Vietnam Treasury Management Profile 2018 - Together we thrive - HSBC Group
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Vietnam
Treasury Management
Profile 2018
Together we thrive
2 HSBC Treasury Management Profile 2018 | Vietnam HSBC Treasury Management Profile 2018 | Vietnam 3
Contents Introduction and
Purpose
Introduction and Purpose 3 Vietnam
This is one of a series of Treasury Management Profiles designed for finance and treasury professionals worldwide. By providing a
Legal and Regulatory 6 snapshot of banking, payments and cash management in selected locations, these profiles can help treasury managers to make
informed decisions, manage risks effectively and take advantage of new opportunities. However, this information is not intended to
Taxation10 be comprehensive and does not constitute financial, legal, tax or other professional advice. Accordingly you should not act upon the
information contained in this document without obtaining your own independent professional advice. The materials contained in this
Banking13
document were assembled in May 2017 (unless otherwise dated) and were based on the law enforceable and information available
Payment Instruments 16 at that time.
Payment Systems 19
Facts and Figures
Cash Management 21
Capital/Other major cities: Hanoi/Ho Chi Minh City, Da Business hours: 07:30–16:30 (Mon–Fri)
Electronic Banking 22 Nang, Hai Phong, Can Tho
Banking hours: 07:30–16:30 (Mon–Fri)
Trade Finance 24 Area: 331,210km2
Stock exchange: Ho Chi Minh Stock Exchange,
Population: 95.4m Hanoi Stock Exchange
Useful Websites 26
Languages: Vietnamese Leading share index: VN Index
Currency: Vietnamese dong (VND) Sectoral distribution Agriculture 15.9%,
of GDP (% of GDP): Industry 32.7%,
Country telephone code: 84 Source: https://www.cia.gov/library/
Services 41.3%
publications/resources/the-world-
Weekend: Saturday and Sunday factbook/index.html. (2017 estimate)
National holidays: 2018 — 1 Jan, 15–21 Feb, 25,
Source: www.goodbusinessday.com. 30 Apr, 1 May, 3 Sep
Government ®® The president is elected by the National Assembly every five
Legislature years. The president can serve two terms. The next presidential
Communist state with a unicameral National Assembly (Quoc election is scheduled to be held in 2021.
Hoi).
Political leader
®® National Assembly: 498 members are elected to serve five-year Nguyen Xuan Phuc, prime minister since 7 April 2016.
terms.
Legislative elections were last held in May 2016. Nguyen Phu Trong, general secretary of the Communist Party
since 19 January 2011.
Head of state
Tran Dai Quang, president since 2 April 2016. ®® The prime minister and the general secretary are elected by the
National Assembly every five years. They can both serve two
terms.
4 HSBC Treasury Management Profile 2018 | Vietnam HSBC Treasury Management Profile 2018 | Vietnam 5
Country credit rating
Fitch Ratings rates Vietnam for issuer default as:
Term Issuer Default Rating
Short B
Long BB-
Long-term rating outlook Positive
Source: www.fitchratings.com, January 2018.
Exchange rate & Interest rate (%) Consumer inflation & GDP volume growth (%)
Economy Vietnam
Vietnam
2016 2017
2011 2012 2013 2014 2015 100 100 10.0 10.0
Q4 Year Q1 Q2 Q3
Exchange rate* (VND/USD)** 20,510 20,828 20,933 21,148 21,698 22,073 21,935 22,216 22,371 22,442 75 75 7.5 7.5
Interest rate 15.00 9.00 7.00 6.50 6.50 6.50 6.50 6.50 6.50 6.50
(Central Bank Policy rate) **(%) 50 50 5.0 5.0
Unemployment (%) 2.01 1.76 1.94 1.84 2.10 NA 2.10 NA NA NA
25 25 2.5 2.5
Consumer inflation*** (%) + 18.7 + 9.1 + 6.6 + 4.1 + 0.9 + 4.9 + 3.2 + 5.0 + 3.3 NA
GDP volume growth*** (%) + 6.2 + 5.2 + 5.4 + 6.0 + 6.7 NA + 6.7 NA NA NA 0 0 0.0 0.0
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
GDP (VND tr) 2,780 3,245 3,584 3,938 4,193 – NA – – –
Exchange rate (VND/USD)
GDP (USD bn) 136 156 171 186 193 – NA – – – Consumer inflation %
Interest rate (Lending Rate) GDP volume growth %
GDP per capita (USD) 1,507 1,725 1,874 2,015 2,065 – NA – – –
BoP (goods/services/income) as % GDP -6.2 + 0.8 - 1.0 - 0.1 - 3.5 – NA – – –
Sources: IMF, International Financial Statistics, November 2017 and 2017 Yearbook.
