Decision No. 42/2003/QÐ-NHNN on the Action Program for International Economic Integration in the Banking Sector

Pursuant to …;

DECISION NO. 42/2003/QĐ-NHNN
OF THE GOVERNOR OF THE STATE BANK OF VIETNAM ON JANUARY 13, 2003 REGARDING THE ACTION PROGRAM
FOR ECONOMIC INTEGRATION INTO THE INTERNATIONAL ECONOMY IN THE FIELD OF BANKING

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on the State Bank of Vietnam dated December 12, 1997;

Pursuant to Decree No. 86/2002/NĐ-CP dated November 5, 2002 of the Government stipulating the functions, tasks, powers, and organizational structure of Ministries and ministerial-level agencies;

Pursuant to Decision No. 37/2002/QĐ-TTg dated March 14, 2002 of the Prime Minister regarding the action program of the Government to implement Resolution No. 07-NQ/TW of the Politburo on economic integration into the international economy;

Based on the proposal of the Director of the Department of International Relations.

Pursuant to …;

Article 1:The Action Program on Economic Integration into the International Economy in the Field of Banking is hereby promulgated together with this Decision.

Article 2:This Decision takes effect from the date of signature.

Article 3:The Head of the Office, heads of relevant units under the State Bank of Vietnam, Directors of the Banking Academy, and Directors of Provincial Branches of the State Bank are responsible for implementing this Decision.

ACTION PROGRAM FOR ECONOMIC INTEGRATION INTO THE INTERNATIONAL ECONOMY IN THE FIELD OF BANKING

(Annexed to Decision No. 42/2003/QĐ-NHNN
dated January 13, 2003 of the Governor of the State Bank of Vietnam)

To gain the initiative in the process of integration, in accordance with the spirit of Resolution No. 07-NQ/TW of the Politburo on economic integration into the international economy, Vietnam needs to build a diverse banking system in terms of form, reputable among customers, competitive, operating effectively, safely, capable of mobilizing social resources better, and expanding investment to meet the demands of industrialization and modernization of the country; intensify training of a cadre of bank staff politically solid, proficient in banking operations and related fields, adept at utilizing information technology achievements, fluent in foreign languages, with industrial work styles and high discipline, contributing to improving labor productivity in the banking sector.

Regarding integration activities, the State Bank of Vietnam (SBV) has identified the focus as performing well its function as the representative of the Vietnamese Government in international financial and monetary organizations, maximizing support from these organizations, developing bilateral cooperation including the implementation of the Vietnam-U.S. Trade Agreement, emphasizing international and regional integration efforts within multilateral economic organizations such as ASEAN, APEC, WTO...

The Action Program of the banking sector aims to implement the Government's Action Program to realize Resolution No. 07 on economic integration into the international economy, comprising seven main contents as follows:

- Information and propaganda work;

- Building, amending, and supplementing laws;

- Completing the overall strategy for economic integration into the international economy;

- Establishing financial and monetary mechanisms, policies, and enhancing competitiveness;

- Negotiating accession to the WTO;

- Training human resources;

- Expanding markets, seeking investment and technical assistance from countries and international organizations.

I. INFORMATION AND PROPAGANDA WORK

Organize propaganda and introduce the Party and State's policies, information, and knowledge about economic integration into the international economy in the SBV and the banking system, incorporate these contents into the teaching programs of the Banking Academy, organize seminars, and disseminate through mass media such as the Banking Times..., creating full awareness and unity within the industry and society.

II. BUILDING, AMENDING, AND SUPPLEMENTING LAWS (2003-2006)

The focus of the banking sector's integration work in the coming years will be to continue implementing the Vietnam-U.S. Trade Agreement and prepare for negotiations to join the WTO.

