Viet Nam Human Rights
Banking sector to support firms
6/7/16
The banking sector will apply comprehensive monetary policies
and banking operations to improve credit access, focusing on enhancing national
credit ratings, according to the State Bank of Vietnam (SBV).
SBV
Governor, Le Minh Hung, made the statement as part of Decision No 1355/QD-NHNN,
dated June 28, while issuing a directive to kick-start an action plan to
support the domestic business environment and national competitiveness with a
vision towards 2020.
The
decision said banking services must be improved in terms of availability and
transparency, so that enterprises and individuals from every economic sector
have equal access to bank loans.
Procedures
must be simplified and costs must be cut for transactions between credit
institutions and their customers, it said.
To
enhance national credit ratings, Hung said the SBV would operate monetary
policies flexibly in tight conjunction with fiscal and other macro-economic
policies.
This
will help control inflation, stabilise the economy and ensure the operational
security of credit institutions, besides supporting national foreign reserves
and facilitating production and business activities.
The
central bank will also closely monitor developments in the gold and foreign
exchange markets and intensify co-ordination with the relevant agencies to
guarantee financial stability.
For
improved availability of banking services, Hung said the banking sector would
continue to complete the legal framework for payment activities, upgrade the
infrastructure and technology and enhance the efficiency of inter-bank payment
networks.
Banking
authorities will create regulations for commercial banks to provide
derivatives, reducing the risk for enterprises using the banks’ products.
They
will encourage more cooperation with international financial organisations to
help low-income individuals and small- and medium-sized enterprises (SMEs)
acquire loans more easily.
Local
credit institutions must strengthen their financial capacity and renew their
management methods to meet Basel II, a set of international banking regulations
set forth by the Basel Committee on Banking Supervision.
Banking
authorities are expected to promptly design a plan for the continuing
re-organisation of credit institutions between now and 2020 to create a future
banking system with multiple functions, secure operations and sustained
efficiency.
They
were also urged to build schemes to develop a system of credit funds and
complete a legal framework for the development of micro-finance institutions.
They
must work to gradually form a market for debt trading, helping maintain
national bad debt ratios at below 3 percent of the overall outstanding loans.
Hung
asked credit institutions to continue to extend loans in prioritised areas,
including agriculture and rural development, exports, support industries and
SMEs, as well as start-ups and hi-tech businesses.
Programmes connecting banks and businesses and measures supporting struggling firms are to be promoted, he said./.
Programmes connecting banks and businesses and measures supporting struggling firms are to be promoted, he said./.
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All comments [ 10 ]
Monetary policies from now until the year end must give top priority to ensuring the safety of the banking system and controlling inflation while still trying to support businesses.
relevant agencies must closely monitor the movements of the macro economy, the monetary market and operations of credit institutions to take flexible measures aimed at assisting the liquidity and capital sources for credit institutions.
The agencies must at the same time ensure the Government’s target to control inflation under 5 per cent this year is not jeopardised.
Credit institutions must balance their capital mobilisation sources and lending to ensure liquidity.
To continue on a strong GDP growth trajectory, the country should work to raise its labor productivity.
The exposure of companies and investors to different economic growth outcomes clearly depends on whether they are active primarily in the domestic or export market.
Domestically oriented companies, such as those in the financial-services or retail sectors, are much more threatened by slower growth in Vietnam than are companies that use the country as an export base for manufactured goods.
More limited access to capital and increasing competition mean that state-owned enterprises must lift their productivity before circumstances force their hand.
We think Vietnam can act decisively to head off short-term risks and embrace a productivity-led agenda.
If the country does so, it can build on its many intrinsic strengths—a young labor force, abundant natural resources, and political stability, to name a few—to create a second wave of growth and prosperity. There are challenges, to be sure, but we believe that they can be overcome.
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