* Official rate. ** Period average. *** Year on year. Sources: International Financial Statistics, IMF: January 2018 and 2017 Yearbook;
and World Trade Organization.6 HSBC Treasury Management Profile 2018 | Vietnam HSBC Treasury Management Profile 2018 | Vietnam 7
Legal and
Regulatory
Central bank Companies engaging in mid-long-term foreign loans must register Residents (with the exception of state-owned companies) require Prior approval from the government, the Ministry of Planning and
The State Bank of Vietnam operates in accordance with the 2010 details of transactions with the central bank no later than 30 days prior approval from the State Bank of Vietnam before purchasing Investment or the Provincial People’s Committee is required for all
Law on the State Bank of Vietnam. from the signing of the loan agreement or letter of guarantee. credit from non‑residents. foreign investment. Foreign investors must open specific foreign
exchange accounts (at banks authorised to provide them) to be
Bank supervision If an entity is engaged in borrowing from abroad they are required A permit from the Ministry of Planning and Investment is required used for all their investments in Vietnam.
The State Bank of Vietnam supervises the banking sector in to report details regarding the performance of these loans to for all investment abroad. The companies involved are required
Vietnam. either the State Bank of Vietnam (for a loan without a government to open a foreign exchange account at an authorised bank and Vietnamese credit institutions require prior approval from the
guarantee) or the Ministry of Finance (for a loan with government these accounts (which are to be used for investment abroad) are State Bank of Vietnam before they can open accounts abroad and
Resident/non-resident status guarantee). required to be registered with the State Bank of Vietnam. must register all loans to non-residents with the central bank.
A company is considered resident in Vietnam if it is incorporated
in or has its place of effective management in Vietnam. Transactions data must be submitted to the General Statistics Residents’ outward investment must be routed through dedicated Individuals must notify the customs authorities when importing
Office, via provincial level offices. The General Statistics Office foreign currency accounts and require an offshore investment or exporting over VND 15 million in domestic currency banknotes
Bank accounts forwards the data to the State Bank of Vietnam for balance of certificate. and/or over the equivalent of USD 5,000 in foreign currency
Resident payments purposes. banknotes.
Foreign exchange accounts can be held by residents both Indirect investment by non-residents must be carried out in VND.
domestically and abroad. Residents require prior approval from Exchange controls Any foreign currency used in non-residents’ indirect investment Vietnam has established bilateral payment arrangements with
the State Bank of Vietnam to hold foreign exchange accounts The Vietnamese dong (VND) is Vietnam’s official currency. must be converted into VND before the investment can take Belarus, Cambodia, China, Laos and Russia.
abroad. Resident domestic currency (VND) accounts cannot be place. Foreign indirect investment by a non-resident entity must
held abroad, but are convertible into foreign currency. ®® Foreign exchange controls are administered by the State Bank be done through an indirect investment account opened at a As a member of the Association of Southeast Asian Nations
of Vietnam. bank licensed in Vietnam. (ASEAN), Vietnam is a participant in the ASEAN Swap
Non-resident Arrangement and the Bilateral Swap Arrangements under
Non-resident bank accounts are permitted in both foreign and Credit institutions are permitted to carry out forward and swap ASEAN+3.
domestic currency. transactions in VND and foreign currencies, with maturities
ranging from three days to one year.
Interest can be offered on current and savings accounts.
Indirect investment by non-residents
Overdraft facilities are available to residents. Non-residents generally require authorisation to carry out foreign
exchange transactions within Vietnam.
