested by competent agencies.

Scope of foreign exchange activities in the international market
Law on Credit Institutions No. 47/2010/QH12 states that: “foreign bank branches only provide a number of foreign exchange services in the international market for customers in Vietnam under the laws on the foreign exchange”. However, according to Circular No. 21/2014/TT-NHNN dated August 14, 2014 specifying the scope of foreign exchange transactions, the foreign bank branches may only grant a guarantee by foreign currency in the international market for customers in Vietnam.

In order to comply with this provision, Circular 07 provides that a foreign bank branch is not permitted to provide a guarantee in foreign currency in respect of an institutional client being a non-resident overseas, except in the following cases:

  • Guarantee for a principal (i.e. a client of an offshore credit institution) in Vietnam on the basis of a cross-guarantee of this offshore credit institution;
  • Guarantee confirmation for a guaranteed obligation of an offshore credit institution to a principal in Vietnam who is guaranteed by the offshore credit institution.

Indochine Counsel
Ho Chi Minh City Office
Unit 4A2, 4th Floor, Han Nam Office Bldg.
65 Nguyen Du, District 1, Ho Chi Minh City, Vietnam
Tel: (84) 8 3823 9640 / Moblie: (84) 975 700 204
Email: chuong.le@indochinecounsel.com
Hanoi Office
Unit 705, 7th Floor, CMC Tower
Duy Tan Street, Cau Giay District, Hanoi, Vietnam
Tel: (84) 4 3795 5261 / Fax: (84) 4 3795 5262
Email: hanoi@indochinecounsel.com
www.indochinecounsel.com

