Bài viết cũ của tôi:
FINANCE FOR DEVELOPEMENT:
SITUATION, CHALLENGES AND PERSPECTIVES
The case of Viet Nam
SITUATION, CHALLENGES AND PERSPECTIVES
The case of Viet Nam
Dear Mr. Chair,
Dear Delegates,
Dear Delegates,
First, I would like to convey my sincere thanks to the Organization for Economic Co-operation and Development (OECD), which has invited the Vietnamese Delegation to participate and address in this Workshop. This is an opportunity for Viet Nam to learn trends of development as well as experience of the member countries for its construction of a financial system for economic development.
Whereas the economic growth of the region and the world is showing indications of slowdown due to oil price escalation and the likely failure to achieve many development goals of the millennium by 2015, OECD has exercised great efforts by organizing this Workshop and "the OECD Global Forum on Development" to determine policies and action plans in order to mobilize and better utilize capital flows for development, aiming at maintaining fast and sustainable development for the optimistic outlook within the next 10 years.
Whereas the economic growth of the region and the world is showing indications of slowdown due to oil price escalation and the likely failure to achieve many development goals of the millennium by 2015, OECD has exercised great efforts by organizing this Workshop and "the OECD Global Forum on Development" to determine policies and action plans in order to mobilize and better utilize capital flows for development, aiming at maintaining fast and sustainable development for the optimistic outlook within the next 10 years.
1. Background of Viet Nam Economy:
In the case of Viet Nam, looking back to the past 20 years of renovation (1986-2005), we are proud of our remarkable achievements in economic growth, poverty reduction and fulfillment of millennium development goals. Of which, the most notable are:
Economic growth rate is fairly high and steady. The annual GDP growth rate increased from 4.5% in the 1986-1990 period to 8.2% in the 1991-1995 period, 7% in the 1996-2000 period and 7.5% in the 2001-2005 period. Accumulatively, after 20 years of renovation, Viet Nam’s annual GDP growth rate was 6.7% on average.
In 2005, Viet Nam was subject to continued adverse impacts. Production input costs remained at high level. The oil prices hit the record high level in tens of years. The economy was inflicted upon by severe natural disasters, chronic and widespread avian flu and electricity shortage. Despite all these negative factors, Viet Nam managed to achieve the growth rate of 8.43%, second to China in East Asia and far exceeding 2004 growth rate of 7.79%.
Viet Nam’s competitiveness has improved substantially; thus, the investment and business environment has become more favorable for enterprises. As a result, contribution of the private sector to GDP increased from 36.6% in 2000 to 43% in 2005.
The ratio of capital mobilization for investment to GDP increased from 18.1% in 1990 to 31.7% in 1995, 32.9% in 2000 and 38.9% in 2005. The investment capital structure has changed towards gradual abandonment of the central planning mechanism in investment; the domestic capital sources are being better exploited and account for over 70% of the total investment capital.
Rapid expansion of foreign economic activities; Viet Nam increasingly and actively involves in regional and global economic integration. Starting from a basically closed and self-sufficient economy in the 80s, Viet Nam reached an import-export value of US$69.4 billion, equal to 132% of its GDP in 2005. Therefore, Viet Nam is classified as a highly open economy. It is worth noting that its export value impressively rose from 699 million rubles in 1985 to US$2.4 billion in 1990; US$5.4 billion in 1995; US$14.5 billion in 2000 and US$32.5 billion in 2005. As a result, the ratio of Viet Nam’s trade deficit to its GDP has much decreased to around 2-3% GDP so far as compared to the time it launched the renovation efforts.
Apart from growing import and export activities, foreign investment inflows are rapidly increasing. At the 13 Conferences of Consultative Group to Viet Nam from 1993 to 2005, sponsors committed to assist Viet Nam with US$32.6 billion. Those who committed the most are Japan (US$10.22 billion), World Bank (US$7.62 billion), ADB (US$4.35 billion), France (US$1.95 billion), organizations under the UN (US$1.1 billion)... So far, Viet Nam have been disbursed with US$15.9 billion (about US$12 billion of loans and US$3.9 billion of aids), equal to 48% of the committed ODA capital.
Thanks to the implementation of prudent fiscal and monetary policies, Viet Nam’s balance of payments has been basically improved, contributing to the macroeconomic stability and facilitating better use of resources. The ratio of the State Budget Revenue on GDP increased from 14.3% in 1986 to 15.2% in 1990, 23.3% in 1995; 20.5% in 2000 and 25.9% in 2005. The State Budget deficit was largely reduced to around 3-3.3% GDP during 2001-2005. Inflation has been curbed after the 20 years of renovation, from nearly 800% in earlier years to only 5% in the 2001-2005 period, specifically about 6% in 2005.
2005 saw the continued stability trend of VND/USD from 2000. Nominal VND/USD exchange rate increased no more than 1% each year. VND/USD exchange rate was stable because: (i) the central bank continued to use exchange rate as an anchor to curb inflation; (ii) there was no mismatch in demand and supply of foreign exchange. However, nominal depreciation was low while inflation was high, raising concerns of negative impacts of exchange rate on exports competitiveness.
As to social development, Viet Nam has made substantial achievements, highly appraised by the world. So far, Viet Nam has fulfilled comprehensively and ahead-of-schedule its commitments on social development, poverty reduction and hunger eradication. In consideration of the launch of the 5-year plan for socio-economic development in the 2006-2010 period with view to the year 2020, it is expected that Viet Nam will successfully reach its goals of development and poverty reduction, paving the way for its accomplishment of millennium development goals.
2. Finance for development of Viet Nam
2.1 Development finance architecture of Viet Nam
a) Financial markets in Viet Nam
In the course of economic renovation towards the market economy mechanism and increasingly expansive and intensive integration into the world economy, the financial system of Viet Nam has profoundly changed, facilitating the effectively and securely distribution of financial resources for development goals.
So far, Viet Nam’s financial system has been set up with all fundamental elements though the level of development of each element is different. Specifically:
- The monetary market, including:
+ The inter-bank domestic currency market, established and operating as from 1993.
+ The inter-bank foreign exchange market, established and operating as from October 1994.
+ Treasury bill biding market, established and operating as from 1995.
+ Open market operations, regulated and launched as from July 2000.
The functions of the monetary market in Viet Nam are to provide short-term funds for enterprises and for the State Budget; to secure loanable funds for financial institutions; and to serve as the workplace for the State Bank of Viet Nam to exercise options of the monetary policy.
