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Banking cooperation effective in fighting financial crisis
The year 2008 saw effective cooperation between the State Bank of Vietnam (SBV) and the international financial community, as well as the rapid development of foreign credit organisations in the country.
Over the past year, Vietnam successfully negotiated 17 programmes and projects worth a total of 1.8 billion USD with the World Bank (WB) and the Asian Development Bank (ADB).
On behalf of the government, the SBV signed agreements on loans of 2.4 billion USD from the two banks to fund 13 separate programmes and projects. These figures help bring the total loan volume to 13.4 billion USD and the total number of programmes or projects to 158.
The SBV received active assistance from foreign financial organisations, including the IMF, ADB, SIDA, JICA and SEACEN to help improve its management capacity. Most worthy of note was a project on banking modernisation worth 60 million USD, funded by the WB.
To tackle the effects of the global financial crisis, the SBV has improved its information and policy consultation exchange with its foreign partners. As a result, experience gained from international financial organisations and banks effectively helped the SBV to provide effective consultation services to the Government in formulating suitable development policies.
In the two years since it joined the World Trade Organisation (WTO) there has been a marked development of foreign banks in Vietnam . To date, the SBV has given the green light for 33 foreign banks from 22 countries and territories to open their branches in the country and has granted licences to allow five joint venture banks and five wholly foreign-invested banks to establish operations in Vietnam. In addition, nine non-banking credit organisations backed by foreign-invested capital and 54 representative offices were also issued licences.
Over the past year, foreign credit organisations in Vietnam achieved a high growth rate. During the first ten months of 2008, the sector mobilised total capital of almost 23 trillion VND (1.3 billion USD), a year-on-year increase of 46 percent, leading to a credit debt balance of 153 trillion VND (9 billion USD).
Foreign credit organisations have also been taking the lead in developing and applying state-of-the-art technology and new banking services in Vietnam . They have acted as bridges for foreign investors to penetrate the Vietnamese market. Moreover, foreign credit organisations provided high levels of assistance to the SBV and other commercial banks in Vietnam.
During 2008, regular dialogues between SBV and foreign credit organisations took place, becoming premise to complete institutions for banking operations, particularly foreign banks.
The number of foreign credit organisations in Vietnam is predicted to increase in the near future, leading to fiercer competition. In response to this, the SBV has been making efforts to complete its policies, adhering to international standards in order to create a favourable environment for credit organisations to develop sustainably and stably, as well as improving the competitiveness of the country’s domestic foreign credit organisations./.
Vietnamplus
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