VietNamNet Bridge – State Bank of Vietnam (SBV) Governor Nguyen Van Binh has taken the floor to discuss the monetary market, capital for production and business activities, and the settlement of bad debts.
At the National Assembly’s Q&A session in Hanoi on November 13, Binh also clarified issues relating to the gold market, and the restructuring of the banking and credit systems.
He said that the difference in domestic and world gold prices caused fluctuations in the macro economy and foreign exchange rate, which resulted in gold speculation and cross-border smuggling of the precious metal.
“This also affected the country’s imports and exports as a large amount of foreign currencies serve gold smuggling, resulting in high inflation and foreign currency outflows,” he noted.
To stabilise the macro economy, the Government and the SBV permitted gold imports to bring the domestic price closer to the world value, he said.
According to Binh, the country lacked mechanisms to manage the gold market before. Therefore, Decree 24, which took effect on May 25, 2011, has created a legal framework to manage the market, including regulations to manage quality and ensure higher interest for consumers.
He went on to say that a large volume of gold bars have been cast under eight different brands. To regulate the gold bar market, the SBV has selected the brand SJC as a standard – they account for more than 90 per cent of the gold market.
The result will be that the bank has an official gold brand to be circulated in parallel with SJC, standardising the gold bar market in transactions and retail, Binh said.
Between 250 and 300 tonnes of gold are hoarded by residents, he said, stressing that it is very wasteful.
“How to use this resource to serve national welfare and people’s livelihood, and averting a gold dependent economy is the goal,” he said.
Implementing the State Bank’s solutions, over the past five months the credit system has bought more than 60 tonnes of gold from the population in an initial effort to mobilise gold.
Regarding bad debts, Binh said that the SBV has mapped out a plan to restructure the banking system and assess bad debts in the sector.
The State Bank announced the rate of bad debts and put forth overall measures to solve them, he noted.
Binh admitted that the bad debt situation has existed for a long time due to hot credit growth and slack management, inspection and supervision.
“It takes time to address bad debts,” he said, adding that “the credit system is now restructuring businesses’ debts and set up a risk prevention fund. Credit oganisations have taken 12 trillion VND (571.5 million USD) from this fund.”
In fact, over 80 percent of bad debt in credit organisations have guarantee assets - half of them real estate.
With these measures, the SBV believes that bad debt will not increase. But it needs coordination between ministries, branches and localities, said Binh.
“Bad debts are not serious at present, but will become dangerous in the future if not tightened,” he stressed.
Together with solving bad debt, the central bank will coordinate with ministries, branches and localities to seek the most effective measures to support businesses, Binh said.
According to the Governor, the liquidity of the banking system has been improved, but is not yet stable. Although the lending interest rate has been lowered, it is still yet to meet business demands.
The inflation rate has recently dropped by 1 per cent but it still remains at risk to rising again, he added.
The SBV and commercial banks are seeking solution packages to further lower interest rates to support businesses, Binh said.
He said that the bad debt rate in the agricultural and rural sector is now only 4.47 per cent, proving the effectiveness of loans in this sector.
Therefore, the State Bank has instructed commercial banks to increase loans to the sector as well as open branches in rural areas to lend capital, he concluded.
On the same day, Minister of Health Nguyen Thi Kim Tien answered National Assembly deputies’ questions on public health care, medicine price management, impacts of hospital fee increases, and gender inequality at birth.
Tien admitted that the price of medicine is now 10 to 20 per cent higher than listed. She blamed the fact on collusion between pharmaceutical companies and doctors who claim a percentage for the medicine they prescribe, and higher prices for bidding at health establishments.
This problem derives from unchecked regulations in drug price bidding, she noted.
Tien presented a regulation that provides clinics and hospitals under the ministry with the right to manage the price of medicines. The ministry should only be responsible for professional management in order to ensure sufficient medicines to patients, she added.
To address the problem, the ministry has coordinated with relevant ministries and agencies to issue a circular to sort medicines on a technical basis, and regulated that bidding prices must be lower than previously listed prices, Tien said.
The ministry has asked the Prime Minister to allow a pilot establishment of a national committee on medicine price bidding with multi-sector involvement, she said. It has also issued nationwide regulations on prescribing medicines and limited the use of special drugs, she added.
To questions on the impact of increased medical services, the minister affirmed that it will bring more benefits to the poor, medical insurance holders and children under the age of 6.
Hospitals are responsible for providing health care services. The payment of the fee is between the financiers - social insurance companies - and the hospitals.
Regarding gender imbalance, the minister affirmed that the issue is worsening, especially in the provinces of the Red River Delta. In some provinces, the ratio of boys to girls is up to 130:100. Notably, couples opt for gender selection from the very first birth.
As for solutions to the issue, the minister said that the Ministry can supervise at the ultrasound stage and impose administrative fines on screenings of the unborn-child’s sex.
The minister said that gender imbalance is not a result of social problems, but has its root in culture and thinking - that is, Vietnamese men want to have boys to maintain their future generations.
The minister suggested that NA’s delegations supervise the issue at the grass-root level. She called on the Party and administrative committees at all levels and society as a whole to play a more active role.
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