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

DECISION OF THE GOVERNOR OF THE STATE BANK OF VIETNAM

Regarding the action program
on international economic integration in the banking sector

___________________

GOVERNOR OF THE STATE BANK OF VIETNAM

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

Pursuant to Decree No. 86/2002/NĐ-CP dated 5/11/2002 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 on the action program of the Government to implement Resolution No. 07-NQ/TW of the Politburo on international economic integration;

At the proposal of the Director of the International Relations Department.

DECISION:

Article 1: Issued together with this Decision is the Action Program on international economic integration in the banking sector.

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 and municipal branches of the State Bank shall be responsible for implementing this Decision.

Action Program on international economic integration in the banking sector

(Issued together with Decision No. 42/2003/QĐ-NHNN
dated 13/1/2003 of the Governor of the State Bank)

To gain the initiative in the process of integration, in accordance with Resolution No. 07-NQ/TW of the Politburo on international economic integration, Vietnam needs to build a diverse banking system in terms of form, reputable among customers, competitive, operating effectively, safely, capable of mobilizing more social resources, and expanding investment to meet the demands of industrialization and modernization; intensify training for 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 ethics and high discipline, contributing to improving labor productivity in the banking industry.

In terms of integration activities, the State Bank of Vietnam (SBV) has identified its focus as performing well the function of representing 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 07 on international economic integration, comprising seven main contents as follows:

Information and propaganda work;

Building, amending, and supplementing laws;

Completing the overall strategy on international economic integration;

Building financial and monetary mechanisms, 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

Organizing propaganda and introduction of Party and State policies, information, and knowledge about international economic integration in the SBV and the banking system, incorporating these contents into the teaching programs of the Banking Academy, organizing seminars, and disseminating 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 continue to be the implementation of the Vietnam-U.S. Trade Agreement and preparation for negotiations to join the WTO.

The SBV will continue to review and compare current Vietnamese laws on banking activities with the contents and agreements in signed bilateral and multilateral agreements. Based on this, it will propose to the Government to request the National Assembly to issue new regulatory documents on currency and banking activities consistent with WTO institutions and other international economic and trade organizations that Vietnam participates in; amend, supplement, adjust, or abolish regulatory documents and policies inconsistent with international commitments that Vietnam has agreed to participate in.

Strengthening the legal framework for credit organizations' activities, establishing 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.

Building a foreign exchange management mechanism towards liberalizing current transactions, selective control over capital account transactions. Establishing a system of measures to monitor international capital flows, especially short-term capital, controlling foreign debt, and minimizing the use of foreign currencies on Vietnamese territory.

III. Completing the Overall Strategy on International Economic Integration (2003)

Developing an overall strategy on 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 international economic integration in the banking sector. On this basis, develop plans to enhance the competitiveness of the Vietnamese credit organization system in both domestic and international markets.

IV. Building Financial and Monetary Mechanisms, Enhancing Competitiveness

Continuing to reform and stabilize the credit organization system to ensure monetary stability, control inflation, support economic development, and facilitate credit organizations' international integration.

1. For the SBV (2003 - 2005)

Reforming monetary policy towards using indirect policy tools, perfecting the open market mechanism;

Perfecting the interest rate adjustment mechanism for domestic and foreign currencies towards liberalization with effective indirect state regulation;

Building a payment mechanism in line with international practices, modernizing the payment system, financial information system, ensuring safe and efficient operation of credit organizations, and enhancing supervisory capacity;

Establishing an early warning system;

Reorganizing the inspection and supervision system for credit organizations;

Setting up an internet-based integration program to update financial and monetary information.

2. For the Credit Organization System (2003-2005)

To strengthen and restructure credit institutions to improve the health of the financial and banking system, meet the requirements for industrialization and modernization of the country; enhance competitiveness both in financial capacity, technological level as well as management capability to be able to proactively participate in international economic integration. Shift and expand the structure of financial services supply in terms of types and quality based on market demand so that commercial joint-stock banks can have more autonomy in business decision-making, take responsibility themselves, seek customers independently, and improve operational efficiency, with the ability to compete 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 process, procedures, and conditions suitable for various economic sectors, focusing on medium and long-term loans consistent with project cycles;

Concentrate on implementing projects for banking technology modernization. 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 training, effectively participate in the secondary money market, rediscount operations, and the central bank's payment system, specifically:

Reorganize the system of JSCBs; dissolve or merge some weak JSCBs;

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

Restructure organizations, particularly risk management units, asset management units, oversight and internal audit units, capital management and investment units.

V. Negotiating WTO Accession

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

VI. Training Human Resources

Develop a long-term human resource training and development strategy to consolidate and improve the quality of the banking cadre capable of integrating into the international economy, politically solid, proficient in banking and related operations, adept at utilizing information technology achievements, 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 those directly involved in international negotiations, signing international contracts, or joining multilateral organizations, inspection and supervision cadres, and specialized international law cadres.

VII. Expanding Markets, Attracting Investment 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 attract funds for the country's industrialization and modernization efforts; pay attention to international and regional integration work in multilateral economic organizations such as ASEAN, APEC, WTO...; and in bilateral cooperation such as the Central Bank of France, 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 of other countries in international integration such as WTO accession negotiations... as well as the process of perfecting regulatory legal documents to consolidate and develop the Vietnamese credit institution system.

VIII. Implementation Organization

To implement this action program, the following departments and units have the task of developing 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 State Bank of Vietnam Office 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 Publicity and Press Center acts as the lead in collecting information on international economic integration.

2- Building and Amending Legal Frameworks

The Legal Department leads, coordinating 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 Strategic Development Department leads, coordinating with relevant units, to implement.

4- Building Financial and Monetary Policies, Enhancing Competitiveness.

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

The Commercial Banks Department leads, coordinating with relevant units, to organize the implementation of contents related to commercial banks.

The Foreign Exchange Management Department leads, coordinating with relevant units, to organize the implementation of contents related to foreign exchange.

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 of Vietnam's Inspection Department serves as the coordinating unit to collaborate with relevant units in implementing inspection and supervision contents such as restructuring the inspection and supervision system of banks; establishing an early warning system.

The Banking Technology and Information Department serves as the coordinating unit to collaborate with relevant units in implementing technology-related contents such as modernizing payment systems, financial information systems; developing an internet integration program to update financial and monetary information.

5- Training human resources

The Organization and Cadre Training Department serves as the coordinating unit to collaborate with the Banking Academy and related units in implementation.

6- Negotiating accession to the WTO

The International Relations Department serves as the coordinating unit to collaborate with related units in implementation.

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

The International Relations Department serves as the coordinating unit to collaborate with related units in implementation.