Vietnam-Russia Joint Venture Bank Promoting Payment in Local Currencies in Vietnam-Russia Trade

In recent years, Vietnam-Russia economic cooperation has improved but remained incommensurate with the potential, demand, and particularly the long tradition of trust between the two countries. One of the currently urgent tasks is robustly accelerating bilateral economic cooperation. Being aware of its responsibilities and obligations, Vietnam-Russia Joint Venture Bank (VRB) has been trying its best to promote its bridging role in finance, banking, payment, trade and investment cooperation between the two countries.

Vietnamese-Russian bilateral payment realities
According to Vietnam-Russia Joint Venture Bank (VRB), up to 97 per cent of trade value between the two countries is settled in US dollar (USD), while Russian ruble (RUB) accounts for just 1.7 per cent. Traders avert risks from ruble instability and the two-way trade is unbalanced, thus they are discouraged to use local domestic currency to settle payments. But, bilateral payments made in US dollars and euros are more difficult as a result of the embargo on Russia imposed by Western countries.

In 2016, Vietnam-EAEU FTA took effect after two years of negotiations, thus opening up great opportunities for Vietnamese exports. The pact created a driving force to unlock the market, draw the attention of both sides, reduce tariff barriers and non-tariff barriers, and offer a favourable gateway for exports and imports between Vietnam and EAEU countries. Going with this opportunity is a challenge in local currency payment for the two countries' businesses.

With that importance, in many national agreements, the governments of the two countries mentioned the use of their currencies in bilateral payment transactions and assigned Vietnam-Russia Joint Venture Bank to carry out this policy. Bilateral payment in domestic currencies not only enhances the position of the two currencies but also helps reduce dependence on foreign currencies. Being aware of its bridging role and responsibility, VRB has taken vigorous steps to promote payment in Vietnamese and Russian currencies to help companies to reduce payment costs, facilitating their operation.

VRB’s resolution to bolster bilateral payments in national currency
Vietnam-Russia Joint Venture Bank (VRB) was equally established in 2006 by Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) and Russian Bank for Foreign Trade (VTB). Since its inception, the bank has served as an important bridge for Vietnam and Russia and carries out common objectives of two holding banks: Trade and investment support between the two countries.

After more than 10 years of construction and growth, VRB has now become one of leading joint venture lenders to develop the network in Vietnam. Currently, VRB has six branches in key economic regions of the country: Hanoi, Hai Phong, Da Nang, Khanh Hoa, Vung Tau and Ho Chi Minh City. Its customers are mainly companies, representative agencies and foreign companies. With the vision of becoming a modern bank for individual customers and SMEs, VRB has developed and diversified its products and services and electronically automated transactions and management systems. In particular, VRB is a reputable bank providing banking and financial services, financing and settling payment for trade and investment activities between the two countries. It is mentioned in joint statements as a lead bank at the service of bilateral projects.

Presently, VRB is also the most trusted bank transferring money between Vietnam and Russia. With VRB, customers can transfer money directly Vietnamese dong and Russian ruble to Vietnam and Russia without any intermediary and enjoy extremely favourable rates, fast services, simple procedures, security and confidentiality. In addition to money transfer service, VRB also issues letters of credit for import and export, letters of guarantee, guarantee notifications and collection of export and experience certificates.

To further develop Vietnam-Russia bilateral payment channels, VRB's Board of Directors hopes Vietnamese and Russian governments will continue to assert the cooperation in building bilateral payment channels.

PV