On May 2, 2019 in Hanoi, the Seminar on facilitating the medium and long term capital flows for socio-economic development was organized within the framework of Vietnam Private Sector Economic Forum 2019 co-hosted by the Government and the Central Economic Commission (CEC). This was one of the six consultation sessions and talk shows taken place before the plenary session of Vietnam Private Sector Economic Forum 2019.
The Seminar was co-chaired by Deputy Chairperson Nguyen Huu Nghia of the CEC, Deputy Governor Dao Minh Tu of the State Bank of Vietnam (SBV) and Vice Minister Tran Xuan Ha of the Ministry of Finance (MOF). Also attended the Seminar were representatives from the Ministry of Natural Resources and Environment, the State Security Commission of Vietnam, Vietnam National Real Estate Association, together with various businesses, financial groups, etc.
In his opening speech, Deputy Governor Dao Minh Tu said that since the implementation of the Resolution on renovating the mechanisms and policies, encouraging and creating favorable conditions for the private sector economic development, the private sector has been developing steadily and strongly, contributing to the socio-economic reforms and development. Resolution No.10-NQ-TW acknowledges that the private sector economy is an important driving force of the economic development. Therefore, over the past time, the SBV has been conducting various measures as follows:
First, improving the legal frameworks to facilitate all economic sectors to access loans according to their financial and business capacity, and expand many channels of capital supply (guarantee, leasing,. ..) by the credit institutions to the economy.
Second, managing the monetary policy instruments consistently in an active and flexible manner to ensure liquidity for the credit institutions, stabilize common interest rates in order to balance capital for promptly supporting the production and business operations of enterprises and individuals.
Third, instructing credit institutions to balance their financial capacity, cut down on their operating costs, improve business efficiency and ensure operational safety in order to reduce lending interest rates to reasonable levels; sharing difficulties with their customers; reforming administrative procedures of credit extending to facilitate enterprises and people to access bank loans.
Deputy Governor Dao Minh Tu speaks at the Seminar
According to Deputy Governor Dao Minh Tu, the consistent implementation of the above mentioned measures has contributed to the credit growth in line with the ability to absorb capital of the economy; the credit structure has been shifted positively, with a focus on 5 priority areas under the Government's policy (credit ratio for agriculture and rural areas increased from 21.6% in 2016 to 24.8% in 2018 and to 25.2% in March 2019); credit for potentially risky areas has been controlled at a reasonable level, thereby facilitating capital flows, actively supporting businesses and people in their production and business operations.
The SBV Deputy Governor said that the imbalance between the capital supply channels through banks and the capital market is still an issue. While the demand for medium and long-term capital of the enterprises to expand and develop their production and business operations is very high, the capital market is not fully developed in both scale and quality in order to meet this demand. Therefore, the medium and long-term capital for the economy has still been reliant on the banking system, medium and long-term credit accounts for a large proportion (about 50.6% of the total loan outstandings).
This situation has been a great pressure and a risk for the credit institution system. Therefore, in order to meet the demand for medium and long-term capital of the enterprises in particular and the economy in general, the development of the stock market is a necessary condition, gradually reducing dependence on bank loans, especially for medium and long-term capital demands.
On the basis of closely following the directions of the Party and the State, in order to facilitate capital flows for the socio-economic development in general and the private sector economy in particular, helping the private sector economy to become an important driving force of the economy, the SBV will adjust the monetary policies in an active and flexible manner, improve the credit quality in consistence with the ability to absorb capital of the economy and continue to create favorable conditions for enterprises to access bank loans.
In addition, the SBV will coordinate closely with the Ministry of Finance and other line ministries and agencies to accelerate the restructuring, and the rapid and sustainable development of the financial market; create conditions for the private sector economy to mobilize capital in the stock market ...
The Seminar went on for over 3 hours with 3 discussion sessions including: Facilitating medium and long-term capital flows and promoting the development of corporate bond market in Vietnam; Enhancing the attractiveness of the voluntary pension fund model; Promoting the development of real estate investment funds in Vietnam. In the second discussion session, the participants discussed and suggested various solutions to increase the attractiveness of Voluntary Pension Fund.
Mr. Nguyen Quoc Hung, Director General of the SBV Department of Credit for Economic Sectors, said that in the recent years, the management agencies have conducted various policies to assist the businesses. The banking industry has directed drastically the credit institutions to support enterprises to access capital. However, he stated that in addition to the policies and mechanisms, the enterprises themselves also need to publicize information and improve transparency to increase their credit worthiness.
Also at the Seminar, the participants exchanged their views on the topic of "Promoting the development of real estate investment funds in Vietnam".
In thanking for the practical opinions of the experts and managers, on behalf of the Organizing Committee, Mr. Can Van Luc, Chief Economist and Director of the BIDV Training and Research Institute, summarized the comments and recommendations of the businesses throughout the 3 discussion sessions.
Regarding the financial market, the experts’ recommendations focused on: Continuing to improve the legal frameworks; Restructuring the financial and capital market; Enhancing the information transparency; Formulating information transparency and credit worthiness ratings mechanisms; Promoting the development of the financial infrastructure, information portals, credit rating agencies; Offering solutions for improving the market liquidity.
Besides, the financial knowledge enhancement and education also plays an important role; it is necessary to educate the people and the investors to understand the issues of the market. For the managers, the enforcement and policy coordination should be further improved.
Le Hang