1 FINANCING FOR DEVELOPEMENT: SITUATION, CHALLENGES AND PERSPECTIVES The case of Viet Nam Le Viet...

download

of 40

  • date post

    27-Mar-2015
  • Category

    Documents
  • view

    215
  • download

    2

Embed Size (px)

transcript

  • Slide 1

1 FINANCING FOR DEVELOPEMENT: SITUATION, CHALLENGES AND PERSPECTIVES The case of Viet Nam Le Viet Duc Ministry of Planning and Investment of Viet Nam at Informal Experts' Workshop "Development Finance Architecture, Paris 6-7/3/2006 Slide 2 2 I- Development Finance Architecture of Viet Nam: 1. Structure of Financial markets in Viet Nam: a) The monetary market: a) The monetary market: + The inter-bank domestic currency market set up in 1993. + The inter-bank foreign exchange market set up in 1994. + Treasury bill bidding market established in 1995. + Open market operations set up in July 2000. The functions of the monetary market in Viet Nam are to provide short-term funds for enterprises and for the State Budget; to secure loanable funds for financial institutions; and to serve as the workplace for the State Bank of Viet Nam to exercise options of the monetary policy. Slide 3 3 b) The long-term capital market : including mainly the bond (government bonds, corporate bonds and project bonds) and share markets: + The bond market was set up and put into operation as from 1995. + The security market of Viet Nam was set up and put into operation as from July 2000. The security markets operations are conducted at two security trading centers, one in Hanoi and the other in Ho Chi Minh City. The security markets operations are conducted at two security trading centers, one in Hanoi and the other in Ho Chi Minh City. Security listing and concentrated transactions are carried out at these centers. Security listing and concentrated transactions are carried out at these centers. + an unofficial security market where unlisted securities are traded, comprised of mainly those of small and medium enterprises. The volume and value of transactions on this market is much higher than those on the official market. The volume and value of transactions on this market is much higher than those on the official market. Slide 4 4 2. Management of financial institutions in Viet Nam : Financial institutions in Viet Nam can be classified into 3 groups: - Financial institutions managed by the State Bank of Viet Nam, - Financial institutions managed by the State Bank of Viet Nam, - Financial institutions managed by the State Securities Committee, under the Ministry of Finance - Financial institutions managed by the State Securities Committee, under the Ministry of Finance - Financial institutions managed by the Government or the Ministry of Finance, - Financial institutions managed by the Government or the Ministry of Finance, Slide 5 5 Financial institutions managed by the State Bank of Viet Nam: 199019941999200220052006 State Owned Commercial Banks 445555 Policy Banks1111 People Credit Fundsn.an.a. 905 Joint Stock Banks0364836 37 Joint Venture Banks034545 Foreign Bank Branches 0n.a. 262831 Foreign Bank Rep. Offices n.a. 414244 Finance Companiesn.a. 756 Leasing Companiesn.a. 999 Slide 6 6 Financial institutions managed by the State Security Committee: 2 Security Trading Centers in Hanoi and HCM City, 2 Security Trading Centers in Hanoi and HCM City, 11 Security Companies and Security Investment Funds. 11 Security Companies and Security Investment Funds. Slide 7 7 Financial institutions managed by other governmental agencies or the Ministry of Finance: The Viet Nam Development Bank, The Viet Nam Development Bank, 8 Development Investment Funds, 8 Development Investment Funds, Social Insurance Funds, Social Insurance Funds, Postal Saving Companies, etc. Postal Saving Companies, etc. The Viet Nam Development Bank, carries policy lending on behalf of the government, provides credit to SOEs and private enterprises, supports the development of infrastructure and pro-export/import activities, and is in charge of the on-lending of the Official Development Assistance (ODA). The Viet Nam Development Bank, carries policy lending on behalf of the government, provides credit to SOEs and private enterprises, supports the development of infrastructure and pro-export/import activities, and is in charge of the on-lending of the Official Development Assistance (ODA). Slide 8 8 3. Vietnamese enterprises can get funding from the following sources: - Credit from banking credit organizations and Peoples Credit Fund; - Commercial loans from leasing companies, financial companies, investment funds and insurance companies; - Soft loans from the Viet Nam Development Bank. - In particular, enterprises with foreign own capital can get funding abroad through foreign companies or their overseas parent companies. - Long-term capital sources through security markets. Slide 9 9 4. The situation of financial sources for Viet Nams Development The ratio of capital mobilization for investment to GDP increased from 18.1% in 1990 to 31.7% in 1995, 32.9% in 2000 and 38.9% in 2005. The ratio of capital mobilization for investment