Professional Documents
Culture Documents
INTERNSHIP REPORT
Topic: Recommendations for strengthening
Vietnam Korea financial cooperation relation.
Student:
PREFACE
ABBREVIATIONS
ASIA Bond Market Initiative
ABMI
AFDM
AFMM
AKFTA
APEC
ASA
ASEAN
ASEM
BSA
CEO
CMI
FDI
HS
Harmonized System
ICD
KDB
KDI
Kexim
KIEC
MoF
Ministry of Finance
MOFE
MoFV
MoU
Memorandum of Understanding
SMEs
SOEs
VDB
WTO
LIST OF FIGURES
TABLE CONTENTS
PREFACES ..................................................................................................................... 1
ABBREVIATIONS ......................................................................................................... 3
LIST OF FIGURES ........................................................................................................ 5
Chapter 1: Overview about the Ministry of Finance of Vietnam and the Department
of International Cooperation.......................................................................................... 8
1.1.
1.1.1.
1.1.2.
1.2.
1.2.1.
1.2.2.
2.1.
2.1.1.
2.1.2.
2.1.3.
2.2.1.
2.2.2.
3.1.
3.1.1.
3.1.2.
3.1.3.
3.2.
3.2.2.
3.3.
CONCLUSIONS ........................................................................................................... 29
REFERENCES ............................................................................................................. 30
Chapter 1: Overview about the Ministry of Finance of Vietnam and the Department
of International Cooperation
1.1. The Ministry of Finance of Vietnam
1.1.1. Tasks and powers
The Ministry of Finance is a Government agency which has the function of
implementing the State management in finance (including: State budget, tax, fees and
other revenues of the State budget, national reserve, State financial funds, financial
investment, corporate finance and financial services); customs; accounting; independent
auditing; insurance; prices; securities; conducting the ownership rights to the States
investment capital in enterprises according to regulations of the Law. The main tasks and
duties of the Ministry of Finance are pursuant to the Decree No 118/2008/N-CP issued
by the Government as follows:
-
Submit to the Government and Prime Minister for approval law and ordinance
projects. Draft legal documents, strategy and development planning, long-term, fiveyear and annual plans on the fields within the Ministrys authority.
Manage the State budget, the collection of tax, fees and other revenues under the
State budget, the budget fund, the State reserve fund and other State financial funds
and the national reserves.
Manage the Government borrowings and debt servicing from domestic and abroad;
and international grants.
Issue Government bonds and participate in stock market management under the
regulations of law, Manage, supervise stock and stock market.
Organize and guide the implementation of statistics in the fields within the
Ministrys authority.
Decide specific orientations and measures and guide the operating mechanism of
public services providing organizations in the fields within the Ministrys authority
in accordance with provisions of Laws; to manage and guide the implementation of
activities of non-productive units within the Ministrys authority.
Implement
the
State
management
to
associations
and
non-Govermental
Manage the assigned capital and assets and the distributed budget plan under the
provisions of the Law.
Investment Department
Department No.I
Legal Department
Financial Inspection
Ministrys Office
10
State Treasury
Financial Review
11
preparing
plans
for
managing,
supervising,
reporting
the
12
13
Unit: USD
Projects
Commited value
3 000 000
3 000 000
29 998 000
32 730 000
12 980 000
3 000 000
30 000 000
100.000.000
Total 314.708.000
14
Projects
Committed value
2.963.000
45.000.000
Total:
50.926.000
15
greatest trade deficit markets to Vietnam (in 2008. it got USD 5.28 billion, equal to 29.3%
total trade deficit of Vietnam). The Intergovernmental Panel about economic and
technology cooperation was set between two countries.
About labor issue, Korea is the third largest labor exporting market of Vietnam at
present. There are around 54,000 Vietnamese labors working in Korea. On May 25 th,
2004, we signed an agreement on moving labors from Vietnam to Korea pursuant to the
Employment Permit System of Korea.
In tourism factor, recent years, Korean tourists have become one of the main sources to
Vietnam: in 2007 there are 475,000 tourists, in 2008, as the affects of economic recession,
this figure reduced to 450,000 people.
In education and culture sector, mutual agreement between two nations in August 1994,
Memorandum of Understanding about culture, arts, sport and tourism in October 2008
and many other agreements about youth exchange and education. Two nations usually
hold cultural exchange programs, exhibitions, motion-picture industry. In 2006, Korea
established Korean Culture Center in Hanoi. Ministry of Education and Training chose
Korea to be the strategic informatics partner in education and training.
