Vietnam’s outlook & Standard Chartered’s strategy

10:46 | 11/01/2016 Finance - Banking

(VEN) - Vietnam Economic News’ Duong Nga spoke with Nirukt Sapru, CEO of Standard Chartered Bank (Vietnam).

Vietnam’s outlook & Standard Chartered’s strategy

Could you give your comments on the achievements that the Vietnamese economy obtained in 2015?

The Vietnamese economy grew 6.68 percent in 2015, beating the government’s 6.2  percent target, according to the General Statistics Office. Vietnam’s economic growth has gained momentum gradually and is now being supported both by exports of foreign-invested enterprises and domestic demand. Vietnam’s economic growth in 2015 may be the fastest among six major Southeast Asian countries tracked by the Asian Development Bank.

We are very impressed with the achievements of the Government in managing and developing the economy over the year which has helped Vietnam return to its trend growth of 6.5 percent. We believe Vietnam is amongst the most positive growth stories in the region. Despite ongoing global macroeconomic concerns, the outlook for Vietnam remains bright and promising. Vietnam‘s combination of improving domestic fundamentals, strong commitment to world trade and a variety of ongoing reforms is continuing to attract foreign investors.

The wait-and-see moment in Vietnam is over. Investors are being told that now is the time to take the plunge in one of Southeast Asia’s most promising economies.

The global market has been volatile as a result of the recent changes in the USD interest rate outlook, weak demand for commodities and adjustments in the Chinese economy. All of these have impacted emerging markets. Vietnam is no exception. However, the State Bank of Vietnam took prudent and prompt actions in response to the market volatility. The SBV devalued the VND three times in 2015, totalling three percent. We support the SBV’s prompt actions in response to the devaluation of the Chinese currency. It is a right approach to manage the market situation and the SBV should continue with this flexible approach.

The SBV widened the trading band twice in August, from +/-1 percent to +/-2 percent and then to +/-3 percent. The widening is a good decision. A wider band gives the central bank more leeway to mitigate FX volatility. The FX adjustments have also increased Vietnam’s export competitiveness relative to other ASEAN economies.

We think that the SBV is likely to remain accommodative in 2016, with benign inflation providing room for policy manoeuvre. We expect the central bank to keep the policy rate unchanged and not devalue the VND in 2016.
 
What do you think about Vietnam’s 2016 economic outlook?

Growth is likely to remain strong in 2016 after exceeding expectations in 2015. We expect FDI to be the key driver and export growth to accelerate. Manufacturing and construction are also likely to provide support. We forecast full-year growth at 6.6 percent in both 2015 and 2016, higher than consensus expectations.

We expect exports to strengthen next year, led by electronics, as the base effect turns favourable and global demand improves. Export growth picked up in Q3-2015 after a subdued Q2, lifted by slightly better demand from the US and Europe and Vietnam’s shift to more value-added electronics exports from traditional textiles and footwear.

We hope inflation to stay muted throughout 2016. Headline inflation has been at or below one percent  for 10 consecutive months, and was at 0.34  percent y/y in November, lower than expected. Core inflation, which excludes food and energy prices, was also benign at 1.7  percent and is likely to stay low in the near term. Food inflation, which has the highest weighting in the CPI basket, remains subdued, while housing inflation has been negative for 12 consecutive months and is likely to stay low. Domestic inflationary pressures remain muted amid subdued demand. We expect inflation to stay low in 2016, averaging only 2.1  percent, even as the low base effect from 2015 fades.
 
As the New Year comes, could you share Standard Chartered Vietnam’s 2016 business strategy and some achievements your bank has obtained?  

We are fully committed to participating and investing in Vietnam’s growth through a robust and sound long-term strategy.

As Vietnam increasingly becomes a strong international trading nation, we continue to be a partner in helping businesses internationalise their customers and supply chains. We are an international bank therefore we play a strong role in telling the compelling Vietnam story to international investors. Our role as the sole ratings advisor to the Vietnamese government and many governmental delegations we have supported across the world continues to help drive inward investments into Vietnam.

Standard Chartered continues to participate in Vietnam’s development process, working with the government, regulators, investors, businesses and people to further strengthen the Vietnamese economy, help the country benefit from global and regional trade, grow the banking sector and provide more people and enterprises with access to financial services.

Our bank will continue to support large and small businesses as well as retail clients in Vietnam in helping them to grow their business, generate wealth and create jobs. The bank’s desire to be a catalyst for socio-economic development sits at the heart of its business strategy and is reflected in its brand promise, to be hHere for good.

From London, having recognized the bank’s excellent performance and its focus on innovation and strategic advancement, Global Banking and Finance Review has named Standard Chartered the Best Foreign Bank in Vietnam in consecutive 2014 and 2015. Winning the award for the second year in a row is a testimony to the strength of our business, the efforts of our staff and most importantly, the trust that our clients and customers have in us. We are humbled that the services we provide to our clients and customers are rewarded with the recognition by the financial press and award bodies. This recognition will inspire us to an even greater level of services and commitment to all our clients and stakeholders and to continue to deliver on our promise of being Here for good.

Also from London, the International Finance Magazine has underscored the bank’s brand promise by naming it the Best Corporate Social Responsible Bank in Vietnam 2015. Standard Chartered has spent more than US$1.5 million for its various community investment programmes in the country during the last two years. The bank also carries out a robust global employee volunteering scheme which offers every employee a three-day paid leave to volunteers. In 2015, the staff in Vietnam volunteered nearly 1,000 days.

The bank’s biggest programme, Seeing is Believing, which tackles preventable blindness was launched in Vietnam in 2004 and has benefited thousands school children nationwide. The program is currently at its phase 5 with US$1 million being spent to bring eye care services to the more rural and remote areas. For the next period of 2016-2018, the bank will invest another US$2 million to support people in the North and the Mekong Delta region to have access to quality, affordable eye-care services.

In addition, the bank’s global programme “Goal” was launched in Vietnam in October 2014 to provide financial education, life skills and employability training to 8,000 adolescent girls. The three-year project with an investment of US$220,000 aspires to empower the young girls in Vietnam to play a more active role in their communities and the Vietnamese economy.

Late in 2015, Standard Chartered Vietnam was awarded the titles Best Bond Deal, Best Corporate Bond, Best Bond House and Deal of the Year by The Asset magazine. The awards recognize the bank’s active and leading role in providing strategic and robust advisory services to both government and clients.

The Best Bond Deal award recognizes the bank’s prominent role in helping the Vietnamese government in its issuance of the 10-year dollar-denominated global bonds last year. The bank served as a joint lead arranger in this issue. This transaction marked Vietnam’s first return to international capital markets since 2010 and achieved multiple highlights including being the lowest coupon bond ever issued by Vietnam, its debut liability management exercise, and one of the largest orderbooks ever amassed for a single-tranche Asian sovereign issuance.

Meanwhile, the Best Corporate Bond is for the bank’s having successfully acted as issuing agent for a major Vietnamese consumer goods company’s first 10-year bond issuance worth approximately US$100 million. The Deal of the Year title recognizes the bank’s role as the financial advisor for the US$370 million sale of a major Vietnamese company’s snacks and confectionery business to an American multinational confectionery, food and beverage conglomerate. This was the largest transaction in Vietnam’s food and beverage sector last year. 

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