Banking & Finance

While inflation is rising globally, forcing central banks to increase interest rates, in Vietnam, the State Bank of Vietnam (SBV) has not shown any indication of doing so in the immediate future. According to analysts, increasing interest rates at this time would go against the government’s policy on supporting economic recovery and development.

The Ministry of Finance (MoF) has proposed the government reduce import tax rates on gasoline from most favored nation (MFN) sources from 20 per cent to 10 per cent in order to diversify supply and cut prices. For oil, MoF has proposed continuing with the current MFN rate of 7 per cent.

The Vietnam Banks Association held a launch ceremony and a first conference of the Consumer Finance Club on July 14. A representative from the Shinhan Finance Company told the gathering that finance companies need a common database to implement fraud prevention measures.

Speaking at a dialogue entitled “Improving the law on bad debts after the pilot of Resolution 42 ends”, organized by Vietnam Economic Times / VnEconomy, analysts acknowledged that there are many shortcomings in the process of property management. They recommended building a proper debt trading market that buys and sells both bad debts and regular debts.

The State Bank of Vietnam (SBV) has net withdrawn nearly VND200 trillion ($8.5 billion) through the open market treasury bill channel in recent times. It also withdraws money through foreign currency sales. Viet Dragon Securities (VDSC) estimates that, in a bid to prevent the devaluation of the VND, the central bank has sold about $13 billion since the beginning of the year.

While global capital is fleeing from stocks and bonds, Vietnam is still attracting strong inflows through exchange-traded funds (ETFs). In June, total inflows from ETFs reached nearly VND1.7 trillion ($72 million), for nearly VND8.4 trillion ($359 million) since the beginning of the year. According to SSI Research, capital from ETFs and active funds coming to Vietnam are now showing signs of shrinking.