Government, universities and organizations of Korea sponsored to many project to
improve education system of Vietnam such as constructing elementary schools project,
Middle-Vietnam vocational schools. Scholarship funds like Korea Foundation, Samsung,
Kumho, etc. provided many scholarships for poor students in Vietnam, improve language
and profession skills in Korea. At present, there are about 5000 Vietnamese students
studying in Korea.
In the end of October 2009,on occasion of the President Lee Myung-bak had official visit
to Vietnam, the Leaders improved relation between two nations to be strategic
partnership
16
The aim of CMI is to expand the ASEAN Swap Arrangement (ASA) to all
ASEAN members and to set up a network of bilateral swap arrangements among ASEAN
17
members and 3 partners China, Japan and Korea to provide liquidity support for member
countries that experience short-run balance of payment deficits. Up to now, there are 16
bilateral swap arrangements signed, in which Korea signed 5 arrangement with ASEAN5.
However, Korea has no action to speed up negotiation bilateral swap arrangements with
other ASEAN countries including Vietnam.
ASIA Bond Market Initiative (ABMI):
ASEAN +3 have prepared to implementing ABMI aims to develop efficient and
liquid bond markets in Asia, which would enable better utilization of Asian savings for
Asian investments.
ASEAN bond market development is an important content of financial cooperation
of AFMM +3, in which Korea and Japan are the leaders of this initiative. Vietnam bond
market in general and capital market in particular are quite young and weak in the
development process towards effectively integrate to regional bond market. Under this
initiative, Vietnam has been received many supports from Japan, however, the support of
Korea concentrated mostly on setting up and developing website Asianbondonline of
ASEAN +3 to encourage member countries to update the development of bond markets in
these countries to provide useful information to foreign investors. Up to now, this website
has been run and Vietnam is one of the most active members in providing data for this
website.
Stimulating training and research activities:
Korea has provided some training courses for high-grade personnel of Ministry of
Finance and State Bank of ASEAN countries about the regional financial system and
international financial integration under ASEAN +3 financial cooperation. These course
were valued quite useful and effective.
18
19
using in customs processes, risk management, export import activities and public
relations. In the year 2008, 2009 and 2010, Vietnam has held enterprises and Customs
Department dialogues platform to give explanation to Korean companies about customs
procedures of Vietnam.
2.2.
Contents
Signed on September 25th 2006, the MoU is an agreement between Ministry of Finance of
Vietnam and Ministry of Finance and Economic of Korea about banking and finance
sectors. According to this 3 year MoU, MOFE of Korea will support to MoF of Vietnam
in following activities:
(i) Developing the policy system about finance and credit management and
strengthening the management and provision ability of the Government in this
sector
(ii) Enhancing the activities of implementing and supervising credit investment and
credit export policies
(iii)
20
Many specific cooperative activities about the state export credit, export credit
insurance, investment credit, and credit guarantee fund were held effectively and
diversely by departments, institutions and organizations of two Ministries:
-
departments in MoF, Ministry of Industry and Trade, Vietnam Development Bank (VDB),
Credit guarantee fund, and Investment and development fund of some provinces to visit
Korea to study their experiences in organizing and managing the banking and finance
system. Moreover, we held many conferences and dialogues with the presence of most
important government organizations many enterprises of Vietnam and Korea to discuss
about credit issues.
-
the situation of export credit services of Vietnam and to define the demand for these
services in Vietnam; and to assess the credit guarantee funds in Vietnam and to give some
recommendations to the concentrative credit guarantee fund model in Vietnam.
Assessment of the success of these activities
Firstly, these activities were a basic for the establishment of Vietnam Development Bank
and Vietnam Export Import Bank, support for set up policies for investment credit and
state export credit, supervisions and reforming of the implementations of investment
credit and export credit after joining WTO
Secondly, the conferences and training courses provided a useful source of information of
VDBs personnel and Vietnamese enterprises to more deeply understand about
experiences of foreign countries and the importance of risk management in banking
system, especially in export import activities, and the process of credit guarantee
services for credit guarantee funds of SMEs.
21
Thirdly, in 2009, VDB was designated to perform the policies for credit guarantee for
SME following concentrative model as well as current model. The support of Korea
played an important role in the success of these policies. It also created a chance for new
cooperative programs in the future.