Reporting
All transactions between resident and non-resident companies
and all transactions on the accounts held by resident companies
Credit institutions are permitted to make foreign-currency loans
to residents, although the borrower must satisfy regulatory must be carried out in VND and must
abroad must be reported on a monthly, quarterly and annual conditions. Credit institutions must seek approval from the State
basis. Transactions relating to foreign direct investment capital
are also required to be reported by resident companies.
Bank of Vietnam for resident’s foreign-currency loan for priority
sectors and encouraged sectors.
be done through an indirect investment
Monthly reports must be submitted by the 12th day of the
following month. Quarterly reports must be submitted by the 12th
Residents are permitted to issue debt securities abroad, although
prior approval from the relevant regulatory authority is required.
account opened at a bank licensed in
Vietnam.
day of the month following the quarter. Annual reports should be Residents are not permitted to buy debt securities from abroad.
submitted by 31 March of the following year. Non-residents are not permitted to issue debt securities in
Vietnam or to sell equities.8 HSBC Treasury Management Profile 2018 | Vietnam HSBC Treasury Management Profile 2018 | Vietnam 9
Anti-money laundering/counter-terrorist financing1 Single transactions exceeding VND 200 million, or its equivalent
Vietnam has implemented anti-money laundering and counter- in foreign currency or gold, or a series of transactions aggregating
terrorist financing legislation. Notable legislation includes: to a value exceeding VND 200 million, or its equivalent in foreign
currency or gold, performed in one day must be reported to the
®® Articles 250 and 251 of the Penal Code, as amended; AMLD. The same rule applies to cash transactions exceeding
®® Anti-Money Laundering Law 2012; and VND 300 million, or its equivalent in foreign currency or gold,
®® Decree No 116/2013/ND/CP 2013 on the Prevention and performed in relation to savings accounts.
Combating of Money Laundering.
Financial institutions are required to report domestic online
The State Bank of Vietnam and the Ministry of Finance have transactions exceeding VND 500 million (approximately USD
also issued related Circulars, most recently No 35/2013 and No 24,000), or its equivalent in foreign currency, and international
31/2014. online transactions exceeding USD 1,000, to the AMLD.
Vietnam is a member of the Asia/Pacific Group on Money All financial institutions must record and report suspicious
Laundering (APG). The Anti-Money Laundering Department transactions within 48 hours to the AMLD. If criminal activity is
(AMLD), the country’s financial intelligence unit, operates under suspected, reports must be made within 24 hours.
the State Bank of Vietnam.
All records must be maintained for a minimum of five years from
Account opening procedures require formal identification of the the date of the closing of the account or the completion of the
account holder and beneficial owners. last transaction.
Individuals conducting occasional transactions of VND 300 All foreign currency exceeding USD 7,000, and gold of more than
million (approximately EUR 10,400 or USD 14,000) must be 300 grams, must be declared to the customs authorities upon
identified. arrival and departure.
1.
Data as at May 2017.10 HSBC Treasury Management Profile 2018 | Vietnam HSBC Treasury Management Profile 2018 | Vietnam 11
Taxation
1
Resident/non-resident Consolidated returns are not permitted and each company with
Withholding tax (subject to tax treaties)
Residence is not defined, but a corporation generally is independent legal status is required to file a separate return.
considered to be resident if it is incorporated in Vietnam. Payments to: Interest Dividends Royalties Other income Branch remittances
Corporate taxation
All companies and other legal entities incorporated and carrying Residents are taxed on worldwide income; non‑residents are Resident companies None None 10% None NA
on a business in Vietnam are subject to various local indirect taxed only on Vietnamese-sourced income. Foreign-source Non-resident companies 5% None *
15% *
10% **
None
taxes and corporate income tax (CIT). They are also required income derived by residents is subject to corporation tax in the
* A withholding tax of 10% (corporate tax) and 5% (VAT) applies to transfer of right to use trademark/payment of right to use trademark. For transfer the ownership of trademark/
to apply Vietnamese Accounting System Standards (VASS) same way as Vietnamese-sourced income.
patent, a withholding tax of 10% (corporate tax) applies (no VAT is applied).
