Vietnam is one of the fastest-growing economies in the world. The low cost of living and highly qualified population make it an ideal location for foreign companies who are looking to branch out and invest. However, expanding internationally has its disadvantages as well. Not knowing the local laws and regulations makes it a thousand times harder to open a company overseas.
The legal foundation for foreign loan management in Vietnam is dynamic, having been updated to reflect the evolving economic environment and the government's strategic focus on financial stability. The primary legal instruments have transitioned over time. Initial regulations were guided by Circular 03/2016/TT-NHNN, but this framework has been progressively superseded. Currently, the operative legal documents are Circular 12/2022/TT-NHNN, which took effect on November 15, 2022, and the more recent Circular 08/2023/TT-NHNN, which became effective on August 15, 2023.
Circular 12/2022/TT-NHNN introduced several significant adjustments to streamline the process for borrowers, including extending certain deadlines and providing for new cases where a change of registration is not required, only a notification via the online portal.1 Circular 08/2023/TT-NHNN further refined the regulations by clarifying borrowing purposes for different loan terms and eliminating some stringent restrictions, such as a prior draft's proposed 8% per annum cap on interest and fees.3 This progression signifies a determined effort by the SBV to tighten criteria while providing clarity and flexibility in a global environment of rising interest rates.
Not all foreign loans are subject to mandatory registration with the SBV. The requirement hinges on the loan's term and specific transactional circumstances. The most fundamental distinction is between medium- and long-term loans and short-term loans.
The term of a loan is determined from the date of first withdrawal to the final repayment date.5 This nuanced approach ensures that the SBV maintains oversight over loans that effectively become long-term, thereby preventing the circumvention of regulatory requirements.
The competent authority for foreign loan registration depends on the loan's value. The SBV operates a tiered system to manage the flow of foreign capital effectively.
This tiered jurisdictional approach serves as a direct administrative mechanism for managing foreign loan flows. By retaining direct control over large-scale capital inflows, the central bank can focus on macro-financial stability and the foreign exchange market. This allows local branches to handle smaller, more routine transactions, streamlining the process for a large number of borrowers while the central authority maintains a focused, top-down view of the market. This structure also implies that large-value loans are subject to a higher level of scrutiny, especially in relation to the country's annual foreign loan quota, which is approved by the Prime Minister.
The foreign loan registration process is a multi-step administrative procedure that requires careful adherence to a specific sequence of actions.
The SBV's online portal is a central component of the modern foreign loan registration process. Unlike its predecessor, Circular 03/2016/TT-NHNN, Circular 12/2022/TT-NHNN mandates the use of this online platform for both registration and periodic reporting.1 Borrowers must register for an account, declare loan information online, and can even submit certain additional documents digitally.5 This shift from an optional to a mandatory online system is a deliberate policy choice, reflecting a broader, government-wide initiative to digitize administrative services.17 The use of this system enables the SBV to build a centralized, real-time "big data" database for risk analysis and management of foreign debt.This is a strategic move for national financial security, as it allows the central bank to monitor foreign capital flows with greater efficiency and precision, thereby enhancing its oversight capabilities.
The application dossier must be prepared with a high degree of precision to ensure a complete and valid submission. The following documents are typically required:
Adhering to strict deadlines is crucial to the foreign loan registration process.
The longer processing time for traditional submissions and VND-denominated loans is a clear administrative incentive. The SBV is effectively encouraging borrowers to use the online system and to avoid borrowing in VND. By offering a significantly faster turnaround for its preferred, more transparent, and more easily controllable methods, the central bank directs borrower behavior toward its strategic goals for foreign capital management.
The SBV's regulations meticulously define the permissible purposes for which foreign loans may be used, with distinct rules for different loan terms.3
A key area of detail lies in the rules for debt restructuring. The principal of the new refinancing loan is strictly capped and must not exceed the aggregate of the outstanding principal, interest, and fees of the refinanced loan, plus the fees of the new refinancing loan.8 Furthermore, the borrower is required to repay the existing refinanced loan within five working days of drawing down the new loan.8
While the regulations provide a clear framework, several nuances and restrictions present potential challenges for borrowers.
These restrictions are not arbitrary. They are a clear policy signal that the SBV wants to ensure foreign capital is directly funneled into productive assets and licensed investment projects of the borrower itself. By limiting loans for intra-group transfers, the central bank aims to prevent complex financial maneuvers that could obscure the ultimate use of funds and complicate debt monitoring, thereby protecting national financial stability and mitigating risks of capital flight. This reflects a fundamentally conservative approach to foreign debt management.
The borrower's compliance obligations do not end with the confirmation of loan registration. A continuous reporting obligation is mandated for all foreign loans, whether short-, medium-, or long-term.10
This mandatory reporting system allows the SBV to track capital withdrawals, debt repayments, and overall compliance in real-time. The data collected from these reports enables the central bank to monitor the total outstanding foreign debt of the private sector and ensure it remains within the government's annually approved limits, thereby reinforcing the central bank's strategic role in safeguarding national financial security.
Failure to comply with the post-registration reporting obligations carries administrative penalties. Acts such as failing to submit reports or submitting them late can result in fines ranging from 10,000,000 VND to 20,000,000 VND.10 Furthermore, if the SBV discovers that a borrower's application for registration or change registration contains fraudulent information or forged documents, the written confirmation of loan registration can be canceled.1
For any foreign loan that must be registered with the SBV, the borrower is required to conduct all capital withdrawals and repayments through a dedicated foreign loan and debt repayment account opened at a service-providing bank. The regulations are flexible in that a borrower may use a single account for one or more foreign loans. For short-term loans that become registrable, repayments must also be made through this account. If a transaction, such as a direct payment from a lender to a beneficiary, is not processed through this account, the borrower must notify the account-providing bank within five working days.
Navigating Vietnam's foreign loan registration process requires a comprehensive and proactive approach. The regulatory framework is not merely a set of procedural steps; it is a system designed to manage and monitor foreign capital flows in a way that aligns with national financial and economic policy.
To successfully navigate this landscape, borrowers should consider the following strategic recommendations:
Foreign loan is a generic term which means foreign loans that are not guaranteed by the Government as well guaranteed by the Government in all forms such as loan contracts, deferred payment contracts for import of goods, lending entrustment contracts, contracts for finance leasing or debt instrument issuance on the international market of the borrower
Pursuant to Clause 1 Article 41, Article 42 of the Circular 12/2022/TT-NHNN, the borrower shall make monthly and unscheduled reports when necessary as follows:
Pursuant to Clause 3 Article 10 of the Circular 12/2022/TT-NHNN, the registration and issuance of access accounts for users who are borrowers are regulated as follows:
For details on how to create a credit registration account, companies can visit the following website: https://qlnh-sbv.cic.org.vn/qlnh/
Pursuant to Clause 4 Article 10 of the Circular 12/2022/TT-NHNN, registration to change account information is required as follows:
The borrower fills in the information on the electronic declaration requesting to change the account information according to the instructions on the website
Within 03 working days from the date of receipt of the electronic declaration requesting the modification of the account information, the competent authority as prescribed in Point a Clause 5 Article 10 of the Circular 12/2022/TT-NHNN approves the content of the modification to the account via the email box that the user has registered. In the event of refusal, an online response must be made, clearly stating the reason.
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