Hanoi, Vietnam June 10, 2015 - The Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) organized an international conference themed “ASEAN Economic Community (AEC) - Opportunities and challenges to Vietnamese enterprises”. Over 200 participants from embassies of ASEAN countries in Vietnam, state regulators, businesses (including BIDV’s corporate customers), financial institutions, institutes, universities and associations attended the conference. Mr. Vu Khoan, former Deputy Prime Minister of Vietnam also contributed to the conference.

2015 is said to be the year of profound integration for Vietnam with a number of FTAs concluded or under negotiations. Vietnam has signed two FTAs with South Korea (May 5) and Eurasian Economic Union (May 29) and is expected to conclude FTA with the European Union in this June. In Southeast Asia, it is scheduled that the ASEAN Economic Community will be formed by Vietnam and other ASEAN member states by 31 December, 2015. This marks a turning point in comprehensive integration of ASEAN economies, a significant move toward a single community premised on three pillars, i.e. economic, socio-cultural and political-security communities. The government of Vietnam has been highly aware of the opportunities and challenges that AEC will bring to the national economy in general and to the business community in particular; therefore, a lot of policies and action programs have been adopted and implemented on a large scale to materialize the political will in this regard

​Mr. Phan Duc Tu - CEO of BIDV said that international economic integration is an inevitable trend and is expected to have large and profound impact. For the economy, integration helps to expand the market, boost trade turnover and serve as a magnet for FDI inflows. Integration also creates opportunities for firms to look for new business partnership, to share and learn, to transfer technology and management expertise across borders. However, integration also brings with it substantial challenges. Some of them can be named here: (i) First, Vietnam’s economy and business community will be subject to greater competitive pressure while the size of the economy and of businesses is still small, and competitiveness is still low; (ii) Second, huge FDI inflows may result in macroeconomic imbalance, unless proper regulation is put in place; (iii) Third, participation in free trade agreements (especially a single economic community) may jeopardize Vietnam’s sovereignty in certain economic development policies; and (iv) Fourth, there are certain risks associated with integration, such as HR challenges (like brain drain), trade and investment disputes and intellectual property issues, etc. All of those risks should be seriously taken into consideration.

As such, BIDV organized this conference with a view to providing a big picture and raising awareness about the AEC as well as creating a forum for managers, policy-makers, associations, local and foreign experts, business community, and banks to share information, experiences, and outline opportunities and challenges in the process of Vietnam’s joining AEC to help businesses understand the integration, from which develop appropriate plans and strategies to leverage on the opportunities as well as turn challenges into opportunities.

In a thesis on “Vietnam and the global economic integration process”, Mr. Vu Khoan, former Deputy Prime Minister of Vietnam analyzes the reasons and existing situation about integration in Vietnam over the past time. According to Khoan, Vietnam integrated into the global economy to expand the market, leverage on outside capital and technology and change their mindsets. However, Vietnam faced issues in the integration process, specifically: (i) Many government officials and business leaders do not understand thoroughly the integration, resulting in confusion in actions; (ii) legal system is still characterized with gaps, overlaps, inconsistency and lack of transparency; (iii) poor infrastructure; (iv) Export quality and efficiencies of domestic enterprises are inadequate; (v) FDI inflows are growing, but the share of high technology is still insignificant; (vi) Track record in regulating a market economy is still limited.Dr. Vo Tri Thanh, Vice President of Central Institute for Economic Management (CIEM) delivered a thesis “ASEAN Economic Community:  View from Vietnam and business opportunities”. According to Thanh, AEC rests on four pillars: a single market and production base; a competitive economic region; equitable economic development; and integration with the global economy. To tap the business opportunities, Thanh proposed the following: (i) Learn the way of managing uncertainties, (ii) Find business opportunities, (iii) Accept competition while learning linkages and (iv) Learn “dialogues” based on “rules of game” and with the government.

He also said that the role of government for AEC is: to incorporate/harmonize integration commitments (TPP, RCEP, VN-EU FTA, etc.) into/with the reforms and development strategy; to minimize the adjustment costs as integration accelerated; to build a good “image” of the State/Government, etc.

Jeffrey Pirie, Executive Director at Deloitte Singapore delivered a speech on competitive position of Vietnamese enterprises in the integration process. Implications of AEC for business include: An ever more connected economy for goods in Southeast Asia; A single market in goods, integrated into the global supply chain is much nearer & much more certain; Increasingly distributed marketing & production networks – in place of narrower focused, more integrated models in the past; Very strong overall growth in trade volumes. According to the surveys of business leaders in the region conducted by Deloitte, Indonesia, Thailand and Vietnam are said to gain the most from the AEC. In particular, Vietnam enterprises will gain much in the industries including consumer business, healthcare, manufacturing, real estate, technology, media and telecommunications.

Dr. Can Van Luc, SEVP of BIDV said in a topic “Financial institutions and enterprises in the AEC integration process” that according to the committed schedule, by 2015, Vietnam will have to open up the market, and eliminate restrictions in the banking, insurance and capital market sectors. Currently, the cap on foreign ownership is 30% in the banking sector, 49% in the insurance and securities sector. However, according to commitments in liberalization of services, by end of 2015 member countries will have to open up all service sectors allowing foreign ownership up to 70%. A lot of commercial banks from the ASEAN countries have set up their commercial presences in the ASEAN bloc to serve business community and promote trade, investment and tourism among member states. This trend will continue upwards when the AEC comes into existence.

He outlined potential areas of support by financial institutions to businesses, including international payment; trade finance; interest and exchange rate hedging; cross-selling; consultancy, market analysis, trend; investment and trade promotion, etc.He also recommended that the banking sector commit to: (i) Streamline administrative procedures, improve service quality; (ii) Increase innovation and IT platform to develop more diverse and tailored products and services for trade and investment; (iii) Improve capability for integration, expand regional coverage, strengthen networking with FIs in the region and the world (iv) Study the impact of FTAs ​​ in order to advise enterprises on their operations, strategies for business investment and trade promotion, etc.; (v) Improve corporate governance and risk management in accordance with international practice, etc.

 For further information, contact:

Consultancy & International Cooperation, BIDV Training School

Tel: +84-4-39320303; or Phung Nguyet Minh, HP:+84983112005, Email: minhpn1@bidv.com.vn.