Vietnam

Overview

Official name : Socialist Republic of Vietnam

Government : One-party rule

Head of State : President, currently Nguyễn Phú Trọng

Capital City : Hanoi

Main towns : Ho Chi Minh City , Hanoi , Haiphong

Land area : 330,363 sq km

Population : 95.54m (2018 est.)

Climate : Tropical monsoon

Currency : Dong (ISO currency code: VND )

Exchange rate : USD 1 = 23,176.00 Vietnam Dong, VND (August, 2020) 15880.5 /USD1 (Oct 2005)

Measures : Metric system

Language : Vietnamese; English

Time : 7 hours ahead of GMT

Regulatory Scheme

The Ministry of Finance (MoF) and the State Bank of Vietnam (SBV) are the primary regulatory bodies for Vietnamese finance. The Foreign Investment Law of Vietnam states that there is no maximum investment limit, 100% foreign investments may be made, and that there is no minimum equity required in Vietnamese projects. Three forms of foreign investments are found in Vietnam . These include: wholly owned firms by foreigners, joint ventures between a private Vietnamese enterprise and a foreign investor, and contracts amongst state economic organizations and investors. Domestic payments may only be transacted in Vietnamese Dong and international payments must be in hard currency, as the Dong is not a convertible currency.

Banking

The State Bank of Vietnam (SBV) regulates Vietnamese banking and monetary policy. Vietnam is in the process of more deeply integrating into the global economy and in doing so it has made strides to open its financial markets to foreign institutions. Additionally it seeks to upgrade its banking sector to international standards. According to the Vietnam-US Bilateral Trade Agreement these advances must be complete by 2008. The SBV in March, 2005 decided to allow European Union banks to receive Vietnamese Dong (VND) deposits of up to 350% of legal capital from individuals, and 400% from legal entities (with no credit relationship), levels previously enjoyed only by American banks. The SBV also declared it would allow foreign banks to invest in local joint stock banks (JSBs), thereby opening the door for JSBs to integrate new technology and learn strategies from foreign investors.

Presently six state-owned banks control 70-80% of Vietnam 's banking. There are 29 foreign bank branches in Vietnam but with the liberalization of the banking sector to be complete by 2008, it may be assumed this number will increase.

Stock Exchange

The Stock Trading Center of Vietnam (STC) in Ho Chi Minh City officially opened on July 20, 2000 with trading commending on the Vietnamese Stock Exchange (VSE) on July 28, 2000 . An Over-The-Counter market opened in Hanoi in 2005. The VSE is the smallest stock exchange in southeast Asia with only 29 listed companies. The State Securities Commission (SSC) is responsible for development of capital markets, issuance of regulations, and licensing of participants in the market. All securities traded on the VSE are denominated using Vietnamese Dong (VND). To be listed on the STC a company must have a capitalization of at least US$318,000 and have a minimum of 50 shareholders (not employees) holding 20% of the stake. They must also register with either The Hong Kong Shanghai Banking Corporation, Deutsche Bank AG, or Standard Chartered Bank, the three custodians licensed to hold foreign securities. Private foreign investors are prohibited from transferring funds outside of Vietnam within one year of the date of investment.

Insurance

The Vietnamese insurance industry is supervised by the Insurance Division of the Ministry of Finance (MoF). This body is responsible for planning the development of the industry, supervising the operation of companies and for licensing insurers and setting forth standards and conditions. All insurance companies must obtain a license from the MoF before commencing operations. In 1995 the first license to a foreign insurance company was issued, after restrictions on foreign insurers were laxed in 1993 with the signing of Decree 100/CP. In 1996 life insurance was first introduced to Vietnam with the establishment of Baoviet Life Insurance Company. Baoviet remains the country's largest insurance company for both non-life and life insurance. In 2003 the life insurance sector was comprised of five insurers with the top 3 controlling approximately 92.3% of the market. The non-life sector was comprised of 13 insurers, the top 5 controlling 92.4% of the market. On December 9, 2000 the first Law on Insurance Business was promulgated, setting forth the requirements when establishing an insurance company in the country. According to the law, an insurance company may be in the form of a state-owned, a joint stock, a joint venture, a mutual insurance organization, or a wholly foreign owned company.