- The SBV will continue to review and compare current Vietnamese laws governing banking activities with the contents and agreements in signed bilateral and multilateral agreements. On this basis, propose to the Government to submit to the National Assembly for the issuance of new regulatory documents on currency and banking activities that comply with WTO institutions and international economic and trade organizations that Vietnam participates in; amend, supplement, adjust, or abolish regulatory documents and policies that are inconsistent with international commitments that Vietnam has agreed to participate in.

- Strengthen the legal framework for credit organizations' activities, establish a system for evaluating and classifying credit organizations according to international standards, ensuring that Vietnam can fully participate in international and regional economic organizations in the financial and banking sectors.

- Develop a foreign exchange management mechanism towards liberalizing current transactions, selectively controlling capital account transactions. Establish a system of measures to control international capital flows, especially short-term capital, control foreign debt, and minimize the use of foreign currencies on Vietnamese territory.

III. COMPLETING THE OVERALL STRATEGY
FOR ECONOMIC INTEGRATION INTO THE INTERNATIONAL ECONOMY (2003)

Develop an overall strategy for international integration, clearly defining and specifying the integration roadmap and commitment levels for each type of international economic organization to guide the entire process of economic integration into the international economy of the banking sector. Based on this strategy, develop plans to enhance the competitiveness of the Vietnamese credit organization system in both domestic and international markets.

IV. BUILDING MECHANISMS AND POLICIES FOR FINANCIAL AND MONETARY MANAGEMENT, ENHANCING COMPETITIVENESS

Continue to reform and improve the credit organization system to stabilize the currency, control inflation, support economic development, and facilitate the international integration of credit organizations.

1. For the SBV (2003 - 2005)

- Reform monetary policy towards applying indirect policy tools, perfecting the open market mechanism;

- Perfect the mechanism for managing interest rates on domestic and foreign currencies towards liberalization with effective indirect state regulation;

- Establish a payment mechanism consistent with international practices, modernize the payment system, financial information system, ensuring safe and efficient operation of the credit organization system, enhancing supervisory capacity;

- Establish an early warning system;

- Reorganize the inspection and supervision system of credit institutions;

- Develop a program for integration on the Internet to update financial and monetary information.

2. For the credit institution system (2003-2005)

Consolidate and restructure credit organizations to improve the health of the financial and banking systems, meeting the requirements of industrialization and modernization of the country; enhance competitiveness in both financial capacity, technological level, and management capability to be able to actively participate in international economic integration. Shift and expand the structure of financial services provided in terms of type and quality based on market demand so that credit institutions can have more autonomy in business decision-making, take responsibility, seek customers independently, and improve operational efficiency with competitive capabilities domestically, regionally, and globally.

a) For State-owned commercial banks (SOCBs)

- Improve the financial health of SOCBs based on restructuring debts, cleaning up the balance sheet, applying measures to prevent new bad debts; implement measures to resolve ineffective investment and loan accounts;

- Separate policy lending activities from SOCBs and transfer this responsibility to the social policy bank;

- Perfect the loan procedures, formalities, and conditions suitable for various economic sectors, focusing on medium and long-term loans consistent with project cycles;

- Concentrate on implementing projects to modernize banking technology. Move towards adopting international accounting standards;

- Train and retrain the management and staff of SOCBs.

b) For joint-stock commercial banks (JSCBs)

Set requirements for organizational restructuring and management standards for JSCBs, creating conditions for these banks to modernize technology and improve management skills, effectively participate in the secondary money market, rediscount operations, and the central bank payment system, specifically:

- Reorganize the JSCB system; dissolve or merge some weak JSCBs;

- Improve the financial health of JSCBs based on restructuring overdue debts;

- Restructure organizations, particularly risk management departments, asset management, liability management, internal audit, capital management, and investment.

V. NEGOTIATIONS FOR WTO ACCESSION

Based on the overall strategy for international economic integration of the banking sector, develop negotiation plans in the field of financial banking services to prepare for WTO accession negotiations, with the goal of joining by 2005.