and Vietnamese Accounting Standards (VAS). These are ** A withholding tax of 5% (corporate tax) and 5% (VAT) generally applies to technical service fees paid to a non-resident. The corporate tax may be exempt under a tax treaty.
generally based on International Accounting Standards, with The standard CIT rate is 20% for any business incorporated in
some modifications. Vietnam. Oil and gas businesses, and other sectors exploiting rare
Capital gains tax Tax treaties/tax information exchange agreements (TIEAs)
and precious natural resources, are taxed at rates from 32% to
Generally, capital gains made by an enterprise in Vietnam will Vietnam has tax treaties with over 70 countries.
Foreign companies carrying on business in Vietnam without 50%, subject to the specific decision of the Ministry of Finance
form part of the taxable income of the enterprise, and will be
setting up a legal business presence may be taxed under a on a case-by-case basis. Vietnamese CIT is applied at the national Thin capitalisation
taxed at the standard CIT rate. No incentive CIT rate, exemptions
foreign contractor withholding tax (FCWT) regime, which mainly level, with no further local taxes. There is no surtax or alternative Under current regulations, there are no restrictions on the
or reduced rates apply to capital gains.
comprises value added tax (VAT) and CIT. They need to pay minimum tax. capital, specific loan ratios or minimum capital requirements for
the same corporate taxes as local companies if they meet the The transfer value is based on the actual price according to the foreign-owned enterprises, except for some industries such as
conditions of a resident business, and register under the relevant Losses may be carried forward to offset taxable income for up
transfer contract. A deemed fair market value will be used if no construction and real estate.
business laws in Vietnam. to five years after the year in which the losses are incurred. The
contract price is available or if the price stated in the contract is
carryback of losses is not permitted. Losses from transfers of real Transfer pricing
deemed to be not at arm’s length.
For corporate tax purposes, there are no differences between the property and investment projects are allowed to be offset against Related-party transactions must be identified and declared
tax rules applicable to businesses owned by Vietnamese nationals profits from operating businesses in the same tax period. The taxable gain is determined as the excess of the sales annually using prescribed forms, which must be submitted
and foreign companies. proceeds less costs and transfer expenses. together with the annual CIT return. Companies are required
Preferential tax rates of 10% for 15 years and 17% for ten years
to make a full self-assessment of their profits calculated on an
Tax authority are available for taxpayers engaged in encouraged investment A specific capital gains tax, called capital assignment profits tax arm’s-length basis, and must prove that the pricing method
®® General Department of Taxation. projects or in socioeconomically disadvantaged locations, as (CAPT), is imposed on gains made by foreign companies on the adopted is indeed arm’s length.
stipulated by the government. A tax holiday of up to four years transfer of interests in a foreign invested or unlisted Vietnamese
Tax year/filing and a 50% tax reduction for up to nine years are available from company. The rate of the CAPT is 20%. The following methodologies are permitted: comparable
The standard fiscal year is the calendar year. Different fiscal years the first profit-making years or the fourth revenue-generation uncontrolled price, resale price, cost plus, comparable profit and
are allowed, provided that the fiscal year‑end is a quarter-end. year, whichever comes first. Current taxpayers with new projects The disposal of an investment in a Vietnamese company requires profit split, although no priority of methods exists. The taxpayer
Corporate taxpayers must notify local tax authorities for formal from 1 January 2014 also are entitled to tax incentives, subject approval from the licensing authorities. must establish that it is using the ‘best’ method appropriate under
financial reporting and tax filing purposes. to certain conditions. Tax incentives for business expansion have the circumstances. Contemporaneous documentation is required.
been reintroduced. Withholding tax (subject to tax treaties) The tax authorities can adjust profits of the pricing strategy is
Provisional quarterly corporate income tax returns are not Foreign Contractor Withholding Tax (FCWT) is imposed on found not to be at arm’s length.
required as from 1 January 2015. Instead, a company is required Advance tax ruling availability income from the provision of goods and services from overseas
to make quarterly provisional corporate income tax payments Advance tax rulings are available from the local and national organisations (except for pure trading transactions), which Enterprises are required to maintain transfer pricing
based on estimates. An annual declaration/filing must be made tax authorities in Vietnam. Companies can submit an official comprises corporate income tax and VAT at a total combined rate documentation to support the arm’s-length nature of related-party
within 90 days after the fiscal year-end date. Any shortfall in application to the tax authorities for a ruling. of 0.1% to 15%. transactions. This must be submitted within 30 days, if requested
excess of 20% between the provisional corporate income tax
by the tax authorities. The definition of related parties includes
payment and annual corporate income tax liability is subject to 1.
