No More Forced VND Conversion: What Circular 72 Actually Means for Inbound Capital

For almost two decades, every foreign investor wiring capital into a Vietnamese fund faced the same friction: the money had to be converted into Vietnamese dong before it could be deployed. The rule was universal, the exception list was short, and the workarounds were costly. Circular No. 72/2025/TT-NHNN, issued by the State Bank of Vietnam and effective from 31 December 2025, ends that requirement for capital entering the VIFC — and the operational implications are more significant than the circular's technical language suggests.

What the Old Regime Required#

Under Vietnam's pre-VIFC FX framework, foreign investors establishing or investing in onshore vehicles had to convert their foreign currency into VND at a licensed credit institution before the funds could be used. The conversion was mandatory regardless of the investment structure — fund, direct investment vehicle, or corporate entity. Repatriation of profits and principal required a reverse conversion at the prevailing rate.

The practical costs were threefold. First, currency risk: the investor absorbed VND exposure from the moment capital entered the country, with no hedge permitted inside the onshore structure. Second, transaction friction: each conversion required documentation, bank approval, and processing time that added days — sometimes weeks — to closing timelines. Third, implicit cost: the bid-offer spread on VND conversion, applied to capital inflows and again to repatriation, amounted to a structural tax on the investment return.

For small retail flows this was tolerable. For a foreign LP committing $50 million to a VIFC-domiciled credit fund, or an asset manager seeding a new vehicle, the drag was material.

What Circular 72 Changes#

Circular 72 Article 4 — implementing Article 84 of Decree No. 329/2025/ND-CP — designates a foreign-currency capital account at an IFC member bank as the mandatory channel for four categories of regulated activity: offshore borrowing, offshore lending, outbound investment, and intra-Vietnam investment from the VIFC. Crucially, the account holds and transacts in foreign currency throughout. The VND conversion requirement is gone.

A foreign LP now wires USD (or EUR, SGD, or another approved currency) directly into the VIFC fund's capital account. The fund deploys that capital in the original currency. When distributions or redemptions occur, proceeds flow back through the same account in the original currency and are repatriated offshore without a mandatory conversion step.

All other FX transactions — day-to-day payments, vendor settlements, staff compensation — route through standard foreign-currency payment accounts at any IFC member bank, also held in foreign currency.

The practical effect: a VIFC fund can operate as a substantially USD-denominated vehicle inside Vietnam, with VND exposure taken only where the investment strategy requires it, not as a regulatory default.

The Offshore Borrowing Simplification#

The same article eliminates SBV registration for offshore borrowing by VIFC members. Previously, drawing on an offshore credit facility required registration with — and in some cases approval from — the SBV before the loan could be disbursed. Amendments to existing facilities triggered a separate registration cycle.

Under Circular 72, VIFC members declare the borrowing and report it to the IFC Management Authority. The ex ante registration step is gone. For a fund that uses offshore credit lines as part of its capital structure, or for a VIFC-licensed bank subsidiary borrowing from its parent, the operational improvement is direct: the facility can be drawn when the investment opportunity arises, not when the SBV's processing queue permits.

This shift is consistent with the broader design philosophy of the Decree 329 / Circular 72 framework — moving from ex ante licensing to ex post reporting, as mandated by Article 16 of Resolution 222/2025/QH15.

Ownership Structure Matters for Outbound Flows#

Circular 72 Articles 4–5 create an asymmetry worth noting for fund structurers. Wholly foreign-owned VIFC members — entities with 100% foreign ownership — may conduct outbound investment and offshore lending under declaration and reporting requirements only. No registration with the IFC Management Authority is required before execution.

VIFC members with mixed or domestic ownership face a different standard: registration with the IFC Management Authority is required, and broader FX rules continue to apply. The practical implication is that fund sponsors establishing vehicles specifically to access the VIFC's liberalised FX framework should consider whether a wholly foreign-owned structure fits their strategy — the procedural burden for outbound flows is materially lower. Note that the deployment rules for capital moved outside the VIFC zone are covered separately.

What Still Needs to Come#

Account-opening and reporting format guidance from the IFC Management Authority remains pending, as do the AML/CFT implementation templates that will specify the declaration filings required under the ex post model. The SBV and IFC Management Authority are expected to issue follow-on circulars and operating procedures covering both areas; when they do, VIFC Insight will publish a separate implementation update. Monitor the IFC Management Authority's official publications for the account-opening guidance in particular — that document will determine how quickly an IFC member bank can onboard a new VIFC fund structure and activate the capital account.

For the full framework — dual-track account structure, the Circular 16/2014 amendments, and the governance overlay — see the evergreen guide at Decree 329 and Circular 72 Explained.