Vietnam Business & Weather Briefing (August 23): Finance Ministry Sets Targets for Banking System

Business Briefing

Gold rate

Domestic gold, silver, and gem trading establishments this morning (August 23) simultaneously adjusted the price of gold, bringing the domestic gold price down to around VND 67 million/tael.

This morning, SJC gold price was adjusted down VND 200,000 compared to the previous day. With this adjustment, SJC gold price in Hanoi and Da Nang is VND 66 million/tael (buying) and VND 67.02 million/tael (selling). In Ho Chi Minh City, DOJI lists the buying gold price at VND 66.05 million/tael and the selling price at VND 67 million/tael, down VND 150,000 in the buying transaction and VND 100,000 in the selling transaction.

Reference rate exchange

The State Bank of Vietnam set the daily reference exchange rate for the US dollar at VND 23,237/USD on August 23, up VND 15 from the previous day. With the current trading band of +/-3 percent, the ceiling rate applied to commercial banks during the day is VND 23,934/USD, and the floor rate VND 22,539/USD.

The opening-hour rates at all commercial banks increased. At 8:30 am, Vietcombank listed the buying rate at VND 23,240/USD and the selling rate at VND 23,550/USD, both up VND 5 from the end of August 22. BIDV also raised both rates by VND 5 to VND 23,270/USD (buying) and VND 23,550/USD (selling).

Photo: Zing

Transport news: Hanoi to deploy more buses for National Day holiday

The Hanoi Transport Corporation (Transerco) plans to operate more bus trips add more vehicles to its fleet to meet the needs of passengers during the National Day holiday (September 1-4). According to Nguyen Thuy, Transerco’s deputy general director, the number of commuters using bus services during the holiday is forecast to increase sharply, especially at Giap Bat, Gia Lam, My Dinh, Yen Nghia, and Nuoc Ngam bus stations.

The corporation will deploy 900 more buses to raise the daily number of bus trips to 11,000. It also asked subordinate units to arrange human resources and vehicles to ease overcrowding at stations in case of need, according to VNA.

They were also requested to strictly comply with regulations regarding Covid-19 prevention and control, it said. The Hanoi Bus Station Joint Stock Company will add 580 vehicles to meet the travel need of people during the four-day holiday. According to the company’s director, Pham Manh Hung, traffic congestion may occur at peak times on some routes or bus stations but it will be solved at the earliest possible.

Photo: Zing

Finance news: Finance ministry sets targets for banking system

The Ministry of Finance (MoF) has issued targets for restructuring banks in a bid to bolster the strength of Vietnam’s financial sector. The MoF will coordinate with other ministries to set regulations on capital increases for State-owned credit institutions, especially the Bank for Agriculture and Rural Development of Vietnam (Agribank). The MoF will also coordinate with the State Bank of Vietnam to apply International Financial Reporting Standards (IFRS) in accordance with financial reporting standards in Vietnam. In addition, it will study and develop standards for debt valuation, including bad debts, with an aim to create a legal basis for debt valuation activities to ensure objectivity in debt valuation.

Ministries and agencies will have to report their results to the MoF’s Department of Banking and Financial Institutions before November 15 every year so the department can compile the results to send to the SBV before November 30 every year. The Government issued Decision No689/QĐ-TTg in June this year, which approved the project on restructuring the system of credit institutions associated with bad debt settlements in 2021-25. The project aims to create a clear and substantive change in the restructuring of the banking system.

Under the decision, Vietnam will reduce the number of credit institutions and basically finish the settlement of poor-performing banks by 2025 to make the banking system more healthy and sustainable. The project encourages investors to participate in the purchase, sale, consolidation, and merger of credit institutions voluntarily to increase the size and competitiveness of the institutions to make the country’s banking system among the top four in ASEAN by 2025. Under the project, Vietnam also targets to have at least two to three commercial banks in the top 100 strongest banks in Asia by 2025. The project stipulates that commercial banks’ capital adequacy ratio will reach at least 10-11% by 2023 and at least 11-12% by 2025.

Large-sized banks, excluding weak ones, must have a minimum charter capital of VND 15 trillion, and the number for small- and medium-sized banks will be VND 5 trillion by 2025. The minimum charter capital required for financial companies and financial leasing companies is VND 750 billion and VND 450 billion, respectively. For weak banks under the central bank’s special control, the capital increase will be implemented according to plans approved by the competent authority.

The project also directs the Vietnam Asset Management Company to submit to competent authorities for consideration a plan to increase its capital to VND 10 trillion in 2022-25 to improve the financial capacity and operational efficiency of the agency in dealing with bad debts. According to the project, the bad debt ratio on the balance sheet of credit institutions, excluding those of weak commercial banks, will be less than 3% by the end of 2025.

Photo: Dan Viet

Export news: Agricultural sector seeking ways to boost exports

Minister of Agriculture and Rural Development (MARD) Le Minh Hoan has suggested building an export market development strategy, where functions and tasks of management agencies are integrated. Speaking at a recent working session between Prime Minister Pham Minh Chinh and representatives from Vietnamese trade offices abroad, Hoan said trade promotion should be combined with tourism and cultural promotion to create reciprocity among the agencies.

He proposed the PM instruct ministries and agencies to appoint agricultural counselors in key markets, who will help domestic firms get updates on export markets. Relevant associations need to closely coordinate to reduce costs and risks, the minister continued, noting that an export alliance would help businesses raise their competitiveness while joining global supply chains.

In response, PM Chinh asked trade offices to continue with market research and give advice to the Government in the market development strategy, as well as recommendations to associations, enterprises and localities, helping them set out and adjust production and business plans. The offices were also tasked with further seeking partners, connecting domestic and foreign firms, and attracting foreign investors to such areas as mechanics, processing-manufacturing, electronics, support industries, chemicals, and pharmaceutical products.

They should pay more attention to sending Vietnamese trainees and workers abroad to enable them to access cutting-edge technologies, meeting Vietnam’s development requirements, the PM said. He assigned the MARD to step up negotiations to boost the Vietnamese agricultural exports and promote shipments via the official channel, and coordinate with localities to ensure that their production follows set standards.

Photo: Nha Dat Sai Gon

Weather Forecast

August 24: In the next 24 hours, the Maon storm will move to the northwest, at a speed of 15-20 km per hour. At 1 am on August 24, the storm will be in the northwest region of Luzon Island (Philippines). Due to the influence of the storm, from the afternoon of August 23, in the eastern seaboard of the South China Sea Sea, the wind will gradually increase to level 6-7, then to level 8.

Hanoi will be cloudy and sunny during the daytime, while thunderstorms, tornadoes, and lightning will appear at night. Ho Chi Minh City will have light sunshine in the early morning. Cloudy weather starts from noon.