The Vietnam Association of Financial Investors (VAFI) has proposed the State Bank of Vietnam (SBV) carry out five measures to help stabilise the monetary market.
In their proposal, VAFI emphasised the necessity to map out a proper roadmap to gradually reduce interest rates of foreign currency deposits to cut down the rates of Vietnam dong.
The association said February would be a good time for SBV to constrain interest rates of foreign currency deposits at between 3% and 5% per annum. It explained that at present, deposit interest rates in Vietnam’s banking system have been eased and will fall in February so as to curb CPI.
“This will help quickly cool down interest rates of Vietnam dong deposits as well as help narrow the gap of foreign exchange rates between the free market and the official one,” said VAFI.
SBV was told they should consider removing its policy in February that allows exporters to borrow foreign currency to boost purchases of materials and export goods. This policy has driven up demand for foreign currencies and resulted in the recent increase in the foreign currency deposit interest rate to 5% per year at many commercial banks.
Such high interest rates plus signals of inflation have ignited locals to prefer savings in foreign currencies. This attitude has further pushed up the demand for foreign currencies and led to soaring exchange rates in the free market.
The association recommended SBV raise foreign invested ownership in commercial banks to 35% or 40% from the current maximum of 30% to help boost foreign investment in the banking system.
SBV was also advised to study to allow these investors to repurchase common shares without voting rights in commercial banks and in listed companies to boost attractiveness of the investment environment, which has been successfully applied in many countries worldwide. Thailand allows foreign investors to hold a maximal 49% stake and to repurchase common shares without voting rights.
VAFI called for quicker equitisation of state-owned enterprises (SOEs) next year because the process has been slowed down for the past three years. They also said the government should sell shares in some large companies like MobiFone, Sabeco, Habeco, and PV Oil, etc.
Source: dtinews.vn