- The long-term capital market, including mainly the bond and share markets. The bond market was set up and put into operation as from 1995. This market is where various types of bonds are traded, including government bonds, corporate bonds and project bonds.
The security market of Viet Nam was set up and put into operation as from July 2000. The security market’s operations are conducted at two security trading centers, one in Hanoi and the other in Ho Chi Minh City. Security listing and concentrated transactions are carried out at these centers.
Besides said official capital markets, there is an unofficial security market where unlisted securities are traded, comprised of mainly those of small and medium enterprises, and those of large corporations preparing to launch the listing. This market was born and operating before the official market was set up. The volume and value of transactions on this market is much higher than those on the official market.
b) Financial institutions:
In view of management, financial institutions in Viet Nam can be classified into 3 groups:
- Financial institutions managed by the State Bank of Viet Nam,
- Financial institutions managed by the State Securities Committee,
- Financial institutions managed by the Government or the Ministry of Finance,
Financial institutions managed by the State Bank of Viet Nam include 5 State Owned Commercial Banks[1], 1 Social Policy Bank to enforce social development policies of the State, 37 Joint Stock Banks, 31 Branches of Foreign Banks, 5 Joint Venture Banks, 44 Representative Office of Foreign Financial Institutions, 6 Financial Companies, 9 Leasing Companies and over 900 People’s Credit Funds. The Viet Nam Bank for Social Policy (VBSP) is an organization to provide loans to poor households, especially in rural areas.
Table 1: Structure of Viet Nam Banking Sector
1990 | 1994 | 1999 | 2002 | 2005 | 2006 | |
State Owned Commercial Banks | 4 | 4 | 5 | 5 | 5 | 5 |
Policy Banks | 1 | 1 | 1 | 1 | ||
People Credit Funds | n.a | n.a. | n.a. | n.a. | 905 | 905 |
Joint Stock Banks | 0 | 36 | 48 | 36 | 36 | 37 |
Joint Venture Banks | 0 | 3 | 4 | 5 | 4 | 5 |
Foreign Bank Branches | 0 | n.a. | n.a. | 26 | 28 | 31 |
Foreign Bank Rep. Offices | n.a. | n.a. | n.a. | 41 | 42 | 44 |
Finance Companies | n.a. | n.a. | n.a. | 7 | 5 | 6 |
Leasing Companies | n.a. | n.a. | n.a. | 9 | 9 | 9 |
The banking system is dominated by five large State-owned commercial banks (SOCBs), which take substantial shares in the market. The second group consists of 37 joint-stock commercial banks (JCBs), accounts for about 15% of total credit and 20% of the total assets. There are also a group of foreign banks (excludes joint-stock banks with foreign capital) with total assets estimated at $6.2 billion in 2005. Together, they account for about 10% of banking credit. According to the SBV, foreign banks' non-performing loans accounted for just 0.16% of their total loans.
Financial institutions managed by the State Security Committee include 2 Security Exchange Centers in Hanoi and HCM City, 11 Security Companies and Security Investment Funds.
Financial institutions managed by other governmental agencies or the Ministry of Finance include the Viet Nam Development Bank, 8 Development Investment Funds established in certain localities, Social Insurance Funds, Postal Saving Companies, etc.
The Viet Nam Development Bank, which channels policy lending on behalf of the government, provides credit to SOEs and private enterprises, supports the development of infrastructure and pro-export/import activities, and is in charge of the on-lending of the Official Development Assistance (ODA).
c) With the existence of said financial markets, Vietnamese enterprises can get funding from the following sources:
- Credit from banking credit organizations, including State owned commercial banks, joint stock commercial banks, joint venture banks, branches of foreign banks in Viet Nam and People’s Credit Fund;
- Commercial loans from leasing companies, financial companies, investment funds of insurance companies;
- Soft loans from the Viet Nam Development Bank.
- In particular, enterprises with foreign own capital can get funding abroad through foreign companies or their overseas parent companies.
- Long-term capital sources through security markets.
2.2 The situation of financial sources for Viet Nam’s Development
a) Total investments
The total investments that have been mobilized and put in use in the economy during 5 years from 2001 to 2005, calculated on the basis of the prices in 2000, has reached 1,100 trillion VND, 1.98 times higher than that of the period from 1996 to 2000. The details are as follows:
Table 2: Total and Structure of Investment of Viet Nam
Targets | Total capital (VND trillion) | Structure (%) |
Total social investment | 1,100 | 100 |
Of which: | ||
1. Investment by state sectors | 573 | 52.1 |
- State budget | 269 | 24.5 |
- State credits | 139 | 12.6 |
- SOE’s investment | 165 | 15.0 |
2. Investment by private sector and people | 315 | 28.6 |
3. Foreign directed investment | 183 | 16.6 |
4. Others | 29 | 2.7 |
Besides domestic capital, during the last 5 years, the attraction of such foreign capital as ODA and FDI has been emphasized and contributed to boosting the economic growth rate.
The prominent point in investments in the last 5 years is the dramatic increase in investments from the private sector. Under the positive effect of the Enterprise Law, from 2001 to 2005, over 160 thousand enterprises registered for establishment with registered capital of 321 thousand billion VND, the number of enterprises joining the market increased by 23% per annum and the registered capital rose by 52%; the number of newly established enterprises from 2001 to 2005 is 2.6 times higher than that in the 9-year period from 1991 to 1999 under the Law on Private Enterprises and Law on Companies, with registered capital 7.7 times higher.
The proportion of investments from domestic private enterprises keeps increasing and exceeding the investments from State-owned enterprises. Investment from the people and private sector in 2001 made up 25% of the total social investment; it is estimated that in 2005 the figure will be up to 33%.
b) Capital from the State Budget:
Mobilize the finance for the development in the last 5 years is strengthened thanks to the national financial situation continues to be improved. The total budget revenue in the last five years increased by 19.1% per annum. On average, the ratio of mobilization to State budget makes up 24.4% of GDP, surpassing the planned objective of 20-21%. Budget revenue structure has moved in the direction of increasing the proportion of stable revenues from domestic production and decreasing proportion of external revenue. Proportion of domestic revenue (excluding crude oil) has risen from 50.9% in 2000 to 53.1% in 2005. After rising from 20.9% in 2001 to 25.9% in 2002, the proportion of import-export revenue is estimated to decline to 17.5% in 2005.
