Lecturer Profile

Yang Chia-Cheng | Senior Manager, E.Sun Bank Ho Chi Minh City Branch. Having been based in Vietnam for seven years, he currently serves as the Head of Corporate Finance at E.Sun Bank Ho Chi Minh City Branch, specializing in credit granting and cross-border financing services for foreign-invested enterprises. He is familiar with Vietnam's foreign exchange policies, investment approval processes, and corporate cash flow design. He excels at helping Taiwanese businesses achieve the most efficient balance between capital allocation, financing, trade credit letters, and foreign debt registration. He translates financial regulations with practical experience, ensuring businesses can "understand, implement, and borrow quickly."

Investment begins with opening an account: the bank is the first partner.

Vietnam's financial environment is highly regulated; whether you are setting up a new company or expanding your factory, you must start by opening a bank account .

Yang Jiazheng began by reminding everyone: " Investment in Vietnam is not about 'doing' first and then supplementing; rather, it's about having the necessary documents first. "

The investment period, factory construction period, and operation period all require different account and financing configurations. From the moment a company is established, cash flows must be clearly distinguished—which are capital injections, which are loans, and which are daily operating funds. If the process is not aligned, a single incorrect inflow could force the entire capital verification and reporting process to be restarted.

He laughed and said, "In Vietnam, banks are like your 'financial navigators.' If you contact us a week earlier, you can usually save three weeks."

The capital account is the "sole entry point" for foreign investment.

Vietnam's foreign exchange controls are so strict that even the "accounts" have clearly defined functions. Foreign companies in Vietnam can only have one capital account . All investment funds (including initial capital and additional investment) must be transferred through this account. After the bank verifies the capital and issues a certificate, the funds can be registered with the competent authority.

In addition, there are two other common types of accounts:

Yang Jiazheng specifically reminded: " If funds are transferred to the wrong account, it's like making a wasted trip. " The purpose of each transaction must match the account's attributes; otherwise, the application will be rejected during the audit and may even affect tax recognition.

Using Taiwanese assets to gain speed in Vietnam: A new strategy for cross-border financing

One of E.Sun Bank's key services is cross-border asset activation . Companies that own real estate or fixed deposits in Taiwan can pledge them as collateral for credit lines to their Vietnamese branches.

Yang Chia-cheng gave an example: "We have clients who use their company's real estate in Taiwan as collateral to help their Vietnamese subsidiaries obtain factory construction loans. Once the Vietnamese factory is completed and the property rights are obtained, they then use the local real estate as collateral again to release the pledge in Taiwan."

The biggest advantage of this " cross-border relay financing " is that companies don't need to prepare a large amount of cash upfront, while still allowing factory construction plans to continue. Through collaboration between the two locations, banks ensure that every bit of the asset's value is effectively utilized.

Vietnam's financial landscape: Zero interest on US dollars, high interest on Vietnamese dongs

Vietnam is a country with "highly controlled foreign exchange ," and the interest rate for US dollar deposits, regardless of the term, is zero. In contrast, the Vietnamese dong deposit interest rate is about 0.2% (current account) to 4% (time deposit), but the lending rate is also relatively high, ranging from 6% to 8%.

This means that if a company rashly borrows in US dollars but spends in Vietnamese dong, it will simultaneously bear interest rate and exchange rate risks. Yang Jiazheng suggests: " The currency of cash flow should be consistent with the currency of financing . This is the basic principle of risk control." Therefore, foreign exchange hedging, forward contracts, and natural hedging strategies should all be planned simultaneously in the early stages of the project.

Loans are not free payments: entrusted payment system

Vietnam's banking loan system differs from Taiwan's, employing a " trustee payment " system. This means that for a company to obtain a loan, it must provide genuine transaction documents: contracts, invoices, and customs declarations. Once the bank verifies that everything is correct, the funds will be directly transferred to the supplier , rather than going into the company's account.

Furthermore, short-term loans cannot be rolled over upon maturity; they must be repaid within 180 days before another loan can be taken out. Yang Jiazheng cautioned, "Banks are not the lenders, but the payers. Without supporting documentation, they will not disburse funds."

