Decision No. 42/2003/QD-NHNN dated January 13, 2003 of the State Bank of Vietnam on the program of action for international economic integration in the banking domain

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Decision No. 42/2003/QD-NHNN dated January 13, 2003 of the State Bank of Vietnam on the program of action for international economic integration in the banking domain
Issuing body: State Bank of VietnamEffective date:
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Official number:42/2003/QD-NHNNSigner:Le Thi Bang Tam
Type:DecisionExpiry date:
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Issuing date:13/01/2003Effect status:
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Fields:Finance - Banking
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THE STATE BANK
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No: 42/2003/QD-NHNN

Hanoi , January 13, 2003

 

DECISION

ON THE PROGRAM OF ACTION FOR INTERNATIONAL ECONOMIC INTEGRATION IN THE BANKING DOMAIN

THE GOVERNOR OF THE STATE BANK

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

Pursuant to the Government’s Decree No. 86/2002/ND-CP of November 5, 2002 prescribing the functions, tasks, powers and organizational structure of the ministries and ministerial-level agencies;

Pursuant to the Prime Minister’s Decision No. 37/2002/QD-TTg of March 14, 2002 on the Government’s program of action for implementation of the Politburo’s Resolution No. 07-NQ/TW on international economic integration;

At the proposal of the director of the Department for International Relations,

DECIDES:

Article 1.- To issue together with this Decision the program of action for international economic integration in the banking domain.

Article 2.- This Decision takes effect after its signing.

Article 3.- The Office’s director, the heads of the State Bank’s concerned units, the director of the Banking Institute and the directors of the State Bank’s provincial/municipal branches shall have to implement this Decision.

 

 

STATE BANK GOVERNOR




Le Duc Thuy

 

PROGRAM OF ACTION

FOR INTERNATIONAL ECONOMIC INTEGRATION IN THE BANKING DOMAIN
(Issued together with the State Bank Governor’s Decision No. 42/2003/QD-NHNN of January 13, 2003)

In order to gain initiative in the integration process, in the spirit of the Politburo’s Resolution No. 07-NQ/TW on international economic integration, Vietnam should build a banking system, which is diversified in forms, prestigious among customers and competitive, operates efficiently and safely, has the capability to better mobilize various capital sources in the society and to expand investment, meeting the requirements of the national cause of industrialization and modernization; step up the work of training a contingent of banking officials, who are politically steadfast, proficient in banking operations and relevant operations, make good use of informatic technological achievements, are fluent in foreign languages, and have industrial working style and high sense of discipline, thus contributing to raising the working efficiency in the banking sector.

Regarding integration activities, the State Bank (SB) has determined that its pivotal task is to well exercise the function to represent the Vietnamese Government at international financial-monetary organizations, make the fullest use of the assistance of these organizations, develop bilateral cooperation relations, including the implementation of the Vietnam - US Bilateral Trade Agreement, with special attention paid to international and regional integration in such multilateral economic organizations as ASEAN, APEC, WTO,...

The banking sector’s program of action aims to implement the Government’s program of action for the implementation of Resolution No. 07 on international economic integration and includes the following 7 principal contents:

- Information and propagation work;

- Law elaboration, amendment and supplementation;

- Perfection of the general strategy on international economic integration;

- Formulating financial-monetary mechanisms and policies, and raising competitiveness;

- Negotiations for joining WTO;

- Human resource training;

- Expansion of markets, winning investment and technical assistance of other countries and international organizations.

I. INFORMATION AND PROPAGATION WORK

To organize propagation and popularization of the Party’s and State’s undertakings and policies as well as information and knowledge on international economic integration in the State Bank in particular and the banking system in general, incorporate these contents into the Banking Institute’s teaching curricula, organize workshops, and through such mass media as the Banking Times,..., create an adequate and uniform perception in the sector and the society as well.

II. LAW ELABORATION, AMENDMENT AND SUPPLEMENTATION (2003-2006)

The central task of the banking sector in the work of integration in the coming years is to continue implementing the Vietnam-US Bilateral Trade Agreement and prepare for negotiations for joining WTO.

