FDIs in VN mostly served by foreign banks

Tuesday, Mar 17, 2015 17:52

FDI enterprises make up for 60 per cent of Viet Nam's foreign trade revenue. — Photo cafef.vn

HA NOI (Biz Hub) — Foreign banks' branches are servicing most of the customers, who are foreign direct investors (FDIs) in Viet Nam, the Dau tu (Vietnam Investment Review) online, reported.

Tharabodee Serng-Adichaiwit, vice president and general director of the Bangkok Bank in Viet Nam, said lending had grown 10 per cent at the bank during the first nine months of last year. The growth rate was 2.5 times the general level recorded in the domestic banking system over the same period.

"Loans for foreign direct investors account for more than 90 per cent of our total lending in Viet Nam," he said.

Other foreign banks in Viet Nam also reportedly mainly serve foreign direct investment (FDI) enterprises, which make up for 60 per cent of the country's foreign trade revenue.

A representative from a foreign investment fund said on the condition of anonymity that many international corporations were eyeing the Vietnamese market in view of the fact that the ASEAN Economic Community will be formed soon. Numerous free trade agreements, including the Trans-Pacific Partnership, would also stimulate an influx of FDI capital into the country.

However, the representative said local banks would only see few opportunities from this new investment wave, since international banks were closely tracking FDIs' movements.

This is evident as among the over 100 branches and representative offices of foreign banks currently operating in Viet Nam, there are many South Korean, Japanese, Singaporean and Thai units. These are also countries that have made considerable investments in Viet Nam.

The foreign banks not only serve firms investing in Viet Nam, but also cater to companies intending to invest here. For example, the Bangkok Bank in Viet Nam serves Thai investors here and many Chinese enterprises which are eyeing investments in the country.

According to Dau tu, the clients of domestic banks mainly include State-run companies and major private firms. Some local banks, such as Vietcombank, VietinBank and BIDV plan to expand their coverage to foreign customers, but they have admitted that it is not easy to do so.

Vietcombank General Director Pham Quang Dung told the online newspaper that the potential for accelerating payment values associated with FDI customers was "relatively significant", since FDI enterprises had taken on important roles in foreign currency trading and import-export activities.

He said Vietcombank had provided many services by receiving deposits, issuing ATM and credit cards, and paying salaries via accounts for FDI firms. "However, the number of FDI customers and the loan values for them remain small in our lending structure."

"We want to serve more FDI customers and have already developed some special programmes to attract them. But at present, they mainly use our bank for basic services, such as wage payments and cash withdrawal," said a manager at a joint stock commercial bank, who chose to remain anonymous. "Most of them borrow money from banks headquartered in their home countries."

Viet Nam International Bank Deputy General Director Le Quang Trung said his bank had also established a separate group for taking care of FDI firms, but the results had not been up to expectations.

Domestic banks also expressed the concern that they have to undertake immense efforts to gain foreign customers, even as many international banks have expressed the intention to cater to domestic firms, Dau tu commented. — VNS

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