All tax information supplied by Deloitte Touche Tohmatsu (www.deloitte.com) and a control threshold as low as 20% (or 10% in some cases).
late payment penalty. Deloitte Highlight, 2017.
Advanced pricing agreements are available.12 HSBC Treasury Management Profile 2018 | Vietnam HSBC Treasury Management Profile 2018 | Vietnam 13
Banking
Digital banking is in
Stamp Duty Preferential import duty rates of 0% to 135% apply to goods Overview
Stamp duties of 0.5% to 20% are assessed on the transfer imported into Vietnam and originating from countries with most There are 42 domestic banks operating in Vietnam: five state-
of housing and land (i.e. certain types of buildings and land), favoured nation trading status with Vietnam. owned banks, four joint venture banks and 31 joint-stock
means of transportation (i.e. all types of motorised vessels/boats,
automobiles and motorcycles), shotguns and sporting guns. Special preferential import duty rates ranging from 0% to its nascent stages, commercial banks. There are also five foreign owned banks, 47
branches of foreign banks and 50 representative offices of foreign
135% apply to goods from several countries that have free banks.
Other taxes
Companies exploiting natural resources, including water, are
trade agreements (FTAs) with Vietnam, including CEPT (i.e.
ASEAN countries) and other FTAs (i.e. the ASEAN–Japan Free
but the commercial Vietnam’s banking sector is dominated by four state-owned
banks all offer
subject to natural resources tax (NRT) at various rates from 1% to Trade Agreement, the ASEAN–India Free Trade Agreement, the banks – Vietnam Bank for Agriculture and Rural Development
40%. ASEAN‑China Free Trade Area Agreement, the ASEAN–Korea (Agribank), Bank for Investment and Development of Vietnam
Free Trade Agreement, and the ASEAN–Australia and New (BIDV), Commercial Bank for Foreign Trade of Vietnam
internet and mobile
Business registration tax (commercial licence tax) is levied Zealand Free Trade Agreement). (Vietcombank), and Vietnam Joint Stock Commercial Bank for
annually on all companies and ranges from VND 1 million to VND Industry and Trade (Vietinbank). At the start of 2017, Vietnam’s
3 million, depending on the type of business. A duty is charged on natural resource exports at rates up to 45%, state-owned banks accounted for approximately 45.4% of the
Cash pooling
while an export duty is commonly applied on scrap and natural
resource export. services. Adoption banking sector’s total assets.
Vietnam has no specific tax rules for cash pooling arrangements. The State Bank of Vietnam is currently promoting a consolidation
Real property tax
Financial transactions/banking services tax
There are no specific financial transactions/banking services taxes
rates are strong: 44% and restructuring programme for the country’s banking sector;
the central bank plans to reduce the number of domestic banks to
The municipal authorities levy tax (e.g. land rental, land use fees,
of account holders
in Vietnam. 15 over the next three years. However, consolidation efforts have
etc.) on the use of real property. Other than stamp duty there is not yet gained much momentum.
no tax on the transfer of real estate. Payroll and social security taxes
use digital services.