Exporters can borrow US dollars, while domestic sellers can only borrow Vietnamese dong.

In Vietnam, the key to whether you can borrow US dollars is not what you buy, but "who you sell to." If a company has foreign exchange earnings (such as export orders), it can borrow US dollars; if its main income comes from the domestic market, it can only borrow Vietnamese dong. This is a regulation set by the State Bank of Vietnam to control its foreign exchange reserves.

Yang Chia-cheng said, "In Taiwan, we look at the currency of payment; in Vietnam, we look at the currency of income ." Therefore, if companies want to flexibly allocate funds, they should design an export structure in the early stages of investment and strive for US dollar loan eligibility.

Equipment and factory construction loans: all medium and long term loans are in Vietnamese Dong.

Loans for factory construction and equipment are medium- to long-term credit lines (mostly over one year). The State Bank of Vietnam stipulates that loans can only be disbursed in Vietnamese Dong. Even if a company is export-oriented, it cannot apply for a US dollar loan. This is precisely to avoid increasing foreign exchange pressure due to long-term US dollar debt. Therefore, when planning financing, companies should handle machinery loans (Vietnamese Dong) and raw material purchases (US dollars) separately and design hedging mechanisms in advance.

Although Vietnamese Dong loans have high interest rates, they come with policy stability and efficient loan disbursement; it's a trade-off.

SBLC and Letter of Guarantee: Consistent Documentation Leads to Faster Issuance

One of the commonly used financing tools in Vietnam is the Standby Letter of Credit (SBLC) . Yang Jiazheng explained, "If a Vietnamese company uses local land as collateral, we can open an SBLC for an overseas branch, which will then lend the money back to the Vietnamese company." However, the key point is that the provider of the collateral and the borrower must be the same entity.

If the document structure or equity relationship is unclear, the SBLC will be delayed or returned. Involving banks in equity and asset planning earlier can make the overall process "three times faster and ten times more stable".

Remittances and Foreign Debts: Documents are the Passports of Cash Flow

Vietnam has extremely strict regulations on international remittances. All funds remitted overseas must be accompanied by transaction documents: contracts, invoices, and customs declarations are all required.

Regarding foreign debt (overseas borrowing):

Foreign debt limits are typically calculated based on " investment amount - registered capital = investment-to-residence difference ," which is the upper limit of borrowing. Yang Jiazheng emphasized, " Registration comes first, loan disbursement comes later; otherwise, the funds won't come in. "

Payroll Transfers and Personal Accounts: Actuaries on the Gray List

Vietnam remains on the "grey list" of some international organizations, making banks particularly strict with personal accounts. Foreign employees are not allowed to deposit cash back into their accounts unless they can provide proof of legitimate cash income. Foreigners wishing to open a Vietnamese Dong current account must also demonstrate a source of income in Vietnam.

Bank SinoPac has designed a cross-border payroll solution for this purpose : accounts can be opened simultaneously in Taiwan, Vietnam and Hong Kong, and payroll transfers and bonus payments can be completed in the same system, eliminating cumbersome verification and review.

When the financial infrastructure is well-designed, dispatched cadres can focus on their work without having to run to the bank every day.

Project financing and new models for solar energy investment

As Vietnam actively promotes renewable energy, more and more EPC/EPC+O investment projects are emerging. Yang Jiazheng pointed out: "Banks can also design tailored solutions for project financing such as solar energy." Companies can use equipment or factories in Vietnam as collateral, combined with overseas funding sources, to reduce upfront capital pressure.

Common landmines and tips for avoiding them

Yang Jiazheng said, " The risk isn't that there are too many regulations, but rather that there are too few documents. "

Turn compliance into speed

Vietnam’s payment system may seem complicated, but it is actually a “predictable” system. When companies know how to match accounts, control document nodes, and match currencies with loans, they can exchange compliance for speed.

Yang Jiazheng summarized: " When the pace of Vietnam's financial flows is in sync with that of the banks, you can start operations three months earlier than others. " From opening accounts, injecting capital, building factories to operations, financial and real-world business development are not two separate lines, but rather a parallel path.

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