SBV policy management contributes to creating healthy and effective investment environment

Also attending this virtual meeting, there was the Minister of Planning and Investment, economic and business experts from the key markets in Asia, Europe and the United States. From the SBV, beside Governor Le Minh Hung there were also leaders of a number of departments and agencies under the SBV.

SBV Governor Le Minh Hung delivered the opening speech at the Meeting

SBV policy management contributes to creating a healthy and effective investment environment

In his opening remarks, SBV Governor Le Minh Hung said that, over the past 20 years, Vietnam has always been rated as an attractive destination by foreign investors. Currently, the challenges brought by the Covid-19 pandemic require Vietnam to be more flexible in responding, and to have specific and timely solutions to mitigate the negative impacts and to turn the challenges into opportunities.

From early 2020, the SBV has taken appropriate and timely steps to respond to the impacts of the Covid-19 pandemic. The SBV has twice lowered the key interest rates to support credit growth, lowered the ceiling interest rate on deposits and the lending interest rate in the priority sectors, enabling both credit institutions and borrowers to get access to capital at a lower cost. Along with that, the SBV has continued to closely monitor the market developments, managed the exchange rates in a proactive and flexible manner in line with market supply and demand; proactively communicated in order to sustain public confidence; promulgated a legal framework alloowing the credit institutions to restructure debts, waive and reduce the lending interest rates for customers affected by Covid-19, and waive and reduce payment service fees; and continued the efforts on bank reforms and supervision of the banking sector in order to ensure a healthy development of the system.

The strong determination in the policy management of the Central Bank has brought about many important results, i.e: the inflation is controlled; the banking system’s liquidity is guaranteed; the money market is stable; the interbank interest rates are at a low level; the lending interest rates have decreased significantly; the exchange rates and the foreign currency market are stable; the State foreign exchange reserves continue to increase, thereby contributing to maintaining a stable business environment for the businesses, supporting economic sectors to overcome difficulties. These positive results are an important element helping to enhance the national confidence and the investor's trust to attract investment capital for economic recovery.

According to Governor Le Minh Hung, the Covid-19 pandemic has caused serious disruptions in all economic and trade activities on a global scale. Foreign investment is one of the most affected areas. This is a big challenge for governments to retain investors, but also an opportunity for countries to promote measures to encourage and attract investment. “The SBV has the most important task of ensuring the macro stability and the stability of the currency, the exchange rates, and a healthy development of a highly resilient banking sector, while still being able to promptly meet the capital needs for economic development,” said the SBV Governor. “To achieve that goal, the SBV will continue to focus on forecasting, developing and updating possible scenarios and implementing appropriate policy actions to support growth on one hand, while still ensuring the macroeconomic stability on the other hand, creating a healthy and effective investment environment for investors, including foreign ones.

At the workshop, delegates discussed Vietnam's socio-economic development strategy and the role of foreign investment; Create a fair business environment and perfect a mechanism to attract foreign investment; Policies to attract foreign direct investment capital in the world where Covid-19 pandemic are still complicated ...

Mr. Nirukt Sapru - CEO – Vietnam, ASEAN and South Asia Cluster Markets, Standard Chartered Bank – moderated the discussion (screenshot)

Maintain stability and safety of the banking system, develop modern banking services

Answering the participants’ questions about the situation of the restructuring of credit institutions, SBV Governor Le Minh Hung said that the Scheme on "Restructuring the system of credit institutions in association with NPL resolution in the 2016-2020 period" mainly focuses on continuing to restructure the system in association with fundamental and thorough handling of bad debts and weak credit institutions by appropriate means, consistent to the market mechanism on the principle of prudence, ensuring the interests of depositors and maintaining the stability and safety of the system. Until now, the Scheme has recorded important results on all related aspects.

In terms of legislation, the monetary and banking legal framework has been improved, synchronized with the international standards and practices, and matching the actual situation in Vietnam. The system of credit institutions has decreased in number, but increased in size (both in terms of total asset, equity and charter capital); the management capacity has been enhanced and expanded in line with the international practices; the transparency in credit operations has been improved. By now, most of the banks have applied capital adequacy ratios in accordance with Basel II; at least 18 commercial banks have applied before the deadline established by the SBV. The SBV has also formulated a legal basis for the implementation of the second pillar of Basel II. Regarding bad debts, with the implementation of synchronous solutions to handle bad debts by the SBV, the credit quality has been significantly improved, contributing to reducing the non-performing loan ratio consistently below 2% by now.

In the context of of the serious impacts by the Covid-19 pandemic on all aspects of the social life and the economic development, the SBV has proactively conducted various solutions to implement the established directions, the tasks and work plans of the banking sector, and continued with the restructuring plan of the credit institution system in the 2016-2020 period.

In the coming time, the SBV will continue to improve the legal framework for macroeconomic monitoring of the financial system; create favorable conditions for credit institutions to provide a full range of financial products and services; enhance the effectiveness and efficiency of the banking inspection and supervision; renovate operations toward quickly and strongly shifting from compliance inspection to risk-based supervision in accordance with the international practices and standards. In addition, the SBV will direct the credit institutions to cut down on costs, reduce profits in order to reduce the lending rates to support the economy; simplify the internal procedures; support new borrowers without lowering the loan standards; ensure the credit quality and safety; and maintain healthy operations of the banking system.

Regarding the development of Digital Banking and Fintech in Vietnam, according to SBV Governor Le Minh Hung, the emergence and rapid development of Fintech has made financial regulators of countries face many challenges and difficulties in their management and supervision, such as the risks of money laundering and terrorism financing; the risks related to security, safety and confidentiality of information, unauthorized use of personal information; etc. The task set out for financial regulators around the world is how to ensure the goal of promoting innovations in the banking sector while still maintaining the stability and safety of the financial market and supporting economic growth…

In the current Vietnamese banking system, there have been several legal regulations applied for the new banking services, and the SBV is currently in the process of reviewing, amending and supplementing these regulations in order to support the credit institutions to quickly deploy new technology applications in their operations, such as: technological applications in the payment area (amending and supplementing Decree No. 101/2012/ND-CP on non-cash payments); promoting E-KYC (amending and supplementing Decree No. 116/2013/ND-CP providing detailed guidelines for the implementation of a number of Articles of the Law on Anti Money Laundering) ...

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