Thanks to the rapid increase in revenue, budgetary expenditures have improved, concentrating on targets of development finance. The proportion of budget expenditure for development investment out of the total budgetary expenditure has been maintained over the five years, accounting for 28% per annum, higher than the target of 25-26%. The budget deficit ratio has been stable, averaged over 5 years, accounting for 2.5-3% of GDP.
c) Mobilization of capital for banking system and securities markets:
- Mobilization of capital for banking system:
Since Viet Nam embarked upon an economic transformation 20 years ago, the Vietnamese financial system has been transforming into a market-based system and expanded rapidly in recent years. Because of the insufficient scope and effectiveness of legal contract enforcement and with inappropriately or imprecisely defined property rights in earlier in the process, Viet Nam had no alternative but to develop a relationship-based financial system, with banks as the main financiers. Banking sector asset in Viet Nam used to dominate the provision of financial services.
In the period of 2001-2005, monetary activities have been flexibly governed, putting inflation under control while actively supporting development and economic structural shifts. Means and forms of payment have been adjusted in accordance with price fluctuations and economic development, increasing at an annual average rate of 22.5%. The ratio of M2/GDP rose quite rapidly, from 58% in 2000 to 85.2% in 2005. Annual mobilized capital increases at an average rate of 24%, meeting the planned target of 20-25%. Credit balances increased by 27.6% per annum, higher than the set objective of 22%. Credit in foreign currencies dramatically went up by 33.7% over the past five years. The low USD interest rate and stable VND/USD exchange rate have encouraged enterprises to borrow foreign currencies to invest into business or repay old loans with high interest rates. The ratio of loans among non-public sectors increased while the ratio of credit for State-run enterprises decreased. It is estimated that by the end of 2005, the ratio of loans among non-public sectors account for about 47% of the total credit balance, while banking credit for State-run businesses decline to 39% and credit for the economic sector with foreign investment occupy 14%.
By the end of 2005, the ratio of bad debts account for about 4% of the total credit balance, much less than that from earlier years of the 5-year plan[2].
From 2001 to 2005, interest rates were set free gradually, creating favorable conditions for banks to actively adjust mobilized capital and loan interest rates to suit international interest rate fluctuations as well as domestic financial changes. The decrease of remittance rates down to 0% can be assessed as a positive step in the process of liberalizing the Viet Nam financial market, ensuring our implementation of international commitments in the integration process.
In 2005, banking sector has been being strengthened and developed further:
State owned commercial banks (SOCBs): in an effort to improve their operation efficiency, in 2001, SOCBs initiated their restructuring process in finance, organization and operation and attained some remarkable achievements as follows:
SOCBs have promoted NPL resolution (88% of NPL resolved) in parallel with improving assets quality, discipline and risk management. As a result, NPL amount of SOCBs, including NPL in state owned enterprises, has been reduced; meanwhile, asset quality has been significantly improved;
Policy lending was separated from the commercial operations of SOCBs and transferred to Viet Nam Bank for Social Policy;
SOCBs have developed their own Credit Manuals and introduced them since the end of 2004 and early 2005, gradually improved their risk management system in line with international standards and practices; developed their own business strategies in the period 2005-2010. As a result, quality of new loans is improved;
In 2005, positive developments were witnessed in the equitization process of SOCBs. Out of 5 SOCBs, the Prime Minister decided to pilot the equitization in 2 SOCBs in 2006: Vietcombank (which has already issued convertible bonds) and Mekong Housing Development Bank. Corporate governance, financial strength, efficiency and competitiveness in SOCBs are objectives of the equitization. Equity sale is phased and state holding will be reduced but not below 51% to maintain capital adequacy ratio.
Major obstacles to SOCB equitization are: resolution of assets and liabilities in prior to equitization; valuation of SOCB and difficulty in determining and sale of equity.
State Bank of Viet Nam developed an equitization roadmap for most SOCBs by 2010.
Joint stock banks (JSBs): continue to implement the restructuring and strengthening plan for JSBs. In order to facilitate the fund mobilization of JSBs in securities markets, and gradually make public banks’ financial health, the State Bank of Viet Nam issued temporary regulations on JSBs’ listing registration and public offer in Securities Trading Center, regulation on disclosing financial reports of JSBs, amended regulations on ranking JSBs. In general, after the strengthening process in JSBs, their operation quality and NPLs resolution have been improved. At present, JSBs have reached and/or exceeded the charter capital as required by the law and made profits.
The commercial banking system has been strengthened and re-arranged. The four State-run commercial banks have founded loan-managing and estate-developing companies to free capital from bad debts, making the financial situation of banks healthier.
- Mobilization of capital for capital market
In comparison to the banking sector, the capital market is much smaller. The bond issuance (including Government bonds, municipal bonds and corporate bonds) stands at 9.6% of GDP at April of 2006 (approximately of USD 4.7 billion), while the market capitalization of both trading centers, the Ho Chi Minh Securities Trading Center and Hanoi Securities Trading Center, combined reaches roughly 3.2 billion USD representing 6.2% of GDP at May of 2006. The small insurance market has been steadily growing and the penetration rate reached 2.03% in 2005.
The Viet Nam’s regulated securities markets consists of 02 trading centers, in which the Hanoi Trading Centers for small and medium-sized companies. There are 46 shares traded in both markets with total market capitalization of 3.2 billion USD, as of March 2006, which represents roughly 6.2% of GDP. Daily average trading volumes in the listed market are close to US$ 6-8 million. Despite of its small size, the Vietnamese equity market has been one of the fastest growing markets in the world recently. The VN-Index ranked fifth among best performing stock indices in Asia in 2005 after Pakistan, South Korea, India and Japan. The VN-Index has increased 67 percent since the beginning of this year, and reaching the all-time high of 503 points on June 26, 2006.
The market is currently served by 14 securities firms with total chartered capital of VND 1057.5 billion (US$ 66.5 million), one fund management company, 05 custodial banks and one settlement bank that have been licensed by the SSC. Securities business is divided into five license categories: brokerage, dealing, portfolio management, underwriting and investment consultancy.
The establishment of a stock market and the equitization of SOEs resulted in the development of an informal stock market, which appears to be even much more vibrant than the organized ones. This market is trading shares of more than 3,000 companies, which are mostly equitized SOEs. However, transparency in this unregulated segment is low and the transaction price is determined by an opaque agreement between the specific buyers and sellers, and this can take place anywhere.