However, in the time of implementing the MoU, the activities only concentrated on
sharing knowledge and information, the requirements for practical skills for personnel of
two countries were not met. They did not have chance to analysis deeply the banking and
finance as well as credit guarantee issues.
2.2.2. Memorandum of Understanding on cooperation in October 2009
Contents
On October 22nd 2009, Ministry of Finance of Vietnam and Ministry of Strategy and
Finance of Korea signed a Memorandum of understanding on cooperation in three years,
focusing on the public finance management such as state budget management, treasury
activities, state owed company control, and human resource improvement:
(a) Macro-economic forecast and analysis;
(b) Budget revenue management (including taxation and custom);
(c) Budget expenditure management (focusing on social securities expenditure);
(d) Fiscal policy and treasury policy;
(e) Privatization of SOEs & public institutions management;
(f) International financial cooperation;
(g) Human resources management and organization structure of both MOSF and
MOFV;
(h) Other areas as mutually agreed by the Sides.
Activities according to the MoU 2006
On March 5th 2010, the representative of MoFV and MoSF worked together to get a
action plan for the year 2010 with 3 activities:
22
On May 2010: a delegation of MoF was sent to Korea in a study tour about
On July 2010, in Hanoi, MoFV and MoSF held a policy dialogue program
on the topic Post financial crisis policies and foreign investment encouraging policies.
In the conferece, MoFV updated Vietnams Economic of the first six month 2010 and
forecasted that of the last 6 month 2010 as well as post financial crisis policies of Vietnam.
Experts from MoSF and KDI shared their experiences respond to financial crisis and
foreign direct investment inducement of Korea.
-
Korea about state budget revenue management and privatization of SOEs and public
institutions management.
For the activities in next year, after finishing all activities in the year 2010, two ministries
will have a meeting on mutual agreement of actions in 2011 and 2012 based on the MoU.
Assessment of the success of these activities
Firstly, MoF can learn from the experience of Korea in managing human resources,
defining the personnel classification scale for organizations and departments of MoF,
divide tasks and powers to each individual, supervising and inspecting regularly
individuals work and general tasks of the organizations and departments transparently.
Personnel rotation should be consider carefully to have suitable polices, take advantages
of personal living condition and working condition.
23
Secondly, the process of staff recruitment, staff retraining, and nomination progress have
to be organized logically, flexibly with the social policies of gender equality, beneficiary
of social welfare, ethnic minority, and talent inducement policy.
Thirdly, the valuable experiences in inducing FDI by focusing on building special
economic zones, exporting processing zone and free trade area, stimulating the economy
recovery after financial crisis.
However, the working program was in very short time with a lot of tasks, therefore, the
contents about human resources management were not analyzed carefully and deeply
enough, the experiences is more theoretically than practically, and it should be reformed
before applying in Vietnam.
24
ASEAN
Korea
Comprehensive
Economics
Partnership
framework
Two countries need to cooperate more effectively in supervising, inspecting the
implementation of the commitment. After announcing the legal documents about tax
reduction and tax cut as agreed in AKFTA, Korea have to inform Vietnam soon for the
announcement of these documents in Vietnam, against unilaterally tax cutting and
reducing actions.
3.1.2. Under ASEAN + 3 framework
Chiang Mai initiative (CMI):
In the progress of performing CMI, Vietnam has been negotiating the first USD 1 billion
bilateral agreement with Japan. As this agreement, if Vietnam had financial problem,
Japanese Government can lend not exceed USD 1 billion. Therefore, if we can negotiate a
similar agreement with Korea, it will a lot of benefit to Vietnam.
Vietnam desires to stimulate negotiation the bilateral swap arrangement with Korea
under the Chiang Mai Initiative of ASEAN +3 financial cooperative activities to enhance
the financial cooperation between Vietnam and Korea Government in particular and to
develop the swap arrangement system in ASEAN +3 in general with the participation of
all ASEAN members.
ASIA Bond Market Initiative (ABMI):
ASEAN bond market development is an important content of financial cooperation of
AFMM +3, in which Korea and Japan are the leaders of this initiative. Vietnam bond
market in general and capital market in particular are quite young and weak in the
25
development process towards effectively integrate to regional bond market. Vietnam want
to improve cooperative relationship with Korea in developing capital market, especially
the support in technology and exchange experiences in managing bond market.
