Foreigners may be allowed to make savings deposits at local banks, according to a draft circular recently released by the State Bank of Vietnam (SBV)
Non-residents with presence in Vietnam may be allowed to make termed savings deposits in both Vietnam dong and foreign currency at local banks.
To make it clearer, the draft circular defines that a non-resident with presence in Vietnam may be a foreign legal person operating in the country in the form of branch, representative office, executive office, operational office, diplomatic representative mission or consulate or a foreigner living in the country for a period of less than 12 months or coming to the country for medical treatment, study or tourist purpose, or working for the above-mentioned agencies.
As explained by the SBV, the regulation, if approved, would help restrict hot money flows and at the same time, protect lawful interests of non-residents with presence in Vietnam.
The rule is highly appreciated by economic and banking experts who all considered it a positive move of the central bank which would probably help local banks meet diversified demands of customers and raise foreign-currency capital.
However, experts remained worried about the provisions requiring foreigners, when withdrawing foreign-currency deposits, to transfer the received amounts to their foreign-currency payment accounts or sell such amounts to licensed banks.
This means that foreigners would receive both principal and interest in Vietnam dong, regardless of whether they make deposits in Vietnam dong or foreign currencies, banking expert Huynh Van Minh commented.
“Assuming that foreigners feel good to receive back their deposits in Vietnam dong, in case they do not spend up all these money amounts before leaving Vietnam, what will they do with the remainder? Will they be allowed to buy foreign-currency cash from local banks or have to make transactions at the black market?” he asked.
The draft should allow foreigners, when leaving the country, to purchase foreign-currency cash not exceeding the total savings amount they have deposited at local banks, Minh suggested.
Economic expert Can Van Luc added that the draft should also contain provisions on the process for inspecting large sums of money, extraordinary sums of money and sums of money of unclear origin so as to prevent and combat money laundering.
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