There is no payroll tax payable by employers. Employers and Effective 1 February 2016, commercial banks are restricted to
Sales taxes/VAT (incl. financial services) employees are subject to statutory social security contributions holding shares in a maximum of two other credit institutions
The standard VAT rate is 10%. Rates of 0% and 5% are applicable (employers at a rate of 18% and employees at a rate of 8%). only; each stake must not exceed 5% of the total equity of that
to the export of certain goods/services and the provision of These contributions are limited to the lower of the employee’s institution.
certain essential goods and services, respectively. total contracted remuneration or VND 26 million per month
(equivalent to USD 1,130). Foreign banks play an active role in the country’s financial
There is a wide range of VAT-exempt goods and services (e.g. sector and together with joint foreign and local controlled banks
certain types of agricultural production, medical services, Both employers and employees are required to make a contributed 9.7% of the banking sector’s total assets at the start
education and training, etc.). contribution for health insurance (employers at a rate of 3% and of 2017. In order to open a branch in Vietnam, a foreign bank is
employees at a rate of 1.5%). required to pay USD 15 million.
Special sales tax (SST) is applicable to the production and import
of certain goods and the provision of certain services (e.g. The unemployment insurance system applies to Vietnamese Notable foreign investment includes: the Bank of Tokyo-
alcohol, motor vehicles, petrol, tobacco, certain air-conditioners, citizens working under labour contracts with an indefinite term, Mitsubishi UFJ’s 19.7% stake in VietinBank, BNP Paribas’s 20%
gambling, massages, golf clubs, lotteries, etc.). SST rates range or with a definite term of 12–36 months, with employers that stake in Oricombank, the Commonwealth Bank of Australia’s
from 10% to 70%. have at least ten individuals in their organisation. The compulsory 20% stake in VIB, HSBC’s 19.4% stake in Techcombank, and
unemployment insurance contribution is 3%, of which the state, Maybank’s 20% stake in ABBank.
employers and employees each contribute 1%.14 HSBC Treasury Management Profile 2018 | Vietnam HSBC Treasury Management Profile 2018 | Vietnam 15
Foreign banks wishing to invest in domestic and joint-venture
Major banks
commercial banks must acquire prior approval from the relevant
governing agencies in their respective countries. Non-resident Total assets (USD billions)
Bank
investment in domestic banks is restricted to 30% and foreign 30 September 2017
banks or financial companies that seek to acquire 10% or more of
BIDV 49.56
a local credit institution’s capital must have total assets worth at
least USD 10 billion. However, Prime Minister Phuc has said the Vietinbank 46.758
limits on foreign ownership in banks will be increased in order to
Agribank 45.36
strengthen the financial system.
Vietcombank 39.55
In 2017, Saigon Joint Stock Commercial Bank, announced plans
to sell a majority stake to a foreign investor, the first bank to Saigon Commercial Bank 18.92
get government approval to do so. In April 2017, Shinhan Bank Source: www.accuity.com, January 2018.
Vietnam announced the acquisition of ANZ Vietnam’s Retail
Division.
Digital banking is in its nascent stages in Vietnam, but the
commercial banks all offer internet and mobile banking services.
Adoption rates are strong. According to KPMG, an estimated
44% of customers at commercial banks use digital services. In
2016, the country’s first digital bank, TIMO, was launched.
The State Bank of Vietnam estimates that just 20% of the
population are banked. It is hoped that digital banking
developments, such as mobile banking and e-money, will provide
greater accessibility to both the unbanked and underbanked
population.
MoMo, a mobile money service, operates the Staight2Bank
Wallet payments scheme. The scheme enables companies and
the government to make payments to both banked and unbanked
residents, especially in remote areas of the country; payments
are made into the MoMo mobile wallet via the Straight2Bank
online platform. The company’s payment system partners with 24
domestic banks and foreign payment networks, including JCB,
MasterCard, and Visa.
In February 2017, the Vietnam Bank for Social Policies (VBSP)
launched a mobile banking service specifically designed to
improve the access of disadvantaged people who lack access to
traditional banking services.16 HSBC Treasury Management Profile 2018 | Vietnam HSBC Treasury Management Profile 2018 | Vietnam 17
Payment
Instruments
1
®® Inter-province cheque payments are cleared and settled
Payment statistics % volume of all cashless
via the State Bank of Vietnam’s National Processing
payments 2016
Transactions (millions) % change Traffic (VND billions) % change and Settlement Centre. Funds are typically available to
2016/2015 2016/2015 beneficiaries within four to seven working days.
