Changes to banking sector raised at VBF

At the Vietnam Business Forum 2022 (VBF) on February 21, proposals were made that the State Bank of Vietnam (SBV) consider expanding the credit space and that the government soon promulgate a decree on a mechanism for the controlled testing of financial technology (fintech) activities.

The VBF recognized the SBV’s role in managing macro-economic stability, controlling inflation in the context of the pandemic, and at the same time supporting businesses. It suggested the central bank increase credit space so that banks can have more room to lend and support businesses, especially small and medium-sized enterprises (SMEs), when necessary.

It also described digital transformation as a “vaccine” for the economy. However, analysts said that digital transformation in the banking industry and other fields still faces challenges, such as a lack of synchronization between relevant legal regulations and the standardization of infrastructure to form a digital ecosystem.

Therefore, the VBF recommended that the government soon issue a decree on a controlled trial mechanism for fintech activities, to allow the application of cash flow management and cash transfer products in Vietnam. It also suggested the speeding up of research and amending the new Law on Electronic Transactions, and promulgating a Decree on electronic identification and authentication and another guiding the Law on Cybersecurity, to provide appropriate and specific instructions.

Addressing the VBF, a representative from the British Chamber of Commerce in Vietnam (BritCham) noted that when the global economy recovers, inflation will be an important issue to address. Data from previous years shows that Vietnam’s inflation rate is often higher than in other countries.

BritCham also believes that liquidity and the ability of banks to support economic growth will be key in 2022 and into the medium-term future. Companies are willing to borrow more to invest based on their ability to grow in the future.