Vietnam formalizes border yuan payment

UNDER a new circular issued by Vietnam’s central bank, the Chinese yuan will be formally allowed as a mode of payment in Vietnamese areas bordering China, helping foster border trade between the two countries.

According to the circular on foreign exchange management issued by the State Bank of Vietnam, which will come into force on October 12, individuals and certain kinds of organizations can use yuan for payment of goods and services, the central bank’s Foreign Exchange Management Department said yesterday, noting that payment can be made via banks or in cash in yuan or Vietnamese dong.

The organizations include commercial banks and branches of foreign banks licensed to conduct foreign exchange deals in Vietnam; branches of banks located in border areas and border gate economic zones of Vietnam and China; those trading in duty-free goods, providing services in isolated areas at international border gates, or engaging in bonded warehouses in border regions; and the Vietnam-China Border Gate Economic Zone.

The new circular has completed a legal framework for payment in border areas, and standardized foreign exchange activities in the areas, according to Can Van Luc, a Vietnamese banking and finance expert and senior adviser to the chairman of the Bank for Industry and Development of Vietnam.

The circular has concretized a decree on payment in border areas issued by the Vietnamese government, which took effect in January this year, and replaced a decision made by the central bank in 2004 on payment in yuan in the areas.

“The implementation of the new circular will facilitate payment in Vietnam-China border areas, encourage and promote their border trade in particular and their twoway trade in general,” he stated yesterday.

Nguyen Thi Mai, a 37year-old trader at the Tan Thanh border gate in Vietnam’s northern Lang Son province bordering China, said traders like her have already used yuan for payment with Chinese partners. “Payment in yuan through banks and in cash in border areas is convenient. So the new circular is good for us because it formalizes the payment,” she said.

Vietnam has seven provinces sharing the border with China — Lang Son, Quang Ninh, Ha Giang, Lai Chau, Lao Cai, Cao Bang and Dien Bien.

Vietnam exported US$23.4 billion worth of goods to China in the first eight months of this year, posting a year-on-year surge of 25.2 percent, according to the Vietnamese General Statistics Office.

Meanwhile, China remained Vietnam’s biggest import market with turnovers of US$41.4 billion, up 12.8 percent.