2015 2016 2015 2016
Cheques 667,147 829,249 24.3 95,511 220,879 131 Cheques accounted for 0.2% of the volume of all cashless
payments in 2016, and 0.3% of the value. Credit Transfers 40.8%
Bank card 55,055,407 80,287,856 45.8 230,593 346,591 50.3 Direct Debits 0.6%
Card payments Bank Cards 14.8%
Direct debits 2,577,431 3,408,455 32.2 3,038,051 2,941,639 - 3.2
Payment cards are an increasingly popular method of payment in Cheques 0.2%
Credit transfers 157,907,353 221,152,707 40.0 33,669,634 42,945,464 27.5 Vietnam. They accounted for 14.8% of the volume of all cashless Others* 43.6%
payments in 2016, but just 0.5% of the value.
Others** 141,760,607 236,975,043 67.2 12,703,628 17,277,171 36
Total 357,967,945 542,653,310 51.6 49,737,417 63,731,744 28.1 There were approximately 116 million payment cards in
% value of all cashless
circulation at the end of March 2017, a 4.5% increase on the
* Includes bills, standing orders, online, mobile and phone banking. Source: State Bank of Vietnam: Transactions of National Payment System. payments 2016
previous quarter. Debit cards account for 90% of all the cards in
circulation. The majority of payment cards are used to withdraw
Cash Direct debits money from ATM machines.
Cash remains the primary payment medium in Vietnam, Direct debits are available in Vietnam for low-value recurring
particularly for low‑value retail and commercial transactions. payments such as utility bills. Banks in Vietnam issue domestic (SmartLink) and international Credit Transfers 67.4%
According to the State Bank of Vietnam, cash is used in about (China UnionPay, Visa and MasterCard) payment cards. Direct Debits 4.6%
12% of all transactions There is currently no centralised payment system for direct debits Vietcombank is the clearing bank for Visa card transactions Bank Cards 0.5%
so payments between creditors and debtors at different banks are of domestic Visa member credit institutions via their accounts Cheques 0.3%
As part of the government’s plans to increase the volume of exchanged bilaterally between banks. opened with VCB. BIDV is the clearing and settling agent for Others* 27%
electronic payments and reduce the volume of cash in circulation, MasterCard domestic transactions.
the use of cash by government agencies for payments, and the Direct debits accounted for 0.6% of the volume of all cashless
payment of securities and other high-value purchases with cash, payments in 2016, and 4.6% of the value. In May 2016, the State Bank of Vietnam urged card-issuing banks * Includes standing order, online, mobile and phone banking transactions.
is restricted. to convert all magnetic cards into chips cards. All ATM cards Source: State Bank of Vietnam: Transactions of National Payment System.
Cheques must be EMV-compliant by 2020.
Credit transfers The cheque is not a widely used payment instrument. It is
®® Credit transfers equal to or above typically used for low-value retail payments. All card-issuing institutions are members of the Smartlink,
VND 500 million, and urgent VND‑denominated credit Banknet or VNBC card payment schemes. In 2016, Smartlink
transfers are cleared and settled via the HVSS. Payments sent ®® Intracity/intra-province cheque payments are cleared by and Banknet completed the merger of their operations, creating
prior to the cut-off time are settled on a same-day basis. provincial payment centres operated by the State Bank of a centralised card switching centre, the National Payment
Vietnam. Funds are typically available to beneficiaries within Corporation of Vietnam, processing card payments through
®® Credit transfers below VND 500 million and non-urgent credit
three days. point-of-sale (POS) terminals, the internet and mobile phones, in
transfers are cleared via the LVSS. Low-value credit transfers
include payroll, supplier and third-party payments. addition to transactions made at ATMs.