- The State Bank shall continue revising and comparing Vietnam’s current law provisions on banking activities with the contents and agreements in the signed bilateral and multilateral agreements. On that basis, it shall submit to the Government for proposing to the National Assembly for promulgation the legal documents on monetary and banking operations in compatibility with the regulations of the WTO as well as international economic and trade organizations which Vietnam has acceded to; amend, supplement, adjust or annul legal documents, mechanisms and policies not compatible with the international commitments which Vietnam has agreed to accede to.

- To enhance legal framework for credit institutions (CIs)’ activities, establish a system for evaluating and classifying CIs according to international standards, ensuring that Vietnam can fully participate in international and regional economic organizations in the finance and banking domain.

- To build a foreign exchange management mechanism along the direction of liberalizing current transactions, and selectively controlling capital account transactions. To build a system of measures to control international capital flow, especially short-term capital, control foreign loans, and control and minimize the use of foreign currencies on the Vietnamese territory.

III. PERFECTION OF THE GENERAL STRATEGY ON INTERNATIONAL ECONOMIC INTEGRATION (2003)

To work out a general strategy on international integration, clearly and specifically determining the integration roadmap and the extent of commitment to each type of international economic organizations in order to orientate the whole process of international economic integration of the banking sector. On the basis of that strategy, to draw up a plan on raising the competitiveness of Vietnam’s system of CIs on domestic and international market.

IV. BUILDING FINANCIAL-MONETARY MECHANISMS AND POLICIES, AND RAISING COMPETITIVENESS

To continue renovating and making healthy the system of CIs in order to stabilize currencies, control inflation, support economic development, and create favorable conditions for CIs to participate in international integration.

1. For the State Bank (2003-2005)

- To renovate monetary policies along the direction of applying indirect policy tools, and perfect the open market;

- To perfect the mechanism for administering interest rates of domestic and foreign currencies along the direction of liberalization with efficient and indirect regulation by the State;

- To formulate a payment mechanism compatible with international practices, modernize the payment system and financial information system, thus ensuring the safe and efficient operation of the system of CIs, raise the monitoring capability;

- To build an early-warning system;

- To restructure the system of inspection and supervision of CIs;

- To program the Internet integration in order to update financial and monetary information.

2. For the system of CIs (2003-2005)

To consolidate and restructure CIs in order to make healthy the financial and banking system and meet the national industrialization and modernization requirements; to raise the competitiveness in financial capability, technological level and managerial capability so as to actively participate in the international economic integration. To restructure and expand financial services in terms of both types and quality along the direction of basing on market supply and demand so that CIs can be more autonomous in making business decisions, take self-responsibility, seek customers themselves and raise operation efficiency, be competitive in the country, the region and the world.

a/ For State-run commercial banks (SCBs)

- To make healthy the SCBs’ finance on the basis of restructuring loans, making asset balance sheets clean, applying measures to prevent the arising of new bad debts; to take measures to settle inefficient investment and loan debts;

- To separate policy credit activities from SCBs and transfer this task to the Bank for Social Policies;

- To perfect the lending process, procedures and conditions to suit various economic sectors, attaching importance to medium- and long-term loans compatible with projects’ cycles;

- To focus on implementation of projects on modernization of the banking technologies. To proceed to apply the international accounting standards;

- To train and retrain a contingent of managerial officials and employees of SCBs.

b/ For joint-stock commercial banks (JSCBs)

To set the requirement of restructuring organization and management standards for JSCBs, to create conditions for them to modernize their technologies, to organize training for raising the managerial capability, and to efficiently participate in secondary monetary market as well as the State Bank’s capital re-allocation operations and payment system, concretely as follows:

- To restructure the system of JSCBs; to dissolve or merge a number of weak and inefficient JSCBs;

- To make healthy the JSCBs’ finance on the basis of restructuring overdue debts;

- To organizationally restructure, especially sections managing risks as well as assets and liabilities, supervising and conducting internal audit and/or managing capital and investment.

V. NEGOTIATIONS FOR JOINING WTO

On the basis of the banking sector’s general strategy on international economic integration, to build plans for negotiations in the field of finance and banking services in preparation for negotiations for joining WTO, with the set objective for 2005.

VI. HUMAN RESOURCE TRAINING

To build medium- and long-term strategies for human resource training and development in order to strengthen and improve the quality of the contingent of banking officials, who are fully capable for participation in international economic integration, politically steadfast, proficient in banking operations and relevant operations, make full use of information technological achievements, fluent in foreign languages, have the industrial working style and high sense of discipline, thus contributing to raising the working efficiency in the banking sector. These strategies attach special importance to those officials who directly participate in negotiations, conclusion of international contracts or accession to multilateral organizations, as well as inspection and supervision officials specialized in international legal affairs.