In comparison to the securities market, the bond market is much larger than the equity market in terms of value outstanding. However, trading in the government bond market has been very modest, though it looks becoming remarkably active. The corporate bond market still is an early stage of development. There are only few issuers such as Vietcombank, BIDV, PetroViet Nam...
Table 3: Structure of the Viet Nam’s Insurance Sector
Type of business | State-owned | Joint-stock | Joint-Venture | 100% foreign capital | Total |
Non-life insurance | 2 | 6 | 5 | 3 | 16 |
Life insurance | 1 | - | 1 | 6 | 8 |
Re-insurance | - | 1 | - | - | 7 |
Insurance Agency | - | 4 | - | 3 | - |
Total | 3 | 11 | 6 | 12 | 32 |
Viet Nam has a small but growing insurance market. There are 32 companies operating in the insurance market, among them three are state-owned companies, 11 joint stock companies, six joint-venture companies, and 12 foreign subsidiaries operating in the country’s insurance sector. Viet Nam’s insurance penetration rate stood at 1.72 percent, 1.73 percent and 2.03 percent in 2003, 2004 and 2005 respectively. In Viet Nam, unlike most other developing economies, life insurance market is larger share than non-life one, which represented two thirds of the total turnover. The life/non-life ratio is likely to reverse as motorization intensifies in the country. The Government set a goal of the insurance penetration rate at 4.2% of GDP by 2010.
The rest of institutional investors and non-bank financial intermediaries are still at an early stage of development. For example, there is the only one state-managed pension fund (the State Social Insurance Fund) for public servants but no pension funds for private sector workers. Regarding leasing business, there were nine companies at the end of 2005 and six finance companies; some of them were subsidiaries of SOCBs and others were joint companies with foreign capital.
Table 4: Selected Financial Sector Data of Viet Nam | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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d) Official Development Assistance (ODA):
During the implementation of the 5-year plan from 2001 to 2005, due to the global economic difficulties, the world’s ODA fund decreased considerably. However, the ODA funds committed for Viet Nam are continuously increasing, which shows the approval and support offered by international donors’ community to the socio-economic development policies of our Party and Government.
The signing of specific international treaties on ODA for these 5 years took place smoothly; the total value of the agreed ODA is approximately USD 14.9 billion of which grants account for 15-20%. Committed capital continuously increased over the past 5 years as follows: 2001 – US$2,399 million; 2002 – US$2,462 million; 2003 – US$2,838 million; 2004 – US$3,441 million; 2005 – US$3,748 million.
The total amount of ODA capital according to signed treaties reached US$11.2 billion; of which, 80% is soft loans, demonstrated by the following figures: 2001 – US$2,417 million; 2002 – US$1,924 million; 2003 – US$1,752 million; 2004 – US$2,597 million; 2005 – US$2,515 million.
The total ODA capital amount disbursed over the 2001-2005 period reached US$7.9 billion, of which: 2001 – US$1,500 million; 2002 – US$1,528 million; 2003 – US$1,442 million; 2004 – US$1,650 million; 2005 – US$1,787 million. After the 5-year period, the disbursed ODA capital accounts for 53% of the committed amount and equals 71% of the amount according to signed treaties. In consideration of the targeted US$9 billion of ODA disbursement, the said rates are still low.
In addition to ODA, Viet Nam receives every year approximately US$100 million of non-refundable aids from nearly 600 non-governmental organizations.
For the cooperation with Viet Nam aiming at developmental purposes, the sponsors set out their strategies and schedules on the basis of consultation with Vietnamese partners. ODA capital is made available through various procedures. For the purposes of cutting costs in the course of supply and implementation of ODA capital and of enhancing ODA capital effectiveness, Viet Nam and the sponsors are carrying out initiatives of harmonizing procedures, combining the sponsors’ strategies with Viet Nam’s priorities of national development. The principles and commitments on aid effectiveness have been agreed by the Vietnamese Government and the sponsors in the Hanoi Commitments on Enhancing Aid Effectiveness.
There are several projects of national socio-economic importance among ODA projects and programs that have been signed. There has been an improvement in the direct ODA disbursement for poverty and difficulty-stricken areas. The average ODA value per capita for poverty and difficulty-stricken areas in the last few years has increased. Many ODA-funded construction projects have been completed and put into operation, contributing to economic growth, improving people’s lives and enhancing social equity.
- Foreign Direct Investment (FDI)
In the context of such difficulties in the world as limited and dispersed capital flow due to fierce competition in the capital market because of the improved investment environment created by the amendment and supplementation to policies during the 5 years from 2001 to 2005, the total registered capital reached as high as 20.9 billion USD, 39% higher than the target (the target is 15 billion USD). The total obtained capital is 14.3 billion USD in comparison with the target of 11 billion USD, 30% higher than the previous period.
The proportion of the foreign direct invested sectors in GDP has increased over the years, reaching 15.9% of GDP in 2005 (13.1% in 2001, 13.9% in 2002, 14.5% in 2003 and 14.8% in 2004). In the last 5 years, foreign direct investment has accounted for 16.6% of the country’s total investment, a considerable decrease compared with 24% in the previous period. The total revenue excluding oil and gas reached 77 billion USD, 2.5 times more than the previous period; the export value excluding oil and gas reached 34.6 billion USD, 3 times more than the previous period and generating over 31.2% of the country’s export turnover; the import turnover reached 45.1 billion USD, making up 34.7% of the total import turnover; the contribution to the State budget was 3.7 billion USD, twice as much as the previous period and equivalent to 5% of the total budget revenue; 1,000,000 direct laborers have been attracted, twice as many as the previous period and the number of indirect laborers is estimated to more than double.
- Remittances from Vietnamese living abroad
Another very important component of the capital inflows into Viet Nam are transfers, dominated by private transfers – the remittances from Vietnamese living abroad. Registered remittances from oversea Vietnamese are rising constantly since 1998. Total capital sourced from overseas remittance is estimated to reach US$18.9 billion since 1991, equal to 60% of FDI capital implemented in Viet Nam during the same period and is greater than the total disbursed ODA since 1993. However, so far the figure worth of overseas remittance has been counted via official remittance systems, which neglect unofficial, uncontrolled channels. Consequently, the real figure of oversea remittance would be higher considering the large amount of money transferred through channels other than banks.
