DOES FOREIGN INDIVIDUAL ALLOWED TO INVEST IN BONDS?
Legal basis:
- Decree No.163/2018
- Decree No.01/2011
- Law on Securities
In the global market nowadays, Vietnam has a rapid economic growth rate and receives special attention from foreign investors. Bonds are also one of the top investment fields of interest due to their high profitability. However, according to Vietnamese laws in securities, can foreigners buy bonds in Vietnam?
For ordinary bonds
According to Article 8 of Decree 163/2018/ND-CP, bond buyers are Vietnamese organizations and individuals, and foreign organizations and individuals depending on the bond issuance plan of the bond issuer. Investors purchasing bonds shall carry out the self-assessment of the level of risks arising from investments in bonds, restrictions on the transaction of bonds to be bought and shall exercise responsible autonomy for their investment decisions.
Thus, according to regulations, foreigners can still buy bonds in Vietnam.
For Government bonds
According to the provisions of Decree 01/2011/ND-CP, Government bonds are bonds issued by the Ministry of Finance to raise funds for the state budget or specific investment projects and programs within the scope of the state’s investment.
Government bonds are issued for these purposes:
– Investment in socio-economic development belongs to the expenditure tasks of the central budget according to the provisions of the Law on the State Budget;
– Offsetting temporary deficit of the state budget from borrowing of short-term bonds;
– Structuring the Governmental debt and debt list;
– Re-lending to the enterprises, credit and financial institutions, and local government as prescribed;
– Other purposes to ensure national financial security.
Government bond interest rates are decided by the issuer within the interest rate bracket set by the Ministry of Finance. Government bonds are often issued at fixed interest rates, floating rates, and discount rates under the issuance plan approved by the competent authority for approval.
According to Article 7 of Decree 01/2011/ND-CP, bond buyers are Vietnamese organizations and individuals, and foreign organizations and individuals. Vietnamese organizations are not allowed to use funds allocated by the state budget to buy bonds. So foreign individuals are also eligible to buy Government bonds.
Faced with the situation of the bond market developing rapidly and generating many risks, the Ministry of Finance has regularly recommended that investors participating in the private placement bond market be cautious, learn about legal regulations and production efficiency of the issuing enterprise, and clearly understand the risks of every bond before deciding to invest, especially foreign investors.