News / Economy

    Vietnam Hints at Lifting Cap on Foreign Ownership of Banks

    FILE - A man counts money he withdrew from an ATM machine at the headquarters of the Bank for Investment and Development of Vietnam in Hanoi.FILE - A man counts money he withdrew from an ATM machine at the headquarters of the Bank for Investment and Development of Vietnam in Hanoi.
    x
    FILE - A man counts money he withdrew from an ATM machine at the headquarters of the Bank for Investment and Development of Vietnam in Hanoi.
    FILE - A man counts money he withdrew from an ATM machine at the headquarters of the Bank for Investment and Development of Vietnam in Hanoi.
    Vietnamese officials said this week they would be willing to raise the ceilings on foreign ownership of banks once the restructuring of the banking sector stabilizes.
     
    The officials would not commit to a timeline or a new percent cap. But one adviser, drawing on the experience of South Korea and Japan, said it could take Vietnam five to 10 years to clean up the banks, which have the highest bad debt ratio in Southeast Asia.
     
    “We have to make our own system healthy again before we feel comfortable to open up,” said Hoang Xuan Hoa, economic director of the central economic committee that advises the government.
     
    Speaking Tuesday at a seminar held by the Ministry of Planning and Investment and the European Chamber of Commerce in Vietnam, Hoa added, “We don’t have to wait till everything is OK before we open up for foreign investors, but it’s a process.”
     
    The overall limit for foreign stakes in Vietnamese banks is 30 percent. Of that portion, foreign individuals are allowed no more than 5 percent, organizations 15 percent, and strategic investors 20 percent. Vietnam raised those levels in February, before which organizations could hold just 10 percent and strategic investors just 15 percent.
     
    While open to an eventual hike in the foreign cap on top of the changes in February, Nguyen Manh Hung, a manager at the State Bank of Vietnam, cautioned against the risk of capricious investors. He said carpetbaggers might invest here but then pull out at the first sign of trouble in Vietnam, or in response to issues in their home markets, such as the current drawdown of quantitative easing in the United States.
     
    “They may be in for a quick buck, and then withdraw capital anytime they see problems,” said Hung, who heads the SBV’s Banking Strategy Institute. “We need to look for long-term commitments from investors. We don’t want to pay the price of capital flight.”
     
    Despite his reticence, Hung acknowledged “there’s a big need for capital to restructure the banking sector.”
     
    Overhaul


    Vietnam is in the process of a major banking overhaul, which is seen as necessary to lift the country out of its years-long slump in GDP growth. Officials have told banks to merge, divest from non-core businesses, resolve cross-ownership issues, and cut their burden of loans that go sour. To buy up some of those toxic loans, Vietnam formed an asset-management company in July.
     
    “High non-performing loans continue to plague banks' balance sheets with various estimates ranging from the official number of 3.79 percent to Moody's estimate of 15 percent,” ANZ said in a statement this week.
     
    Foreigners say they could help ease the load of bad debts at Vietnamese lenders, but their stakes are not high enough to justify pumping more resources into the struggling banks.
     
    “Thirty percent doesn’t give us sufficient incentive or control to come in and resolve these issues,” EuroCham director Paul Jewell said.
     
    Hung complained that foreign investors say they want to buy more shares in Vietnamese banks, yet have not made use of the allotments in place. But bankers responded that they haven’t been interested because the ceiling is too low. They said the government would have to let foreigners own 49 percent, or even 51 percent, of a bank to make the investment worthwhile.
     
    At the end of the seminar, the president of the planning ministry’s Development Strategy Institute said he found the bankers’ arguments “persuasive.” Bui Tat Thang promised to take the recommendations to the government, saying, “I think the relationship between foreign ownership caps and participation in banks is very important.”

