MPI plan to give banking sector an added edge

Under the plan, state-owned commercial banks would continue to receive chartered capital injections and enterprises would have to issue corporate bonds for their projects rather than request government-guaranteed loans.
State Bank deputy governor Le Duc Thuy said this was a possible solution in the current economic climate. He said that several loans provided by banks had not hit the mark in developing the economy.
“State-owned commercial banks are operating at low efficiency and the loss of payment capability is a possibility,” he said, adding that “corporate and government bonds should be the main products on the securities market, rather than a focus on shares in listed companies”.
The government is currently enacting its plan to inject a total of VND10,390 billion ($680 million) into the five state-owned commercial banks within the 2001-2003 period.
Senior economist from the Institute for the World Economy, Vo Dai Luoc, said: “The capability of the State Bank and the government to issue convertible bonds to the total value of VND9,140 billion ($608 million) with an interest rate of 2 or 3 per cent after inflation should be taken into consideration.”
State Securities Commission president Nguyen Duc Quang said 60 kinds of government bonds were currently listed on the bourse “with a total value of around VND3,000 billion ($200 million), but trade is irregular”.
Deputy Finance Minister, Le Thi Bang Tam, said: “In fact, the issuance of government bonds has been purely for contribution to the state budget, not for providing a basis for the issuance of corporate bonds and related investment activities on the securities market.
“One of the main disadvantages for the economy in general and enterprises in particular is the local currency hasn’t been convertible,” she said. Only the Cambodian riel, Laotian kip, Myanmar kyat and Vietnamese dong are not convertible in Asia.
She said the plan for the development and completion of the monetary and capital market should include the possibility of converting the local currency, which would directly or indirectly support local enterprises in global trading.
Head of the Ho Chi Minh City Economic Institute, Tran Du Lich, said that in the context of the limited capital of commercial banks, the mobilisation of capital for enterprises and the economy from unofficial channels such as from insurance firms and development assistance funds should also be taken into account.
Deputy Minister of Planning and Investment, Lai Quang Thuc, said a sustainable and robust financial market was crucial to the rise of the economy.
“The plan should take into account various factors like market predictability, international practice and Vietnam’s commitment to world integration,” he said.