Governor Nguyen Van Giau of the State Bank of Vietnam (SBV) has asserted that the monetary policy and exchange rate have been managed in a flexible manner in order to stabilize the money and foreign exchange markets and contribute to macro-economic stability. This statement was made by the SBV Governor in his interview for the reporters of the Vietnam Multimedia Corporation (VTC1) and media agencies on August 12. Following is the full text of the interview:
Answer: The administrative reform is one of important measures of supporting the successful implementation of the 2006-2010 socio-economic development plan, compliance with Vietnam’s commitments to the World Trade Organization (WTO), and development of an effective, efficient and professional administrative system. Therefore, the Prime Minister approved the 2007-2010 Project of Administrative Procedure Simplification in State Management (known as Project 30).
The SBV is among the frontrunners in publicizing its own Set of Administrative Procedures. The SBV Administrative Procedures Set consists of 221 procedures. The publicity of the Administrative Procedures Set is of paramount importance for the banking sector. This is the first time that the SBV has collected a complete database of administrative procedures related to monetary and banking operations to be publicized to enterprises and the public and international friends. This publicity also reflects the enormous effort of the whole banking industry in implementing the directives and objectives of the administrative reform while making an active contribution to the development of the banking sector in the direction of transparency and international integration.
From August 24, 2009, the SBV will get down to the second phase of the Project to revise, analyze and detect any discrepancies and problems , thereby making recommendations of unnecessary procedures to be revised, replaced or removed in the third phase in order to meet the objective of developing a central bank in line with international practices and standards.
Answer: I would like to assert that the Vietnamese Government and the SBV have so far managed the exchange rate policy in a stable manner. This is clearly reflected in a number of macro-economic indicators; for example, the trade deficit of the first seven months of this year is only USD 3.4 billion, much lower than that of the same period last year. The trade deficit of the whole year is estimated to be below USD 10 billion, accounting for 16-16.5% of the total export value. While the capital inflows have appeared to decline, the registered FDI of the first six months still reached USD 10 billion with the disbursement amount of nearly USD 5 billion. The overseas Vietnamese remittance declined slightly. Particularly, the FII increased in two consecutive months with the total value of USD 7-8 million per day, showing a positive sign for the economy.
Over the past time, the SBV has taken many measures of redressing and enhancing the regulatory management of the forex market. Presently, the foreign exchange interest rates offered by commercial banks are relatively lower than the previous time. This trend helps to stimulate the requirement of borrowing foreign currencies on the one hand, and on the other, encourages many people to sell their foreign currencies for domestic currencies to be put in their saving accounts in stead of hoarding them. Specifically, the foreign exchange loan outstanding decreased by 9.55% in May as compared to end 2008, but it increased by 1.2% against June and decreased by only 2.3% as compared to end 2008. The hoarding of foreign currencies by many enterprises decreased remarkably. Enterprises have sold a large amount of foreign exchange over the past ten days. Particularly on August 10, commercial banks sold USD 150 million, but bought USD 221 million, resulting in a net purchase of USD 71 million, and the sale and the purchase levels were even on August 11. This happening shows that the simultaneous measures by the SBV started to bear fruit.
Answer: In general, the Government continues to pursue macro-economic policies in line with Resolution 30 with the aim of preventing economic decline, maintaining a proper economic growth rate, stabilizing macro-economy, actively containing inflation and ensuring social protection in accordance with the objectives set by the CPV Political Bureau. Moreover, the management must be for the sake of the whole nation as a top priority, but not for the sake of a certain sector.
It is true that several medium and small joint-stock commercial banks have increased their mobilizing rates but mainly for over 36 months term deposits. The other term rates are fairly stable. The increase of this type has caused unremarkable impact on the banks’ profits, since 74% out of the total mobilizing outstanding of commercial banks is of the maturity of less than 1 year, and 26% of 1-5 years. It means that before increasing the rates, commercial banks had to make cautious calculation to ensure their profitability.
In addition, only several medium and small joint-stock commercial banks have increased their mobilizing rates while the rates quoted by the state-owned commercial banks and large joint-stock commercial banks have remained almost unchanged. It proves that the mobilizing rates deserve no concern at all. At present, liquidity of commercial banks remains good. At addition, the SBV has taken many measures to promote liquidity for commercial banks. In the conference of the General Directors of all commercial banks on credit operations and review of the implementation of Instruction No.01/CT-NHNN, I required commercial banks to work out the plan of credit growth for the second half of the year with the aim of ensuring the credit structure in line with the capital resource structure so as to boost production and export, to ensure prudent ratios and to closely monitor the credit quality. However, the SBV will closely watch to identify any abnormal case of mobilizing rate hike for proper sanctions.