15.1 Legislation
It is practical that the current banking law system has firmly been set up since 12 December 1997 when the two basic laws, the Law on State Bank of Vietnam and the Law on Credit Institutions, in substitution of the former Ordinances, all of 23 May 1990, have been introduced, which were amended and supplemented on 17 June 2003 and 1 October 2004 respectively. Most recently, these Laws have been replaced by new ones adopted on 16 June 2010 and effective since 1 January 2011.

15.2 Banking System
The local banking sector has two tiers. The first tier is SBV being responsible for conducting monetary policy and for supervision and regulation of the banking system. The second tier includes commercial banks, financial companies, credit co-operatives, people's credit funds, and insurance companies. This Section focuses only on the commercial banks which consist of State-run banks, joint stock banks, joint venture banks, foreign bank branches, and foreign bank ROs.
Amongst all, foreign banks wishing to establish a presence in Vietnam has a choice of four types, including joint venture banks, wholly foreign owned banks, foreign bank branches and foreign bank ROs. All the applications for and registrations in relation to those types are subject to the jurisdiction of SBV.
Subject to the specific regulations of SBV, a new joint venture bank must follow application procedures as applicable to joint venture established under the LI, which are earlier described in Section 5 hereof. Subject to the license from SBV, joint venture banks can offer a wide range of banking services in Vietnam. The local partner to a joint venture bank must be an existing commercial bank. The minimum required capital for a joint venture bank is US$50 million (effective 2008) and US$150 million (effective 2010).
Like joint venture banks, foreign bank branches are entitled to provide the permitted banking services in Vietnam. The minimum required capital for a branch is US$15 million.
Like foreign economic organizations' ROs which are described in Section 6 above, foreign bank ROs are not allowed to offer banking services in Vietnam. Naturally, they are duly representatives of foreign banks in Vietnam, which can only do market researches and support their parent bank's services.
Generally, joint venture banks, wholly foreign owned banks and foreign bank branches are subject to the same taxes applicable to other businesses herein, which are well described in Section 16 below.

15.3 Foreign Exchange and Transfer
The State management on this matter is shared amongst several State agencies. Amongst all, the Government charges with overall policy on foreign exchange management, based on the recommendation submitted to by MPI. MOF is responsible for making plans for implementing such overall policy, and SBV is liable for the day-to-day management and supervision of MOF's plans.

(i) Bank Accounts
Under the prevailing regulations, foreign capital enterprises can open bank accounts (direct investment capital account for foreign investor) with banks licensed and operating in Vietnam. All the receipts and expenditures including capital contributions, in principle, must be made through such bank accounts.
Subject to the using purposes, bank accounts which a foreign capital projects can open comprise the following:

(a) normal local/foreign currency bank account,
(b) deposit bank account, and
(c) off-shore foreign currency bank account. Practically, not every foreign capital project is entitled to open off-shore foreign currency bank account because this requires to meet several criteria and be subject to a specific consent from SBV.

(ii) Foreign Exchange Balancing
In principle, every foreign capital project is required balance itself their foreign currency demands on the basis that all income in foreign currency must at least cover their foreign currency expenditures. However, to encourage the foreign investment in infrastructural construction, essential import substitute production, and other important fields, SBV has assured balancing foreign currency demands for such type of projects. This assurance shall be extended for the entire duration of those projects.

(iii) Cash Transactions
In principle, all payments and receipts in Vietnam must be made in Vietnamese dong, except for some particular circumstances as permitted by the prevailing laws and depending upon SBV's approvals, which include commercial banks and financial institutions, foreign exchange bureaus, etc. Foreign investors to BCCs and JVCs are permitted to withdraw cash in foreign currency from bank accounts for paying salary and other allowances to their expatriates, or paying travel allowance to local employees for work-related overseas trips.
To keep an international balance, the Government actively seeks to channel foreign currency inflows whilst strictly monitoring the outflows. There appears no restriction upon inward remittances, which however must be either converted into Vietnamese dong or deposited into a foreign currency bank account. With respect to outward remittances, they are allowable to some special circumstances which include:

(a) Payment for imported goods and services;
(b) Abroad remittance by foreign investors, of: invested and reinvested capital, earning profits from undertakings in Vietnam, principals and interests of off-shore loans and credits, and other legal benefits;
(c) Payment for travel allowances to employees traveling abroad, payments of salary to the executives of foreign capital enterprises and Vietnamese employees working in a foreign country; and
(d) Abroad remittance of salaries and other legal incomes of foreigners.

(iv) Exchange Rates
Any conversion will be based on the exchange rates of the authorized bank affecting the conversion, which will be referred to the rates announced by SBV at the time of transaction.

15.4 Capital and Financial Market
The efforts made by the Government and State Securities Commission ("SSC") has been responded by the first opening of the Securities Transaction Center ("STC") in HCMC in 2000 (now called Ho Chi Minh City Stocks Exchange or HOSE), and the smaller one in 2004, in Hanoi, called Hanoi Securities Trading Center or HASTC (now called Hanoi Stocks Exchange or HNX). For more simplified procedures for listing by enterprises and more efficient management by State agencies, the Government is considering a project on combining these two stock exchanges into one in the near future.
To date, over 100 securities companies has been licensed by SSC, to provide a full range of services relating to securities business. They all have either head offices or branch/ liaison offices in Hanoi or HCMC. Two kinds of goods are well available for sale in the securities market. They are stocks listed by around 700 enterprises, mainly enterprises equitized from the SOEs, and bonds issued by the Government and banks. In addition, to reinforce the management of stock exchanges, a floor trading securities of unlisted public companies (called UpCOM) has been established to manage the activities of sale and purchase of securities issued by unlisted public companies.
Applying for the trading code from Vietnam Securities Depository Center ("VSD"), opening the securities trading account with a securities company in Vietnam, opening the capital account with a qualified bank in Vietnam, and opening the securities depository account with a member of VSD (i.e. qualified securities company or a bank)are compulsory with respect to foreign individuals and organizations who wish to buy listed securities in the Vietnamese securities market, while the simpler requirements are made to a purchase of unlisted securities by foreign individuals and organizations in the Vietnamese securities market. With respect to listed stocks, foreign investors can hold up to 49% of the total of stocks in circulation of an issuer. With respect to listed bonds, foreign individuals and organizations can hold up to 40% of the total of bonds in circulation of an issuer, of which a private individual can hold up to 5% and an organization can hold up to 10%. With respect to unlisted stocks, foreign ownership limits are different (which in theory may go up to 100%), varying from business sector to business sector, and in accordance with the Vietnam's commitments to the WTO and the relevant specific laws.