Oversea remittances are one of the most important sources of income to Viet Nam. The constantly rising overseas remittances also reflect potential resource for Viet Nam’s economy development. Assuming that remittances to Viet Nam from overseas Vietnamese represent 10 per cent of their income, this implies that the combined annual income of Vietnamese emigrants is at least US$30 billion, which equals about 55 per cent of Viet Nam's current GDP. This is indeed a tremendous resource for Viet Nam to draw upon for its FDI requirements in the future. To increase remittance volumes, the Government has applied number of policies and incentives such as not only banks, but other economic organizations also are permitted to act as agents for remittance payment; or no cap on the volume of remittance has been put and no tax has been imposed on overseas remittance.
- Other foreign capital (foreign private investment)
In comparison to the FDI, the FPI to Viet Nam has been negligible. The reason might be that Viet Nam has relatively weak and undeveloped financial market. The market instruments and opportunities for short-term international capital flows are quite limited. At present, there are 18 funds operating in Viet Nam, raising about US$1,644 million. However, only a small amount has been put into the listed market. Significant amount has been invested in OTC (pre-listed) market, private sector, real estates...
Not only has the volatile capital flows (the short-term loans) into Viet Nam been limited but long-term loans and bond emission in international financial markets also are negligible at this stage. The latter is particularly important as they contribute to a currency mismatch on a macro level and expose the economy to potential exogenous shocks. Until September 2005, Viet Nam made its debut in the international financial markets with the launch of the first sovereign bond deal. The US$ 750 million 10-year issue was extremely well bid and has traded strongly. Nevertheless, as the investment climate continues to be favorable with low investment risk, political and social risk, continued strong economic growth and stability exchange rate, Viet Nam will attract increasing amounts of foreign direct and portfolio investment in the coming years.
3. Financial outlook of Viet Nam’s development
Being aware of difficulties and challenges in the coming period, Vietnamese Government arranged to build the 5-year (2006-2010) socio-economic plan of development with a new approach, notably the broad participation of people and civil societies in the planning process so as to ensure the highest feasibility of the plan, including the financial source of development. On 29 June 2006, the 5-year (2006-2010) socio-economic plan of development of Viet Nam, which was ratified by the National Assembly, has become the most important task of Vietnamese Government in the forthcoming period.
3.1 Viet Nam’s general direction of development in the 2006-2010 period
General goals of the five-year socio-economic development plan in 2006-2010 are:
Boost the economic growth rate, achieving important changes about effective and sustainable development, quickly bringing Viet Nam out of the low development state. Significantly improve people’s material, cultural, and spiritual lives. Create foundations to boost the industrialization and modernization process and gradually develop the knowledge-based economy. Stabilize politics, order, and social security. Firmly protect our independence, sovereignty, territory, and national security. Improve Viet Nam’s status in the region and the world.
The main targets are set up so as to ensure sustainable development of 3 axes: economy – society – environment.
a) Economy: At constant prices, Gross Domestic Product (GDP) in 2010 will be 2.1 times higher than that in 2000. Annual average growth rate for the period of 5 years 2006-2010 will be 7.5-8%, amongst which agriculture, forestry, and fisheries will increase by 3-3.2%, industry and construction will increase by 9.5-10.2%, services will increase by 7.7-8.2%.
GDP scale in 2010 will be 1,690-1,760 billion VND (current price), equivalent to 94-98 billion USD and GDP per capita will be about 1,050-1,100 USD.
State budget revenue will be about 21-22% of GDP.
Economic sectoral structure in GDP in 2010 will be: Agriculture, forestry, and fisheries products about 15-16%, industry and construction about 43-44%, services about 40-41%.
Total export turnover will increase by 16% annually.
Total social investment will be about 2,200 thousand billion VND (2005 price), equivalent to 140 billion USD, accounting for 40% of GDP.
If domestic and international conditions favor, try to get an economic growth rate of above 8% (GDP).
b) Social affairs: Continue the implementation of the millennium development goals (MDG) as committed including:
Completing the universalization of lower secondary schools. By 2010 tertiary education will be provided to 200 per 10,000 populations. Trained labor rate will reach 40% of the total social labor.
The population size will be under 89 million; the population growth rate by 2010 will be about 1.14%. Create jobs for over 8 million laborers, i.e. an average of over 1.6 million per annum; vocational training will be offered to 7.5 million people, in which 25 – 30% will receive long-term training. Urban unemployment rate will stay under 5%. By 2010 agricultural labor will account for 50% of the total social labor.
Vietnamese average life expectancy will be about 72 years of age. Under-1 infant mortality rate will be under 16‰ and under-five mortality will be about 27‰. Under-five malnutrition rate will be under 20% by 2010. Reduce maternity mortality and birth-related mortality to fewer than 7 per 10,000 live births. The number of doctors and pharmacists will reach 6 per 100,000 populations. Completely eliminate hungry households; reduce poor households (according to new standards) to 10 – 11% by 2010.
100% households in need will have houses to live in, with the average of 14 – 15 m2 per capita; telephone density will reach 35 sets per 100 population; Internet subscriber rates will reach 25 per 100 population; there will be expansion in the use of information technology.
c) The Environment: By 2010, increase forest coverage to 42-43%.
Strive for 100% newly built production establishments to apply clean technology or be equipped with pollution minimization facilities, ensure waste treatment and 50% of production and business establishments to satisfy environmental standards.
By 2010, 40% of urban areas and 70% of industrial zones, export processing zones will be equipped with centralized wastewater treatment systems, 90 % of solid waste collected, over 80% of hazardous waste and 100% medical waste treated.
Strive to reach 95% of urban population and 75% of rural population to have access to clean water.
3.2 Finance for Viet Nam’s development in the 2006-2010 period
a) Demand of investment:
In order to achieve the above objectives and ensure an economic growth rate of 7.5 – 8%, the investment rate per GDP in the five-year plan of 2006 – 2010 has to increase compared to the five-year plan of 2001 – 2005. The total capital investment of the whole society in the five-year plan of 2006 – 2010 according to 2005 prices is to reach about 2,200 thousand billion VND, equivalent to 140 billion USD.
Of the total capital investment of the whole society, investment from the State budget is expected to reach about 445 thousand billion VND, accounting for 20.2% of the total social investment; investment from the State preferential credit sources is expected to reach 205 thousand billion VND, accounting for 9.3%; investment from SOEs will possibly reach 333 thousand billion VND, accounting for 15.1%; investment from individuals and private sector may reach 759 thousand billion VND, accounting for 34.4%; investment from FDI is expected to reach 378 thousand billion VND (including domestic capital), equivalent to 24 billion USD (2005 exchange rate), accounting for 17.1%; investment from other sources may reach 85 thousand billion VND, accounting for 3.8%.
