Repatriating foreign direct investments from Vietnam is a bit more complicated than repatriating foreign indirect investments (which I talked about last week, here). This week I am going to discuss the legal process for making FOREX and repatriation happen in the case of foreign direct investment (FDI) into Vietnam. This article should be read in tandem with last week’s article for a full understanding of what must happen for a foreign investor to properly repatriate his investment in Vietnam.

What is FDI?

To distinguish an FDI from a foreign indirect investment, one must look to the Law on Investment. Foreign Direct Investment isn’t itself defined in the law, but it is explicated. And in conjunction with definitions in the recent Decree outlining FOREX regulations for FDI, one can come to an understanding of what FDI really is.

FDI is a few things.

First, it is an investment project that results in an enterprise that is invested by a foreign investor. This excludes simply contributing capital, purchasing shares, or investing on the basis of a contract.

Second, FDI is an investment in enterprises of more than 50% in such a way as to not require registration of an investment project. This includes a contribution of capital or purchase of shares in an already existing enterprise in such a proportion as to raise the total number of foreign owned shares int he enterprise above 51%. Investment through M&A or restructuring that results in foreign ownership above 51%. Or the initial founding of an enterprise in certain specific sectors according to specific branch laws.

Third, FDI is an investment by foreign investors in an investment project for the development of a Public Private Partnership project according to the law on investment.

If, as a foreign investor, one’s investment falls within these categories, it is considered to be an FDI and thus subject to Decree 06/2019/TT-NHNN guiding Foreign Exchange Control of FDI Activities in Vietnam and thus the foreign investor should ensure that the requirements discussed below are met before entrusting their money to the invested project/enterprise.

What is a DICA?

As discussed last week, a foreign investor who is making an indirect investment in an enterprise in Vietnam must open an Indirect Investment Capital Account. The requirement for FDI is different, however, and the investor is not required to open a special account to make the investment, rather, the enterprise in which the investor is investing must open the account.

From the beginning, however, a special FDI investment account isn’t required. When a foreign investor, either organization or individual, decides to establish an investment project or start an enterprise in Vietnam they will outlay cash money prior to receipt of authorization from the Government to begin the project. This outlay is not required to be made with any special account. But upon receipt of a proper investment registration certificate (IRC) from the authorities, the outlay will be converted either to capital contribution or a foreign loan and treated accordingly.

Once an investment project receives an IRC from the authorities, if it is seeking foreign monies, it must open what is called a Direct Investment Capital Account (DICA). The DICA is a foreign currency or VND denominated account opened at an authorized bank through which FDI related payments and revenues are processed. FDI enterprises are required to open a DICA as are foreign investors who invest in investment projects in the form of business cooperation contracts or PPP agreements that do not necessarily result in the establishment of an enterprise.

The DICA will be used by the FDI enterprise or investor to handle all transactions related to the capital contributions of the project or to foreign loans. Unlike an IICA (discussed last week) the DICA is not the responsibility of the foreign investor but of the invested enterprise and is a means of controlling the use of FOREX by Vietnamese citizen enterprises.

Rules for a DICA

An enterprise can open two DICAs. One in a foreign currency and one in VND. They can only open each of these accounts at a single bank. The foreign currency and VND accounts do need to be at the same bank. If the enterprise takes and pays a foreign loan in a currency other than the currency of its current DICA, it can open a second DICA in that currency to settle the loan.

Foreign investors who are involved with PPP and BCC projects and open a DICA may open a separate DICA for every investment project with which they are involved. If an FDI enterprise was, through investment subsequent to establishment, or through special branch law, owned by foreign investors at greater than 51%; or the enterprise was a result of an investment in a BCC or PPP; and the foreign ownership share decreases below 51% or the enterprise lists on a stock exchange, then the foreign investors are required to open individual IICAs and conduct repatriation procedures as discussed in Part 1 last week.

All FDI related transactions of the FDI enterprise are to be handled through a DICA. From receipt of capital contribution from foreign and domestic investors to transfer of shareholdings to payment of dividends to investors. The enterprise is responsible for maintaining the DICAs.

What needs to happen to repatriate FDI?

Understanding how a DICA works differently from an IICA is important. For FDI investors, repatriation of profits and capital contributions is simpler than for those involved with indirect investment activities. The onus is on the invested enterprise. That said, as FDI investors, a foreign investor is usually involved in the management of a company and must make sure that the enterprise is in compliance with the FOREX and banking requirements including the creation and maintenance of a DICA.

There is no need for an FDI investor to open a separate bank account in Vietnam to receive payment of dividends and repayment of capital contributions upon reduction of charter capital or changes in capitalization of the invested enterprise. These things are handled by the in-house accountants and should be included in general accounting reports to the Board of Management and/or Inspection Committee.

If the FDI enterprise lists, the foreign investor must open an IICA and conduct procedures for indirect investment as discussed last week. If the foreign ownership share of the FDI enterprise drops below 51% then the same must happen. Otherwise, the only thing the foreign investors should ensure is that the FDI enterprise has properly opened a DICA and is conducting its finances according to the local legislation.

If the FDI is through a BCC or PPP, however, then the foreign investor must open a DICA on its own account. All investments in infrastructure or projects of these types must be through a DICA established by the investor and the investor is responsible for ensuring compliance with FOREX and banking regulations.

Once a DICA is properly opened and maintained, the obstacles to the repatriation of profits and investments are few and belong to the FDI enterprise (with the exception of BCC or PPP projects). An FDI investor doesn’t even have to open a foreign currency account in Vietnam, so long as the FDI enterprise has opened a foreign currency DICA capable of receipt of foreign currency investments.

This means that Decree 06, which came into effect last September, greatly simplifies the process for foreign investors involved with FDI increasing the appeal of FDI projects in Vietnam and hopefully luring further investment prospects into the country. Now, if the National Assembly would revisit the IICAs and requirements for indirect investment, it may open the nation’s stock exchanges to greater capitalization from foreign investors as well.

If you want to know the specific transaction types necessary to be processed through a DICA by an FDI enterprise, or further regulations for investors involved with BCC or PPP projects, please feel free to contact your lawyer at Indochine Counsel or find a contact on the firm’s webpage at