    You May Like

    Self-doubt, Cultural Barriers Hinder Cambodian Women in Tech

    Longtime Cambodian tech observer Sok Sikieng says that although more women have joined profession in recent years, there remain significant factors hindering women from reaching tech potential

    Trans-Adriatic Pipeline to Boost European Energy Security

    $4.5 billion-pipeline will become operational in 2020 and will deliver gas from Azerbaijan’s Shah Deniz II field to southern Italy

    Video California Celebration Showcases Local Wines, Balloons

    Annual festival showcases the region's harvested agriculture, fine wines and offers opportunities to experience the gentle breeze in a hot air balloon flight

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Vietnamese-American Youth Optimistic About Obama's Visit to Vietnami
    X
    Elizabeth Lee
    May 22, 2016 6:04 AM
    U.S. President Barack Obama's visit to Vietnam later this month comes at a time when Vietnam is seeking stronger ties with the United States. Many Vietnamese Americans, especially the younger generation, are optimistic Obama’s trip will help further reconciliation between the two former foes. Elizabeth Lee has more from the community called "Little Saigon" located south of Los Angeles.
    Video

    Video Vietnamese-American Youth Optimistic About Obama's Visit to Vietnam

    U.S. President Barack Obama's visit to Vietnam later this month comes at a time when Vietnam is seeking stronger ties with the United States. Many Vietnamese Americans, especially the younger generation, are optimistic Obama’s trip will help further reconciliation between the two former foes. Elizabeth Lee has more from the community called "Little Saigon" located south of Los Angeles.
    Video

    Video First-generation, Afghan-American Student Sets Sights on Basketball Glory

    Their parents are immigrants to the United States. They are kids who live between two worlds -- their parents' homeland and the U.S. For many of them, they feel most "American" at school. It can be tricky balancing both worlds. In this report, produced by Beth Mendelson, Arash Arabasadi tells us about one Afghan-American student who seems to be coping -- one shot at a time.
    Video

    Video Newest US Citizens, Writing the Next Great Chapter

    While universities across the United States honor their newest graduates this Friday, many immigrants in downtown Manhattan are celebrating, too. One hundred of them, representing 31 countries across four continents, graduated as U.S. citizens, joining the ranks of 680,000 others every year in New York and cities around the country.
    Video

    Video Vietnam Sees Strong Economic Growth Despite Incomplete Reforms

    Vietnam has transformed its communist economy to become one of the world's fastest-growing nations. While the reforms are incomplete, multinational corporations see a profitable future in Vietnam and have made major investments -- as VOA's Jim Randle reports.
    Video

    Video Qatar Denies World Cup Corruption

    The head of Qatar’s organizing committee for the 2022 World Cup insists his country's bid to host the soccer tournament was completely clean, despite the corruption scandals that have rocked the sport’s governing body, FIFA. Hassan Al-Thawadi also said new laws would offer protection to migrants working on World Cup construction projects. VOA's Henry Ridgwell reports.
    Video

    Video Infrastructure Funding Puts Cambodia on Front Line of International Politics

    When leaders of the world’s seven most developed economies meet in Japan next week, demands for infrastructure investment world wide will be high on the agenda. Japanese Prime Minister Shinzo Abe’s push for “quality infrastructure investment” throughout Asia has been widely viewed as a counter to the rise of Chinese investment flooding into region.
    Video

    Video Democrats Fear Party Unity a Casualty in Clinton-Sanders Battle

    Democratic presidential front-runner Hillary Clinton claimed a narrow victory in Tuesday's Kentucky primary even as rival Bernie Sanders won in Oregon. Tensions between the two campaigns are rising, prompting fears that the party will have a difficult time unifying to face the presumptive Republican nominee, Donald Trump. VOA national correspondent Jim Malone has more from Washington.
    Video

    Video Portrait of a Transgender Marriage: Husband and Wife Navigate New Roles

    As controversy continues in North Carolina over the use of public bathrooms by transgender individuals, personal struggles with gender identity that were once secret are now coming to light. VOA’s Tina Trinh explored the ramifications for one couple as part of trans.formation, a series of stories on transgender issues.
    Video

    Video Amerikan Hero Flips Stereotype of Middle Eastern Character

    An Iranian American comedian is hoping to connect with American audiences through a film that inverts some of Hollywood's stereotypes about Middle Eastern characters. Sama Dizayee reports.
    Video

    Video Budding Young Inventors Tackle City's Problems with 3-D Printing

    Every city has problems, and local officials and politicians are often frustrated by their inability to solve them. But surprising solutions can come from unexpected places. Students in Baltimore. Maryland, took up the challenge to solve problems they identified in their city, and came up with projects and products to make a difference. VOA's June Soh has more on a digital fabrication competition primarily focused on 3-D design and printing. Carol Pearson narrates.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.8971
    JPY
    USD
    110.16
    GBP
    USD
    0.6811
    CAD
    USD
    1.3106
    INR
    USD
    67.378

    Rates may not be current.