to GDP increased from 18.1% in 1990 to 31.7% in 1995, 32.9% in 2000 and 38.9% in 2005. The investment capital structure has changed towards gradual abandonment of the central planning mechanism in investment; The investment capital structure has changed towards gradual abandonment of the central planning mechanism in investment; The domestic capital sources are being better exploited and account for over 70% of the total investment capital. The domestic capital sources are being better exploited and account for over 70% of the total investment capital. Slide 10 10 Investment capital resources in Viet Nam Capital from the State Budget Capital from the State Budget Capital from banking system Capital from banking system Capital from capital market Capital from capital market Official Development Assistance Official Development Assistance Foreign Direct Investment Foreign Direct Investment Remittances from Vietnamese Overseas Remittances from Vietnamese Overseas Other foreign capital (foreign private investment) Other foreign capital (foreign private investment) Proper Capital of population and enterprises Proper Capital of population and enterprises Slide 11 11 Capital from the State Budget: The total budget revenue in the last five years increased by 19.1% per annum. The total budget revenue in the last five years increased by 19.1% per annum. The ratio of mobilization to State budget makes up 24.4% of GDP The ratio of mobilization to State budget makes up 24.4% of GDP Thank to the rapid increase in revenue, budgetary expenditures have improved. Thank to the rapid increase in revenue, budgetary expenditures have improved. The proportion of budget expenditure for development investment out of the total budgetary expenditure accounting for 28% per annum, higher than the target of 25-26%. The proportion of budget expenditure for development investment out of the total budgetary expenditure accounting for 28% per annum, higher than the target of 25-26%. Investment from budget occupies 24.5% of total investment in 2001-2005 period. Investment from budget occupies 24.5% of total investment in 2001-2005 period. Slide 12 12 Mobilization of capital from banking system strengthened thanks to: Mobilization of capital from banking system strengthened thanks to: - The national financial situation continues to be improved; GDP growth rate is high; - The monetary activities have been flexibly governed, putting inflation under control while actively supporting development and economic structural shifts; - The ratio of M2/GDP rose quite rapidly, from 58% in 2000 to 85.2% in 2005; - Annual mobilized capital increases at an average rate of 24%; - Credit balances increased by 27.6% per annum; - By the end of 2005, in total loans: + Non-public sectors account for 47% of the total credit + State-run businesses occupies 39% + State-run businesses occupies 39% + Enterprises with foreign investment occupies 14%. + Enterprises with foreign investment occupies 14%. Slide 13 13 Mobilization of capital from capital market The capital market is small: The bond issuance stands at 9.6% of GDP at April of 2006 (USD 4.7 billion). The corporate bond market still is an early stage of development. The bond issuance stands at 9.6% of GDP at April of 2006 (USD 4.7 billion). The corporate bond market still is an early stage of development. The market capitalization of both securities trading centers combined reaches 3.2 billion USD representing 6.2% of GDP at May of 2006; The market capitalization of both securities trading centers combined reaches 3.2 billion USD representing 6.2% of GDP at May of 2006; The small insurance market has been steadily growing and the penetration rate reached 2.03% in 2005. The small insurance market has been steadily growing and the penetration rate reached 2.03% in 2005. Slide 14 14 Official Development Assistance The ODA funds committed for Viet Nam are continuously increasing in 5 years 2001-2005 The ODA funds committed for Viet Nam are continuously increasing in 5 years 2001-2005 Total value of the agreed ODA is USD 14.9 billion of which grants account for 15-20%; Total value of the agreed ODA is USD 14.9 billion of which grants account for 15-20%; The total amount of ODA capital according to signed treaties reached US$11.2 billion; of which, 80% is soft loans; The total amount of ODA capital according to signed treaties reached US$11.2 billion; of which, 80% is soft loans; Total ODA disbursed reached US$7.9 billion; Total ODA disbursed reached US$7.9 billion; US$100 million of non-refundable aids from nearly 600 non-governmental organizations. US$100 million of non-refundable aids from nearly 600 non-governmental organizations. Slide 15 15 Foreign Direct Investment 2001-2005 The total registered capital reached 20.9 billion USD, 39% higher than the target (the target is 15 billion USD). The total registered capital reached 20.9 billion USD, 39% higher than the target (the target is 15 billion USD). The total obtained capital is 14.3 billion USD in comparison with the target of 11 billion USD, 30% higher than the previ