Vietnam’s banking sector needs to be reformed amid economic recovery and investment inflow surge despite its high growth over the past years, specialists said at a conference titled “Financial and Banking Reform.”
The two-day conference was co-organized by the Vietnamese Ministry of Finance and Euromoney magazine under Euromoney Institutional Investor PLC (UK) in Hanoi on Nov 30.
Most participants at the conference urged Vietnam to accelerate the reforms in banking and finance sector from next year.
Dominic Scriven Obe, director of Dragon Capital Group Limited, said Vietnam needs to finish and issue the Law on State Bank of Vietnam and the Law on Credit Institutions soon to create a fair business environment for both state-owned and joint stock banks.
The market regulators should release better forecasts on forex rate and interest rate whereby commercial banks can draw up an effective business plan for its long-term activities, Pham Quoc Thanh, deputy general director ABBank, addressed.
A report from Vietnam Banking Association (VNBA) showed that total assets of the whole banking system reached nearly VND2,536 trillion as of the end of June, compared to VND2,208 trillion at the end of 2008
The ratio of deposits over GDP accelerated to 114% in 2008 from 15% in 1992 while the ratio of lending on GDP bounced to 105% from 13.7% during the period.
As of Sept 30, total outstanding loans of the economy were reported at VND1,601 trillion or US$60 billion, making a high contribution to the annual economic growth of 7%-8% last decade.
The association also reported that 40% of current banks in Vietnam have a registered capital of more than VND5 trillion.
Especially, the banking system has helped pull inflation down from 774% in 1986 to stay at one-digit from 1992 till now, except for 2007-2008 during which the inflation stood at two-digit figure due to the affects of global economic downturn.
Vietnam currently has 41 partly-privatized and joint stock banks; three state-owned banks; one bank for social policies; one for development; five wholly foreign-owned banks; five join venture banks and about 40 foreign bank offices. (Vietnam Economic Times)
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