Of the total social investment, domestic sources are expected to reach about 65%, external sources to reach 35%.
b) Mobilization of main investment sources:
(1) State Budget: The total budget revenue in the next five years of 2006 - 2010 is expected to reach 1,477 thousand billion VND, equivalent to 190% of the total budget revenue of the five years of 2001 – 2005 and about 21 – 22% of GDP. The average budget revenue increase may reach 10.8% per annum.
The revenue structure is forecasted to shift toward more collection from domestic sources and reduction of revenue from crude oil, export and import. Domestic contribution (excluding crude oil) accounts for 59-60% of the total budget revenue.
State budget expenditure is designed on the basis of the balance with income and also the satisfaction of debt payment by the State and control of debt inside and outside the country at the safety level, together with the improved effectiveness of the use of the State budget funding. State budget expenditure in the next five years is forecasted to reach 1,815 thousand billion VND, i.e. about 27.5% of GDP. The spending increase rate may be 11.2% per annum.
The State budget spending structure is expected to shift towards more spending for debt repayment, assistance, ensuring development investment accounts for 29-30% of the total budget expenditure and to stay stable throughout the five years (the average during the five years will be 29.7%). The total spending on development investment is expected to reach 539 thousand billion VND.
Mobilizing investment capital from bond and government bond sources. The Government is still in pursuit of loose fiscal policy, leading to high demand of capital borrowing for development. Through the batches of issuing bond and government bond both internally and externally in 2004 and 2005, it’s indicated that this kind of capital mobilization has great potential for attracting investment capital for development. It’s estimated that mobilization from bond, government bond and other sources will reach 83,000 billions Dong in the next 5 years.
Investment capital from State-owned Enterprises sector. Investment capital for development of State-owned Enterprises is derived from machinery depreciation fund to re-invest, remaining profits and credit loans. Thus, factor that decides investment ability of the State-owned Enterprises sector is the outcomes of their production and business activities. Relevant analyses on speed of investment growth from State-owned Enterprises with variables representing enterprises’ business outcomes such as industrial production, export volume shows that investment capital from State-owned Enterprises can increase fairly, ensuring the above demand.
(2) Capital from bank
The objectives of monetary policies over the next five years are to control inflation and to ensure the safety of banking systems and credit organizations with regards to speeding up economic growth rate. To closely combine monetary policies with fiscal policies for stabilizing the macro-economy in order to direct and encourage the population and enterprises in their investment and business-oriented savings.
The banking system will concentrate to attract accumulated sources in the population and economic sectors to ensure a sufficient capital source for credit loans; help consolidate investment and economic development. Total means of payment to increase by 18-20% per annum, total credit debt balance almost 18-20% per annum.
Rapidly reduce the proportion of overdue debts of our banking systems to an average level as that of other countries in the region by 2010. Other safety rates of banking systems like bank assets against total mobilized capital sources, total bank assets against total credit loans, etc., are to be equivalent to other countries in the region.
Make and realize monetary policies in accordance with market principles and fully realize international norms and practices in banking activities. Continue the implementation of negotiable interest rate policies according to market principles.
Manage monetary policies based on the regulation of supplied money amounts, while creating necessary conditions to move to the implementation of governing monetary policies on the basis of regulating interest rates; prime interest rates, capital replenishment interest rates and re-amortization interest rates of the State Bank are to be used to direct and regulate market interest rates.
Develop credit organizations: Reform and develop Viet Nam commercial bank systems with diverse forms of ownership and organization; introduce international practices and standards on banking administration. Bring into play the core role of State commercial banks while ensuring self-control, self-responsibility and healthy competition in the whole system under the Law. Develop and improve the quality of people’s credit funds in order for them to become credit organizations working on principles of volunteering, self-control, and self-responsibility for their operational results. Encourage developing non –banking institutions likes financial company, insurance company, leasing financial company etc. to meet the capital demand of the economy.
Facilitate people and enterprises in their access to banking services; then rapidly spread out forms of non-cash payment and payment through banks.
Ensure the rights to business of foreign banks and financial institutions pursuant to international commitments. Open the market of banking services and international banking integration in accordance with the roadmap committed in bilateral and multilateral agreements.
Intensify the financial capacity of commercial banks: Strive for the fundamental accomplishment of the plan of restructuring commercial banks approved by the Government. Improve profit-generation capacity; completely settle outstanding debts and improve assets balance sheets of commercial banks. Issue long-term shares and bonds to increase liquid capital in commercial banks in conformity to international norms. By the year 2010, establish a comprehensive legal framework; fully apply international institutions and norms on safety in monetary-banking businesses. Fundamentally complete the Law on State banks and Law on credit organizations.
With the above solutions, banking system will become a channel providing credit with efficiency for the economy, thus it’s able to guarantee the economy’s capital demand for this system.
(3) Mobilizing investment capital for development from private sector. Investment capital from private sector will increase rapidly in the coming years due to some following major impacts:
Firstly, Common Investment Law and Unified Enterprise Law is a breakthrough and the most positive factor. These laws will create more motivation for private sector to invest in business and production development.
Secondly, capital from Vietnamese overseas is increasing rapidly, amounting to over 3 billions USD per year. At present, this source not simply raises people’s income like before, but is also forming various kinds of business cooperation to make full use of advantages, internally and externally. Thanks to the increased links between domestic banks and overseas capital banks and companies so as to establish overseas capital receiving network, transaction cost from the US and Viet Nam reduced from 3-5% down to 1.6-1.8%.
Promulgating Securities Law, continuing to perfect State-managing mechanism on financial market in order to develop quickly, safely and effectively this market. Targeting in 2010, total capitalization of securities markets represents roughly 10-15% of GDP.
Basing on analysis of economic relationship between saving ratio of the economy (representing the capacity to supply investment from private sector), GDP growth rate, interest of short-term loans, inflation rate and investment spending from private sector in the past periods, it’s possible to forecast that the speed of investment growth of private sector can maintain the rate of more or less than 25% per year.
