10:49 | 19/11/2015 Economy
(VEN) - According to business website Bloomberg, production in Vietnam is developing steadily, while many other countries in the region are shrinking their production scale. State Bank Deputy Governor Nguyen Kim Anh said that the banking system will apply specific policies to drive capital flows to Vietnam’s processing and manufacturing sector.
Illustrative image (Source: thoibaonganhang)
Capital for production increases high
State Bank Governor Nguyen Van Binh said that the processing and manufacturing sector has attracted attention from businesses, particularly foreign direct investment (FDI) companies. The percentage of the sector has increased progressively from 50 percent in 2011 to 70 percent in 2012, 76.6 percent in 2013 and 72 percent in 2014. Eighty of all 101 countries and territories with FDI projects in Vietnam have invested in this sector.
To help the country make the most of its growth and become the world’s new processing and manufacturing center after 2015, the banking system has outlined specific itineraries to boost credit for the sector.
Over the last years, credit has been poured into the prioritized areas of agriculture, rural areas, export, support industries, medium to small-sized enterprises, and firms adopting high technology, which are crucial for Vietnam to become a global manufacturing center.
Nguyen Kim Anh also said by the end of 2014, the balance of outstanding loans for medium to small-sized enterprises exceeded VND923 trillion accounting for 23.25 percent of the total balance of outstanding loans. The balance of outstanding loans for high-tech businesses reached almost VND20 trillion, a 25.26 percent increase from a year ago. Credit sourced from Vietnamese banks has also been absorbed into the FDI sector helping it expand the scale of production.
Specific policies will be in place
World Bank Director for Vietnam Victoria Kwakwa said that Vietnam has opportunities to become a global processing and manufacturing center considering that US$90 billion (almost 50 percent of the gross domestic product, GDP) will go to the processing and manufacturing sector during the next 10 years. The sector will contribute 80 percent of Vietnamese total export earnings.
Victoria Kwakwa underlined that Vietnam would still have advantage to develop since it is close to the global production value chain, has a strong work force and benefits from low production costs. The country is also opening foreign trade and deepening international integration via bilateral and multilateral agreements. The Vietnamese market also has great potential.
Nguyen Kim Anh said the banking system will in the coming time implement monetary policy in an aim to stabilize the macro economy and the value of the local currency to help drive Vietnam towards a global manufacturing center.
She said that the State Bank will step by step loosen regulations on FDI enterprises in terms of capital transfers, the remittance of foreign currency, and their stake in enterprises in Vietnam.
As for indirect FDI capital flows, the State Bank will maintain its control and necessary restrictions in terms of the ownership of foreign partners, investment forms, executive personnel, and employment.
In addition, the State Bank will accelerate the disbursement and effective use of loans for programs and projects funded by the World Bank and the Asian Development Bank. Meanwhile, the bank will make the most of financial resources and support of international financial institutions and bilateral and multilateral partners to facilitate the establishment of a global manufacturing center in Vietnam.