Vietnam Considers Ban on Foreign Bank Accounts

Posted by Reading Time: 4 minutes

By: Dezan Shira & Associates

Vietnam’s state bank (SBV) has published a draft circular which looks set to limit the ability of foreign nationals to open and deposit within Vietnamese bank accounts. With significant interest rate differentials on the side of investors, as well as a healthy appetite for capital on the part of many governing officials, the announcement has naturally been met with mixed reactions.

Understanding Banking Limitations

Under the draft circular, it is stated that “depositors of Vietnamese and foreign currencies” would be open to Vietnamese citizens. While not explicitly banning foreigners, the specific nature of the regulation does bring into question the prevailing state of affairs with regard to banking within the country. Currently, given the proper documentation – usually a passport and valid visa – foreign nationals are permitted to open and operate vietnamese bank accounts. However, in recent years, the operation of these accounts has seen increased regulation. As per a decree released in 2014, foreign accounts have been restricted to denomination in Vietnamese Dong. It is feared that the omission  of foreign nationals under the latest draft Circular would effectively end the ability of foreign nationals to deposit within the country all together. 

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Assessing Impacts on Investment

For those investing and working within Vietnam, the relatively high interest rates currently available to investors, coupled with the Dong’s stability in recent years, makes holding money within the country an investment of its own. Interest rates currently stand at 6.5 percent on the national level, and thus foreign nationals holding assets within Vietnamese bank accounts are likely to reap the benefit of rate differential between Vietnam and their home market. The chart below outlines the extent of the advantages available for various markets.

Vietnam's interest rates compared to 19 other countries

In the event that a ban on foreign deposits is imposed, many investors currently taking advantage of this opportunity would be forced to turn elsewhere to house liquid assets. While the extent of foreign holdings in the Vietnamese banking system is opaque, resulting outflows of capital could certainly put downward pressure on the VND, temporarily opening opportunities for FDI. 

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Impacts on Investment

From both a personal and corporate perspective, the future of the draft Circular should be watched closely. It is likely that additional guidance on aspects of the ban will become clear in the coming months as officials flesh out their intentions and outline plans for implementation. For more information on aspects of the ban or in depth analysis on banking within Vietnam, contact vietnam@dezshira.com or visit us online at www.dezshira.com


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Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email vietnam@dezshira.com or visit www.dezshira.com.

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