VI. TRAINING OF HUMAN RESOURCES

Develop a long-term strategy for training and developing human resources to strengthen and improve the quality of the banking workforce capable of integrating into the international economy, politically solid, proficient in banking and related operations, adept at utilizing achievements in information technology, fluent in foreign languages, with industrial work ethics and high discipline, contributing to improving labor productivity in the banking sector. This strategy particularly focuses on personnel directly involved in international negotiations, signing international contracts, or joining multilateral organizations, inspection and supervision personnel, and specialists in international law.

VII. EXPANDING MARKETS, SECURING INVESTMENTS AND
TECHNICAL ASSISTANCE FROM COUNTRIES AND
INTERNATIONAL ORGANIZATIONS

Continue to consolidate and develop cooperative relationships with international financial and monetary organizations such as the International Monetary Fund (IMF), World Bank (WB), Asian Development Bank (ADB), European Investment Bank, Nordic Investment Bank, OPEC Fund, Kuwait Fund; coordinate with relevant ministries and agencies to focus on implementing commitments with IMF/WB/ADB to accelerate the progress of signed projects to secure funds for the country's industrialization and modernization efforts; pay attention to international and regional integration in multilateral economic organizations like ASEAN, APEC, WTO...; and in bilateral cooperation such as the French Central Bank, the French Agency for Cooperation and Development (PROPARCO), Japan Bank for International Cooperation (JBIC), U.S. Export-Import Bank (EXIMBANK), People's Bank of China, Central Bank of Laos, Central Bank of Cambodia, National Bank of Cuba, Central Bank of Malaysia, Central Bank of Iran, Luxembourg...

At the same time, seek technical assistance from international organizations and central banks of countries in researching and absorbing information and experiences from other countries in international integration such as WTO accession negotiations, as well as the process of perfecting regulatory documents to strengthen and develop the Vietnamese credit organization system.

IMPLEMENTATION

To implement this action program, the following departments and units have the task of building specific implementation plans for their units to carry out assigned tasks. These plans need to be completed and submitted for approval by the Governor before February 28, 2003.

1- Information and propaganda work:

- The Banking Academy has a plan to include in extracurricular programs the introduction of global and regional economic and financial organizations such as: WTO, ASEAN, APEC, ASEM, EU, IMF, WB, ADB, etc...

- The Office of the State Bank of Vietnam acts as the lead, coordinating with relevant units to organize seminars and propaganda on integration for State Bank of Vietnam and commercial bank staff.

- The Banking Times has a plan to promote integration through the press and other media.

- The Propaganda and Media Center acts as the lead in collecting information on international economic integration.

2- Building, amending, and supplementing laws

The Legal Department leads coordination with relevant units to review and propose amendments and supplements to legal documents and regulations.

3- Completing the overall strategy for international economic integration:

The Development Strategy Department leads coordination with relevant units to implement.

4- Building financial and monetary mechanisms and policies, enhancing competitiveness.

- The Monetary Policy Department leads coordination with relevant units to organize the implementation of contents related to monetary policy.

- The Banking Department shall take the lead in coordinating with relevant units to organize the implementation of contents related to commercial banks.

- The Foreign Exchange Management Department shall take the lead in coordinating with relevant units to organize the implementation of contents related to foreign exchange.

- The State Bank Inspectorate shall take the lead in coordinating with relevant units to organize the implementation of contents related to inspection and supervision such as restructuring the inspection and supervision system of banks; building an early warning system.

- The Banking Information Technology Department shall take the lead in coordinating with relevant units to implement contents related to information technology such as modernizing payment systems, financial information systems; developing a program for integration on the Internet to update financial and monetary information.

5- Training human resources

The Organization and Training Department shall take the lead in coordinating with the Banking Academy and relevant units to implement.

6- Negotiating accession to the World Trade Organization

The International Relations Department shall take the lead in coordinating with relevant units to implement.

7- Expanding markets, attracting investment and technical assistance from countries and international organizations.

The International Relations Department shall take the lead in coordinating with relevant units to implement.