The Banking Working Group under the Vietnam Business Forum proposes changes to foreign exchange policy.
In order to maintain export competitiveness, Vietnam should perfect mechanisms and administrative procedures relating to controlling foreign exchange, the Banking Working Group (BWG) suggested at the recent Vietnam Business Forum (VBF) 2014.
License for operating foreign exchange activities
With existing policies, Vietnamese banks are yet to fully implement common foreign exchange controls, so the BWG proposed the government allow banks to fully implement these controls in both local and international markets to meet the needs of customers and reduce liquidity risk.
Regarding foreign banks and their branches operating in Vietnam, the BWG recommended the lifting of restrictions relating to the classification of customers in the international market to reduce unnecessary administrative procedures for both financial institutions and the State Bank of Vietnam (SBV).
The group also suggested removing requirements for the Vietnamese translation and notarization of a foreigner’s identification documents required when they wish to open a bank account.
Foreign indirect investment bank accounts
Foreign indirect investment activities are currently only permitted to work through a single bank account. However, indirect investors often diversify their investment to various activities in different industries, so they need to open multiple accounts at the same bank to manage their portfolio. The existing mechanism technically limits the ability to manage multiple movements in their portfolio, which can affect flows of foreign portfolio investment and the development of Vietnam’s stock market
The BWG’s proposal recommends that SBV’s regulations be more flexible in allowing multiple accounts (at a same bank) for indirect foreign investors, so legitimate needs and international banking standardization are met.
Foreign currency deposits
The group also recommended the State Bank consider allowing banks to receive deposits in foreign currencies from foreigners working in Vietnam. Otherwise there may be a waste of capital and foreigners may be forced deposit their legal income outside of Vietnam.