3.1.3. In taxation and custom sectors
Vietnams Government and Ministry of Finance are implementing the project of
modernization tax and customs system, and we need both support from many countries
not only in ASEAN but also all over the world, in which Korea is the most important
strategic partner for experiences and technology facilitation. Under Vietnam Korea
financial cooperation, we can give some suggestions for their supports as follows:
-
inspection activities
-
26
3.2.
MOSF had agreed to expand the MoU with the same contents in two years 2010 and 2011,
focusing on fulfilling the organizational structure and preparing action plan for VDB in
the period 2010 2015; assessing the implementation of investment credit policies,
export credit and state export credit insurance.
To archive these targets in the year 2010 and 2011, we have some suggestions to
strengthen their cooperation as follows:
-
About export credit, two Ministries should have some meetings to exchange
experiences in setting up, organizing and managing policies and credit assessment
procedures of Kexim to apply to VDB
-
in study tour to analysis about capital raising and managing progress, furthermore,
MOSF will send their experts to Vietnam to research on the potential market for
export credit insurance of Vietnam.
-
fulfill the credit guarantee policy system with the roof is VDB
-
Koreas
27
The year 2009 is the first year of implementing MoU, although there are some
valuable successes, in the next 2 years, we need to focus on the agreed contents
effectively, in which:
-
Two Ministries have mutual agree on the action plan for each year, diversify
mobilization
-
Other recommendations
The mutual benefit in international cooperation is very important. We
require a lot of supports from other countries then we should show them what their
benefits of coming to Vietnam are. The role of the Government is undeniable in
this situation to strengthen the combination of all organizations, especially
Ministry of Finance, Ministry of Industrial and Trade, Ministry of Planning and
Investment in preparing a comfortable for Korean Investment to invest in
Vietnamese market by open and transparent policies in business and investment,
capital and profit movement facilities and strict administrative measures for
ineffective investment. The transportation and telecommunication system also
need to be improved to adopt with new requirement for development. Furthermore,
the advantage of a stable political environment and a diversify culture with large
population would be a factor to attract investors to Vietnam in the next decades.
28
CONCLUSIONS
relation between Vietnam and Korea had some significant improvements with many
agreements and a MoU on development cooperation in 2009, Vietnams Government as
well as other related Governmental organizations should consider to issue suitable
policies and strategy to maintain our relation. In finance and economic issue in particular,
Korea is a good model for Vietnam in developing and managing the economy and
financial organizations, Vietnam can learn a lot from Korean experiences in
macroeconomic forecast, banking finance, corporate finance, export credit, investment
credit, etc. Moreover, Vietnam and Korea need to cooperate tightly to control Tax and
Customs operations. Training courses and exchange programs will be very useful support
of Korea for Vietnam to improve the profession skills in organizing, managing and
processing financial issue in term of global financial market has been fluctuating over
time. Vietnam also needs Korea to share the information technology and techniques to
establish and perfect the banking system, tax and customs regulation system, and financial
statistics system.
To maintain the cooperative relation as well as inducing Korean investors,
Vietnams Government need to have open strategy for investors and businessmen to enter
domestic market, show them the advantages of Vietnam with a rapid growth, potential
market of more than 80 millions customers and s stable political environment. With a lot
of similarities in graphical positions, culture and history, Vietnam will become one of the
most important partners of Korea in Asia and in the global market. Recognizing the
mutual benefit of each party in this relation will be a base to develop the relationship to be
closer and closer in the future.
29
REFERENCES
1. PGS.TS. Vo Thanh Thu, B 2008, Quan h kinh t quc t, Nh xut bn thng k
2. Ministry of Finance - Finance and Financial Institutions Department, 2010, Bo
co nh gi kt qu hp tc theo Bin bn fhi nh k gia B Ti chnh Vit
Nam v B Ti chnh v Chin lc Hn Quc
3. Ministry of Finance - Personnel and Organization Department, 2010, Bo co
Kho st cng tc t chc cn b ti Hn Quc
4. Ministry of Finance - Ministry of Finance - Finance and Financial Institutions
Department , 2010, Chng trnh thc hin nm 2010
5. Ministry of Finance International Cooperation Department, 2010, Ti liu chun
b cho bui lm vic ca B trng V Vn Ninh v i s Hn Quc
6. Salvatore, Dominick (2004), International Economics
8th
30