(3) ODA attraction:
ODA in the five years of 2006 – 2010 is expected to increase quickly thanks to favorable international conditions, the fast development of the Viet Nam economy as well as the increasingly effective reception and utilization of this resource. For the whole five years, it is possible to mobilize 19 billion USD of capital committed.
ODA disbursement in the budget is expected to increase from 1.7 billion USD in 2005 to 2.3 billion USD in 2010; the whole ODA disbursed in the five years of 2006 – 2010 is approximately 11 billion USD; in which, the investment spending accounts for about 85%.
(4) FDI and foreign indirect capital flow:
Cognizant of the important role that FDI plays in Viet Nam’s economic development perspective, Viet Nam has been making every effort in order to be competitive to rival economies in attracting FDI. Many changes have been made in legal frameworks since last year, which form the basis for companies of all different kinds. The key pieces of legislation have recently been passed are the Unified Enterprise Law – that replaces a group of laws applied to different types of enterprise with a single company law, and the Common Investment Law, that replaces the Law on Foreign Investment and the Law on Encouragement of Domestic Investment. The aforementioned laws, which come into effect in July this year and remove the current two-tier price system that discriminates against foreign investors, will set up the solid background that ensure all sorts of enterprises in Viet Nam can operate on a basis of equal treatment regardless of ownerships.
Thank to them, the FDI flow are forecasted to increase significantly. In the five years of 2006 – 2010, the total FDI newly registered (including newly allocated, added capital and indirect investment) may reach 23 – 25 billion USD, in which the added capital of on-going projects account for about 35%.
Realized FDI (including added capital of on-going projects) in the five years of 2006 – 2010 is expected to reach 18-19.5 billion USD, in which industry (including oil and gas) accounts for 70 – 72%; agriculture, forestry and fisheries 5 – 6.5% and services 20 – 21.5%.
Apart from the two external sources mentioned above, it is possible to mobilize some foreign indirect investment through bonds and shares overseas, through the stock exchange and other loans for medium-term and long-term investment; 4.3 billion USD is expected to be mobilized in the next five years.
3.3 Difficulties and challenges posed during the mobilization of finance for Viet Nam’s development in the 2006-2010 period.
a) State’s capital sources: state budget, state’s preferential credit and state-owned enterprises’ capital
The mobilization of financial resources for development is limited; much capital potential both domestic and abroad have not been well developed. The State budget revenue is unstable. By 2005, 45.8% of total budget revenue was estimated to depend on externalities, including crude oil export (28.3%) and import-export tax (17.5%).
Policies and laws on taxation have not been fully worked out to include all sources of revenue, while there remain too many levels of tax rates and tax exemption and reduction on a large scale, which are difficult to implement and create favorable conditions for tax fraud, badly influencing the economic structure and the fairness of the trading and investing environment. Many subsidy-like budget expenditures such as loss-compensation, interest-compensation, compensation for exchange rate, export allowance, additional capital, have increased rapidly. The criteria for allocation of budget expenditure are not clear. The efficiency of budget capital utilization is still low; loss, waste and inefficiency in using State budget have not been solved.
Even though the ratio of accumulation and investment in GDP has risen remarkably, it is less than the real potential. 20% of domestic accumulation has not been mobilized for investment. The State budget spent on development investment is limited and partly dependent on foreign loans. The solution of bad debts is still faced with many problems, including the discrepancy between banking reform and SOEs reform.
b) Bank’s capital
Weak operation of banking system is seriously affecting the capacity to mobilize this source of capital. For this moment, the minimum rate of capital safety of public banks is only 4.4-6.2%, much less than the target (8% in 2005). Banking services have not fully developed; the main income of commercial banks, particularly State-run ones, depends on interest they can get from loans. The credit quality is still limited; the ratio of bad debts has not decreased enough. The financial situation of enterprises, especially big enterprises, is unsound; loss and debts are common and slow to improve.
The Vietnamese financial sector suffers from a number of handicaps that are typical for any developing economies:
Incomplete – it lacks a full range of market and institutions that meet all the financial needs of the economy. For instance, there is general a lack of availability of long-term finance for infrastructure and industry, finance for SME development and financial instruments that meet the needs of the poor people;
Disconnected – lack of information and financial linkage between institutions and market impairs efficiency in allocating resources. The result is the presence of informal financial organizations;
Distorted – financial sector activities tend to be influenced by the government and other non-commercial factors rather than being market determined, for instance in pricing deposit and lending decision;
Inefficient – lack of competition, inadequate access to technology and know-how, and diffused incentives render financial sector activity unduly expensive;
Fragile – weakness in governance and lack of appropriate regulations and supervision enhance their susceptibility to shocks.
Investment mobilization mechanisms and policies are not attractive enough, the investment environment is still subject to risks despite some improvement; there are still signs of discrimination among different economic sectors which discourage them from boldly investing in business and production. Despite some renovations, public administrative reform related to investment is generally sluggish, causing delay and difficulties and hence the missing of investment opportunities.
Investments from the State budget, the State credit, have not generated a boost to attract other capital sources in order to form a logical, effective investment structure and to boost the economic structural shift.
Capital mobilized from people and enterprises through the system of commercial banks, including ones in foreign currencies, have not been fully used for loans. Meanwhile, there is still a lack of capital in the economy and some enterprises have to borrow foreign currencies from foreign sources for investment. This is a big problem resulting from complicated mechanisms and procedures for loans, unsuitable and risky policies on exchange rates, especially on loans in foreign currencies, and the lack of encouragement for enterprises and investors to borrow capital.
c) ODA utilization is still limited; the disbursement is slow, decreasing its effectiveness.
The disbursement is slow due to many reasons, primarily the complicated procedures and processes in the country and as required by donors, the slow emigration and resettlement, ground clearing, bidding work, limited and insufficient project management and monitoring capacity. At times and in some places, the counter-part capital is not timely provided.
ODA mobilization and planning is not complete enough to guide the beneficiaries towards the utilization of these resources. Absence of an overall direction to attract and use ODA. This absence has restricted Ministries/industries and local authorities to bring into full play of their leading role and activeness in attracting, using ODA as well as the process of organizing and implementing it, thus reducing the effectiveness of management and use of this resource.
The capacity of project management teams generally does not meet the requirements due to insufficiency in the number of staff, most of whom hold more than one position simultaneously, in quality and in the lack of professionalism.
Legal framework for ODA management is still not comprehensive and clear, legal documents are not strictly implemented. The Government promulgated new Decree on management and use of ODA however; ODA is under influence of a number of other legal documents containing contents that are not integrative and comprehensive in comparison with the Decree on management and use of ODA.
