Vietnam to reform banking system amid challenges from TPP

By An Hong, Lam Le   May 11, 2016 | 02:53 pm GMT+7
Vietnam to reform banking system amid challenges from TPP
Prime Minister Nguyen Xuan Phuc (center) at the 17th Asian Banker Summit in Hanoi. Photo by Xavier Bourgois

Prime Minister Nguyen Xuan Phuc addressed the 17th Asian Banker Summit today, pledging to continue economic reforms across the country, including the banking sector, as Vietnam integrates into the global market.

The Prime Minister is committed to radically reforming the economy, keeping inflation under control and stabilizing the macro-economy. That includes stepping up restructuring within the banking sector by clearing bad debts.

“As Vietnam has become a middle income country with a market-based economy, the country is gradually adopting modern governance models and steadily adjusting its rules and practices to better align with international standards,” said Phuc.

In parallel, Vietnam is going to integrate further into the global market, expanding its trade with 55 more countries, including G7 and G20 members.

Vietnam's government is also committed to creating favorable conditions for foreign investors by clearing any obstacles they may face, the Prime Minister said. “Your growth [in Vietnam] is our success.”

Le Minh Hung, governor of the State Bank of Vietnam (SBV), echoed the Prime Minister, adding that “the SBV considers banking reforms as an indispensible and intrinsic need for the system.” Hung said he wants to ensure fair competition for international investors in the Vietnamese market, and hopes foreign investors will play a more active role in the restructuring of the banking sector.

vietnam-to-reform-banking-system-amid-challenges-from-tpp

SBV Governor Le Minh Hung speaking at the 17th Asian Banker Summit. Photo by Xavier Bourgois

He noted that the recent establishment of the ASEAN Economic Community (AEC) and Vietnam’s participation in important free trade agreements, notably the Trans Pacific Partnership, present many opportunities and challenges for Vietnam’s financial sector.

Subsequent changes required in the system include improvements to policymaking, monitoring and management of the banking sector, transparency and institutional capability, as well as restructuring the sector towards international standards.

Nguyen Thi Hong, deputy governor of the SBV, told reporters on the sidelines of the summit that free trade agreements like the TPP “provide an opportunity for Vietnam’s banks to have an equal standing with their international counterparts. In parallel, foreign banks will be able to share with Vietnam their management experience and technology."

The 17th Asian Banker Summit started on May 10 in Hanoi and will run for three days. It has been organized by the SBV and The Asian Banker. This is the second time the summit has been held in Vietnam.

This year’s summit is being attended by over 1,000 people, including top leaders of financial organizations and commercial banks from over 30 countries.

The summit is a chance for international organizations to learn about Vietnam’s banking sector and help the country’s banks develop international ties, promoting competitiveness and market expansion. This is also an opportunity for Vietnam to attract foreign investment and learn from modern management and technology solutions in the financial sector.