Related Articles by Firm
Trade remedies in Vietnam
On April 20, the Ministry of Industry and Trade issued a circular detailing provisions on trade remedies.
Guidelines for food safety rules further streamlining administrative procedures
On February 2, 2018, the government promulgated Decree No. 15/2018/ND-CP guiding some articles of the Law on Food Safety 2010 (Decree 15) ...
Vietnam: New law supports start-ups and SMEs
On June 12, 2017 the National Assembly of Vietnam issued Law No. 04/2017/QH14 on supporting small and medium-sized enterprises (the SME Support Law), which took effect on January 1, 2018 ...
Vietnam: Licensing procedures for foreign investors clarified
The simplification of administrative procedures has now been widely acknowledged as an aim of the Vietnamese government as part of its wider plan to attract more foreign investment ..
Vietnam: New regulations on liquor trading
On September 14, 2017, the government promulgated Decree No. 105/2017/ND-CP on liquor trading (Decree 105) ...
Vietnam: New decree for registration of security measures
The government recently issued a decree to streamline the procedures and requirements for registration of security measures, and improve information disclosure for secured assets ...
VIETNAM: New regulations on technology transfer
The Law on Technology Transfer No. 80/2006/QH11 (the 2006 LOTT) was issued on November 29, 2006 when Vietnam was preparing for its accession to the WTO ...
Vietnam Labelling goods circulated in the Vietnamese market
Since its promulgation in 2006, Decree No. 89/2006/ND-CP on labelling products is based on legal documents that, so far, have been invalidated ...
New regulation on title retention in Vietnam
The retention of title, a legal concept recognised throughout the world, has now officially become one of the security measures for the performance of obligations in Vietnam ...
Vietnam Update – Q2, 2017
Including electronic visas, IPRs taxes, import/export rules, new tax regulations for farmland use, management of investment projects and commercial mediation ...
An obvious advance in resolving “.vn” domain name disputes
In a previous article regarding the challenges of resolving “.vn” domain name disputes in Vietnam, we mentioned the recent increase in the number of .vn domain names and the increase in the number of .vn domain name disputes...
Vietnamese citizens allowed to game at casinos
On January 16, 2017, Vietnam’s government issued a decree that allows citizens to game at casinos. Decree No. 03/2017/ND-CP on casino business operations (Decree 03) took effect on March 15, 2017...
Vietnam update
The start of 2017 saw a handful of new regulations that affect business in Vietnam. Indochine Counsel have briefed them and outlined the most important changes from each new regulation, ranging from the Civil Code to minimum wage and from accountancy ...
New capital adequacy regulations in Vietnam
The State Bank of Vietnam (SBV) recently released regulations requiring banks and foreign bank branches in Vietnam to maintain a minimum capital adequacy ratio (CAR) of 8 percent from 2020...
Administrative sanctions in the securities market
On November 1, 2016 the Vietnamese government issued a new decree on sanctions against administrative violations in the securities market...
Pharmacy activities
More than 10 years since its implementation, Vietnam has revised and supplemented the regulatory framework for the pharmaceutical industry to reflect the realities of practice ...
Vietnam Update
Vietnam has passed new regulations governing forex agents, tax, food safety and other aspects which affect conducting business in the country.
Transfer of a registered domain name in Vietnam
Pursuant to Article 49 of the Law on Telecommunications No. 41/2009/QH12, holders of a registered national ...
New regulation on conditions for securities investment and business on the Vietnamese securities market
On July 1, 2016, the Vietnamese Government issued Decree No. 86/2016/ND-CP regulating the conditions ...
New guidance on PPP in Vietnam
Decree No. 15/2015/ND-CP of the Government on public private partnership investment forms (the ‘PPP’) went into ...
Increased penal liabilities for crimes relating to food safety and hygiene
Food safety and hygiene are on red alert in Vietnam. According to local papers and media, food poisoning happens almost everyday ...
New regulation of Vietnam on re-organisation of credit institutions
On December 31, 2015 the State Bank of Vietnam (SBV) promulgated Circular No. 36/2015/TT-NHNN regulating the ...
Client Alert - Vietnam
New regulations affect business in Vietnam. They cover topics ranging from social insurance to stock market actions to real estate trading floors.
New guidance for real estate brokers and trading floors
On December 30, 2015 the Ministry of Construction issued Circular No. 11/2015/TT-BXD (Circular 11) regulating the issuance of real estate ...
Guidance on mortgages of residential houses yet to be built
On December 9, 2015 the State Bank of Vietnam issued Circular No. 26/2015/TT-NHNN guiding on procedures for mortgage and ...
Vietnam Alert - January 2016
New regulations on food safety inspection, stock market actions and offshore direct investment affect the way of doing business in Vietnam. This edition also looks at how the US Foreign Account Tax Compliance Act affects international banking and local accounts ...
Resolving disputes over domain names in Vietnam
This article focuses on resolving disputes over domain names which are identical or confusingly similar to registered trademarks/trade names in Vietnam. According to ...
Enterprise registration in Vietnam – IPRs contributed as capital and IPRs as part of an enterprise name
Similar to the former 2005 Law on Enterprises, the new Law on Enterprises No. 68/2014/QH13 dated November 26, 2014 (New LOE 2014) allows the contribution of ...
New decree on enterprise registration
On November 26, 2014 the National Assembly of Vietnam adopted a new law on enterprise (2014 Enterprise Law) which takes ...
Indochine's Vietnam Client Alert
The September Client Alert contains updates on topics from new rules for intellectual property enforcement to a review of more changes in the new enterprise law which are likely to affect many businesses in Vietnam.
Relaxation of restrictions on share transfer by the founding shareholders under the new enterprise law of Vietnam