The mechanism for managing, regulating and using ODA at various levels is not consistent; the ability to manage ODA is limited.
The supervision and appraisal regarding ODA have not been paid proper attention to; the reporting and financial consolidation regimes are not carried out properly and strictly; and necessary disciplines to enforce implementation of such regimes are not sufficient.
The above limitations mostly stem from subjective and objective causes as follows:
As to the subjective cause, the length of time for ODA to be received and used in Vietnam has been just over 10 years (that of other countries in the region has been about 30-40 years), Vietnam, therefore, is still lacking in knowledge and experiences in managing ODA.
As to the objective cause, in the process of receiving and using ODA, there are still donors, due to various reasons, have yet to create favorable conditions for the recipient country to play its mastering role, meanwhile, taking measures to impose contents, method of management and conditions for aids.
ODA’s process and procedures of some donors are rather complicated, even unclear in most cases. These donors are lack of flexibility in management method; their agencies haven’t been well provided with sufficient power to manage aids in Vietnam.
d) Foreign direct investment, newly registered ones and added capital are increasing but still below potentials.
Investment capital in the past years has increased but the proportion of foreign direct investment as part of the total investment is decreasing gradually because the growth rate is lower than the rising level of domestic investments. The proportion of foreign direct investment in society’s total investments fell from 24% in the period 1996-2000 to about 16.6% in the period 2001-2005.
The attraction of foreign investment in agriculture, forestry and fisheries is still limited despite certain preferential policies. There are many reasons for this situation: these fields are subject to risks caused by natural disasters, the modes for cooperation with peasants are not suitable, the planning of the raw-material supplies is unsuitable and inadequate, foreign investors tend to invest in areas with good infrastructures and sufficient and convenient markets.
The system of policies and laws is inconsistent and incomplete, causing negative psychological impacts on foreign investors. A “level playing field” for both domestic and foreign investments has not been created. In some production fields such as cement, iron, steel, electricity, even measures that limit foreign investments are applied. The link between the foreign invested sector and domestic enterprises is not tight. For instance, the domestic enterprises’ supply of materials and accessories to foreign invested ones is limited, leading to the decrease in their participation in the localization [of the production of accessories and components] and export through foreign invested enterprises. Sectoral and regional planning has not been substantially renovated in order to identify necessary amounts of investment capital and the responsibilities of ministries, branches and localities in the attraction of foreign direct investments. The post-licensing management work is not good. The rate of projects that fail or are prematurely dismissed is still high, some large-scaled projects take a long time to be deployed, and there remain large amounts of investment capital still unused though licenses have been granted.
3.4 Recommendations for changes to the international financial mechanism for development, which assists poor countries with finance for development
In the past years, much international efforts were made to tap into capital sources to assist developing countries to achieve their goals of promoting economic growth, poverty reduction and sustainable development. However, many works need to be done so as to cause these efforts to be more consistent and comprehensive, practical and effective; to open wider for more countries to be benefited from the renovated international financial system; and to accelerate the process of implementation towards achieving the millennium goals.
In additional to individual policies of each country, we believe that the global financial system needs to be better organized so as to better mobilize global and regional resources for helping poor country integrate into the world economy. It is important to keep in mine that the ultimate objective of the new international financial system is to promote growth and alleviate poverty, and reform efforts should be linked to this objective. Regional and international financial cooperation can play a key role in attaining this objective. We hope the OECD member countries would be able to share to developing countries their experiences in process of reforming international financial institutions. Specifically:
Firstly, developing countries need to mobilize financial resources both domestically and abroad through improving Government budget collection, developing internal financial market, building and perfecting legal framework, publicity and transparency, enhancing investment environment to attract foreign investment inflows. It should be confirmed that internal resources mobilization always plays a decisive role, at the same time, important role is of external resources.
Secondly, financial markets should be more favorable so that poor countries are able to access markets of richer countries.
Thirdly, enhancing financial, technological supports and other forms of support for poor countries; continuing to improve method of support so that grants can be brought into full play, in order to strengthen and implement all the millennium development goals of poor countries; increasing action coordination among donors for the goal of helping poor countries. Quick reducing debt burden of poor countries.
Particularly, developed countries need to accelerate the roadmap of implementing their commitment to increase ODA sources by 0.7% GNP, creating more preferences in conditions for borrowing and reducing binding conditions for granting credit.
Fourthly, building regimes that can firmly maintain the stability of the global and regional economy so as to minimize the global and regional financial crises’ impacts on financial market and growth of poor countries.
Fifthly, building an assured mechanism for poor countries to raise their voices in international fora so that all countries can take part in solving global, regional issues, and those of poor countries themselves… Especially, we desire that international community will give developing countries bigger and equal role and stand in the process of building policy of investment for development, policy for developing international financial-monetary markets
At this forum, I wish to listen to many of your ideas contributing to the process of building a new financial structure so that we have a chance to consider, adjust, complement and perfect our estimations in order to best meet the requirements during the process of developing financial system to serve the development goal of Vietnam, at the same time, to help Vietnam grasp the opportunity to integrate faster, more effectively, to the brotherly economies in financial area for development.
I would like to thank you for your attention and wish our Workshop be successful.
Thank you./.
References
- Report of Vietnamese Finance Minister Nguyen Sinh Hung at "high level dialogue on financing to development", New York, 27/6/2005.
- Financial sector reform to attract foreign portfolio investment in Viet Nam, by Nguyen Thanh Long and Nguyen The Tho, State Securities Commission of Viet Nam; 2006.
- Draff of Report: "ODA Strategic Framework", version 15-4-2006 of the Ministry of Planning and Investment.
- Viet Nam economic report - updates
- The Five-Year Socio-Economic Development Plan for 2006-2010 period of Viet Nam.
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[1] Viet Nam has 05 SOCBs, among them the four bigger are: the Foreign Trade Bank of Viet Nam (VietcomBank); the Bank for Agriculture and Rural Development of Viet Nam (AgriBank); the Industry and Commerce Bank of Viet Nam (IncomBank); and the Bank for Investment and Development of Viet Nam (BIDV); and the much smaller is the Mekong Housing Development Bank (MHB).
[2] Bad debts in 2001 were 8.53%, 7.15% in 2002, 4.8% in 2003 and about 4% in 2004.
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