News 9/14/2018 04:42

In quest of a local bank for foreign enterprises in Vietnam

During the first half of 2018, foreign direct investment surpassed USD 20 billion, 5.7% higher compared to the same period last year. In order to adapt to the rapidly changing market, Vietnam local banks transform themselves to fit with the changes and compete with the international banks in providing the best products and services to the targeted customers.

The increase in foreign investment in Vietnam

Since 1988, there has been 128 countries and territories having valid investment projects in Vietnam, with the total registered capital of USD 326 billion. Of all the sectors that received foreign investment, the manufacturing and processing sector leads with the registered capital of 58% total registered capital, making 50% of the total industrial output, 73% of total export, created 3.6 million direct jobs and roughly 6 million indirect jobs.

The Ministry of Planning and Investment (MPI) stated in its most recent report that a total of 1,366 new projects was granted investment certificate in the first 6 months of 2018 (H1), marking a jump of 15.5% year-on-year, with the total investment capital of USD 11.8 billion. Total disbursed capital therefore was USD 180.74 billion, accounting for 54.6% of the total registered capital

In addition, during H1, it was recored a remarkable jump in indirect investment. 2,749 merger and acquisition (M&A) deals were signed with the total investment capital contributions of USD 4.1 billion. In recent years, the fast-moving consumer goods (FMCG) segment has attracted remarkable investments and will continue to attract significant funding in the near future. Real estate sector is expected to continue drawing attention from investors. Together with the revitalisation of the economy, high population and urbanisation growth rates would be the major incentives for M&A deals in Vietnam. Additionally, finance and banking is a potential field for M&A activities thanks to the coming reinforcement of the restructuring of the banking system.

The foreign investment has made large impacts on multiple sectors of the ecomomy, however, it has not yet made a strong links between domestic and FDI enterprises. Technology transfer between FDI and domestic firms has been low, and the development of the support industry has been poorly. Only a few Vietnamese companies have gained access to FDI firms’ supply chain. The key here is to enhance the interaction between domestic and FDI enterprises, create a fair competition environment so that enterprises could compete and cooperate in production. In addition, domestic enterprises have to increase capacity, absorb technology, increase management capacity, human resources, as well as the capacity to sign and enforce long-term contracts.

As for the domestic banks, with the advantage of having a close connection with reputable domestic companies, domestic banks have the capacity to connect the needs of the FDI and domestic enterprises.

The needs of a local bank for international businesses

In Vietnam, there are over fifty foreign credit institutions, with nine 100%-foreign owned banks. Even though foreign credit institutions have competitive advantages in terms of reputation, experience and financial health, the domestic banks also have their unique competitiveness. Among them, Vietnam Joint stock Commercial Bank for Industry and Trade (VietinBank) stood out as one of the leading banks with a strong financial health, knowledge of the market, and the connection to domestic companies. 

VietinBank, as the leading commercial bank in Vietnam, has always been at the forefront to support foreign enterprises’ business development. VietinBank has supported multinational corporations from different sectors, especially manufacturing, real estate and commerce.

VietinBank has been making multiple amendments, providing its FDI clients with customised products and services in order to best fit the financial needs of FDI enterprises. In order to support the foreign enterprises, VietinBank also established Japan Desk, Korea Desk and Chinese Desk to provide professional support to FDI corporations from Japan, Korea and Chinese-speaking countries. VietinBank has established strategic partnership with prestigious financial institutions such as JFC, Bank of America, Commerzbank, KDB, Krungsri Bank, Kasikorn Bank, KeximBank, and local Japanese banks to implement the Business Matching program for FDI and Vietnamese businesses.

In terms of reputation, VietinBank has been listed in the Forbes’ Top 2.000 Global Corporations for 6 consecutive years, and Brand Finance’s Top 400 Most Valuable Banking Brands. In terms of experience, VietinBank is the long-term and trusted partner of reputable multinational corporations from Japan, Korea, China, Singapore,... such as: LG Electronics, Lotte, Hyosung, Piaggio, Brotex, Gain Lucky, CP, Phú Mỹ Hưng, VSIP. The bank’s operation efficiency is exemplified by the fact that total FDI outstanding loans of VietinBank grew sharply by 35% each year. Meanwhile, the total number of FDI customers has increased tremendously by 16% year on year, to nearly 3.000 FDI enterprises in the end of 2017.

The message “VietinBank – The Local Bank for International Businesses” is an affirmation of the bank’s commitment to cater to all the financial needs of foreign owned enterprises investing and operating in Vietnam.