VII. EXPANSION OF MARKETS, WINNING INVESTMENT AND TECHNICAL ASSISTANCE OF OTHER COUNTRIES AND INTERNATIONAL ORGANIZATIONS

To continue strengthening and developing cooperation relations with such international finance-monetary organizations as the International Monetary Fund (IMF); the World Bank (WB); the Asian Development Bank (ADB); the European Investment Bank; the North European Investment Bank; the OPEC Fund; and the KUWAIT Fund; to coordinate with the concerned ministries and branches in focusing on the fulfillment of the commitments with the IMF, WB and ADB in order to step up the tempo of implementation of the signed projects, making full use of capital sources for the national cause of industrialization and modernization; to attach importance to international and regional integration in such multilateral economic organizations as the ASEAN, APEC, WTO,... and bilateral cooperation organizations such as the French Central Bank, the French Cooperation and Development Promotion Agency (PROPARCO), the Japan Bank for International Cooperation (JBIC), the American EXIMBANK, the Chinese People’s Bank, the Lao Central Bank, the Cambodian Central Bank, the Cuban National Bank, the Malaysian Central Bank, the Central Bank of Iran, Luxembourg,...

And at the same time to win technical assistance of international organizations and central banks of other countries in research and collection of information and their experiences in international integration such as in negotiations for joining WTO,... and in the process of perfecting the system of legal documents in order to strengthen and develop Vietnam’s system of credit institutions.

IMPLEMENTATION ORGANIZATION

In order to implement this program of action, the departments and units listed below shall have to build their own specific plans of action for implementation of the assigned tasks. These plans of action should be completed and submitted to the State Bank Governor for approval before February 28, 2003.

1. Information and propagation work:

- The Banking Institute shall plan to incorporate the introduction of the world and regional economic, financial and banking organizations such as WTO, ASEAN, APEC, ASEM, EU, IMF, WB, ADB,... into its extra-curricula programs.

- The State Bank’s Office shall act as the main body and coordinate with the concerned units in devising plans on organization of workshops and propagation of integration for officials of the State Bank and commercial banks.

- The Banking Times shall devise plans on integration propagation through press and other mass media.

- The Press Propagation Center shall act as the main body in collecting information on international economic integration.

2. Law elaboration, amendment and supplementation:

The Legal Department shall assume the prime responsibility, act as the main body and coordinate with the concerned units in revising legal documents and regulations and proposing amendments and/or supplements thereto.

3. Perfection of the general strategy on international economic integration:

The Department for Bank Development Strategies shall assume the prime responsibility, act as the main body and coordinate with the concerned units in the implementation thereof.

4. Building financial and monetary mechanisms and policies, and raising competitiveness:

- The Monetary Policies Department shall assume the prime responsibility, act as the main body and coordinate with the concerned units in organizing the implementation of the contents related to monetary policies.

- The Department for Banks shall assume the prime responsibility, act as the main body and coordinate with the concerned units in organizing the implementation of the contents related to commercial banks.

- The Department for Foreign Exchange Management shall assume the prime responsibility, act as the main body and coordinate with the concerned units in organizing the implementation of the contents related to foreign exchange.

- The State Bank’s Inspectorate shall act as the main body and coordinate with the concerned units in organizing the implementation of the contents related to inspection and supervision such as the restructure of the bank inspection and supervision system; and building an early-warning system.

- The Department for Bank Informatics Technology shall act as the main body and coordinate with the concerned units in implementing the contents related to informatics technology such as the modernization of payment system and financial information system; and programming integration on the Internet for updating financial and monetary information.

5. Human resource training:

The Department for Organization, Personnel and Training shall assume the prime responsibility, act as the main body and coordinate with the Banking Institute and concerned units in the implementation thereof.

6. Negotiations on admission to WTO:

The Department for International Relations shall assume the prime responsibility, act as the main body and coordinate with the concerned units in the implementation thereof.

7. Expansion of markets, and winning investment and technical assistance of other countries and international organizations:

The Department for International Relations shall assume the prime responsibility, act as the main body and coordinate with the concerned units in the implementation thereof.

 

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