One of the notable points of the new law on enterprises, dated November 26, 2014 (Law on Enterprise 2014), is the relaxation of restrictions on the founding shareholders’ ordinary shares during the ...
New investment law – new provisions on licensing procedures for foreign investors
On November 26, 2014 the National Assembly of Vietnam adopted a new law on investment (2014 Investment Law) which will take effect on July 1, 2015 and replace the current ...
New Regulations Affecting Business in Vietnam
Vietnam has issued new regulations that affect PPPs, derivative securities, cross border provision of public information and employment. Here are the most important changes from each new regulation.
Vietnam approves new decree on PPP investment form
On February 14, 2015, the government of Vietnam enacted Decree No. 15/2015/ND-CP (Decree 15) regulating the investment in the ...
Vietnam: Client Alert for March 2015
This issue discusses the new decree governing notary offices in Vietnam and the new Ministry of Finance circular detailing the payment forms for enterprises in the country. Moreover, it gives some tips on legal networking in Southeast Asia.
New provisions for foreign investors and conditional investment sectors under the law on investment 2014
On November 26, 2014, the Vietnamese National Assembly passed a new law on investment (LOI). The LOI appears to make …
Notable changes of the new law on real estate business
real estate business No. 66/2014/QH13 (the New REB Law), which will take effect on July 1 2015 and replace the law on real estate …
Enterprise Law 2014 – an institutional breakthrough for Vietnam’s economy
On November 26, 2014, the same promulgation day of Investment Law 2014, the National Assembly of Vietnam promulgated a new enterprise law with many positive new regulations and meaningful …
Foreign exchange control of foreign direct investment
On August 11, 2014 the State Bank of Vietnam enacted Circular No. 19/2014/TT-NHNN (Circular 19) guiding the foreign exchange control of foreign direct investment activities in Vietnam …
E-commerce in Vietnam
Vietnam has been ranked 15th for Internet users internationally, however only 20 percent of those users in Hanoi and Ho Chi Minh City use the internet for online shopping1. The Vietnam E-Commerce and …
New procedural rules for setting up a general information website and social network
Under the Vietnamese regulations of Internet service and online information, social network is defined as an information system that provides its users with such …
Remarkable changes in FOREX Rules
On July 17th, 2014 the Government issued Decree No. 70/2014/ND-CP (Decree 70) guiding the implementation of a number of articles of Ordinance No. 28/2005/PL-UBTVQH11 dated December …
More restrictions on multi-level marketing in Vietnam
On May 14th, 2014 the Government issued Decree No. 42/2014/ND-CP on the management of multi-level marketing activities (Decree 42) to replace the previous Decree No. 110/2005/ND-CP, …
Draft Law on Enterprise in Vietnam
In an effort to further improve the business environment, and create an equal playing ground for the community of the enterprises doing business in Vietnam, the Government of Vietnam has recently …
New guidance on labour contracts
Decree No. 44/2013/ND-CP, dated May 10th 2013, (Decree 44) addresses a number of issues as set out under the Labor Code 2012. Some of the issues addressed include: (i) rules for participating in compulsory …
New schedule for foreign owned capital to implement trading and related activities
On May 21st, 2007 the Ministry of Trade (currently Ministry of Industry and Trade (MOIT)) promulgated Decision No. 10/2007/QD-BTM to announce the schedule for implementation of trading …
For unified PPP legislation in Vietnam
With the goal of developing a comprehensive and unified legal framework for public-private partnership (PPP) model for infrastructure projects, …
Significant points of the Land Law 2013
It has been over ten years since the promulgation of Land Law No.13/2003/QH11, dated November 26th, 2003 (Land Law 2003). …
Re-registration of FIEs in Vietnam
Foreign-invested enterprises (FIEs) have, on the whole, been considered an attractive channel for investment in the Vietnam market …
Significant changes on tax administration
On July 22nd, 2013 the Government issued Decree No. 83/2013/ND-CP (Decree 83) detailing a number of articles of the Law on …
Development trends in the regulation on goods distribution and trading activities conducted by foreign traders
To provide guidance to Vietnam’s commitments made upon its accession to the WTO on market openings, the Government …
Some changes of rules in distribution and trading sector for foreign invested enterprises
On April 22nd, 2013 the Ministry of Industry and Trade issued Circular No. 08/2013/TT-BCT on trade in goods by foreign invested …
Related Articles
Latest amendment to the procedure for the resolution of small claims lawsuit
The new procedure provides more optimal and effective regulation than the previous regulation.
Thailand Plus incentives under BOI
The two new incentives encourage companies to move from overseas to Thailand.
Investing in uncertain times is not a paradox, it is a solution
Redesigning legal processes can deliver efficiency gains of between 15% and 50%.
Related Articles by Jurisdiction
Restructuring & Insolvency Special Report
In this month’s cover feature, we take a look at the reasons why in-house counsel need to stay alert to restructuring and insolvency trends, and talk to experts from around the region about the practical considerations which should be ...
Vehicle Import Business Licence required in Vietnam
Decree 116 regulates the statutory conditions of vehicle manufacture, assembly, import and warranty & maintenance services.
Foreign exchange control of foreign direct investment
On August 11, 2014 the State Bank of Vietnam enacted Circular No. 19/2014/TT-NHNN (Circular 19) guiding the foreign exchange control of foreign direct investment activities in Vietnam …
Latest Articles
Latest amendment to the procedure for the resolution of small claims lawsuit
The new procedure provides more optimal and effective regulation than the previous regulation.
Thailand Plus incentives under BOI
The two new incentives encourage companies to move from overseas to Thailand.
Investing in uncertain times is not a paradox, it is a solution
Redesigning legal processes can deliver efficiency gains of between 15% and 50%.