VINACHEM

If the draft ordinance is approved, Vietnamese individuals would be able to takeinitiative in borrowing foreign currencies from foreign sources for theirpersonal spending or investments and paying debts.

The State Bank of Vietnam thinks that it’s now the right time to loosen thepolicy on foreign currency management applied to individuals.

However, economists do not think this way. The draft ordinance, therefore, hasnot been applauded.

Dr. Tran Hoang Ngan, a member of the National Advisory Council for MonetaryPolicies, believes that Vietnamese individuals should not be allowed to borrowforeign currencies from foreign sources. It’d be better if only legal entitieshave the right to do this.

According to Ngan, it’s highly possible that individuals, who borrow money torun their business or buy houses, would not be able to pay debts. “In this case,they would spoil the national prestige and national brand,” Ngan said.

“I wholeheartedly remain against the new regulation,” he said.

Ngan agrees that it’s necessary to promulgate the new Ordinance on ForeignExchange in order to help stabilize the foreign currency market, especially whenthe black market has resumed its operation. However, he still believes that theordinance should be revised, even though the draft ordinance is expected to beratified in 10 days.

Dr. Tran Du Lich, a well-known economist, has agreed that it’s now not the righttime to loosen the foreign exchange management policy.

Every year, tens of millions of Vietnamese farmer householders have to work hardto be able to export $30 million worth of products. Meanwhile, every year, therich people remit 3.5 billion dollars abroad for healthcare and study services.

Citing the figures, Lich said that foreign currencies have been flowing out ofVietnam, which may badly affect the national balance. Therefore, he hassuggested keeping the current strict control over the foreign currency inflowand outflow as an issue relating to the national balance.

Agreeing that a big amount of foreign currencies has been going out of Vietnamevery year, a senior executive from Bao Viet Bank said that it’ll be of no useto prohibit people to remit foreign currencies abroad. It’s simply because thedemand for having healthcare and study services overseas has been existing. Ifthe government still prohibits the remittance, people would still try to bringmoney abroad, but through illegal channels.

The banker said that instead of a ban, Vietnam should set up reasonable policiesto restrict the remittance (collecting high fees, imposing tax…). This would notonly help restrict the foreign currency remittance abroad, but also helpincrease the tax sums to be collected to the state budget.

In related news, the draft of the new Ordinance on Foreign Exchange does notinclude the provisions relating to the gold market management, which has raisedcontroversy.

Dr. Lich stressed that foreign currencies means gold as well, while the goldmanagement remains a very burning issue for now.

According to Nguyen Van Giau, Chair of the National Assembly’s EconomicsCommittee, the new ordinance is expected to get the ratification by March 18 or19. The new ordinance is scheduled to take effects on July 1, 2013.