Credit transfers accounted for 40.8% of the volume of all cashless
payments in 2016, and 67.4% of the value.18 HSBC Treasury Management Profile 2018 | Vietnam HSBC Treasury Management Profile 2018 | Vietnam 19
Payment
Systems
There were 17,472 ATMs and 263,427 POS terminals in Vietnam Electronic wallets Type
Currency centre holidays
at the end of 2016, a 5.4% and 21% increase respectively on Electronic money schemes are available in the form of reloadable IBPS (InterBank Payment System) is owned and operated by the
2015 figures. All ATM networks are interoperable. pre-paid cards. There were three million pre-paid cards in Vietnam State Bank of Vietnam. IBPS includes the following subsystems: 2018 1 Jan, 15–21 Feb, 25, 30 Apr,
at the end of 2015. 1 May, 3 Sep
In 2016, the volume of ATM transactions processed increased ®® The HVSS (High-Value Settlement System). In 2016, the HVSS
by 8.3% to 670 million transactions; total value fell by 3.6% on E-cards are typically used for low-value transactions and to processed 14.1 million transactions, with a total value of 2019 1 Jan, 4–8 Feb, 30 Apr,
2015 figures to VND 1,194,081 billion. During the same period, pay utility bills. Vietcombank and eight other institutions are VND 41,727,719 billion, an increase of 45.4% in volume but a 1 May, 2 Sep
there were 56 million POS transactions, with a total value of authorised to issue e-money cards in Vietnam. fall of 12% in value on 2015 figures. Source: www.goodbusinessday.com.
VND 192,174 billion. The majority of payment cards are used to ®® The LVSS (Low-Value Settlement System), a deferred net
withdraw money from ATM machines. VinaPay’s MrTopUp service is one of the biggest pre‑paid card settlement system. In 2016, the LVSS processed 66.6 million
distributors in Vietnam. Five banks are authorised to take part in transactions, with a total value of VND 2,389,493 billion, a
The Asian Payment Network (APN) initiative currently allows VinaPay’s Vcash e-wallet scheme, which allows individuals and 34.5% and 55% increase in volume and value respectively on
ATM card holders in Vietnam to perform cash withdrawals at the companies to make and receive payments, pay bills and make 2015 figures.
ATMs of participating banks in each member country (Australia, purchases online.
China, Japan, Indonesia, Malaysia, New Zealand, the Philippines, Banks can also process payments bilaterally via the internal
Singapore, South Korea, Thailand and Vietnam), through a linked Mobile Wallets schemes are also increasingly available, including: clearing systems of Vietnam’s six largest banks.
1Pay, which allows users to pay via SMS, online, and via pre-paid
Transactions processed
ATM network. The APN’s aim is to become a settlement network
for a range of retail payments across Asia. In Vietnam, the cards for online shopping; Payoo, from the VietUnion Online Transactions processed via a local branch of the State Bank of
initiative is operated by Banknetvn. Services Corporation, a digital wallet for both business and Vietnam – intracity/intra-province payments – are cleared by the
via a local branch of the
consumer payments; and MoMo, which can be used to transfer, central bank’s branch-operated provincial payment centres. Inter-
receive, withdraw and deposit money (via the wallet) as well as province payments are cleared by the State Bank of Vietnam’s
pay bills. National Processing and Settlement Centre.
Participants State Bank of Vietnam
The IBPS has approximately 2,353 direct and non-direct
Five banks are authorised to take part in VinaPay’s
participants.
– intracity/intra-province
Transaction types processed
Vcash e-wallet scheme, which allows individuals The HVSS processes all payment transactions equal to or above
VND 500 million and gross real time and time-critical VND-
payments – are cleared
and companies to make and receive payments,
denominated interbank transfers.
The LVSS processes low-value and non-urgent transactions
by the central bank’s
pay bills and make purchases online.
(below VND 500 million) electronic credit and debit payments.
Payments received after the cut-off time are processed on the branch-operated
next working day.
Operating hours provincial payment
The HVSS operates 08:00 to 17:00, Monday to Friday.
1.
State Bank of Vietnam: Transactions of National Payment System.
The LVSS operates 08:00 to 16:00, Monday to Friday.
centres.20 HSBC Treasury Management Profile 2018 | Vietnam HSBC Treasury Management Profile 2018 | Vietnam 21
Cash
Management
Collections
Banks in Vietnam offer a range of collections options to corporate A range of collections
clients, including regular cash and cheque collection services via
security service providers.
options are available
Cross-border
Cross-border payments instructions are routed via SWIFT and
settled through accounts held with correspondent banks abroad
to corporate clients,
including regular cash
or, in the case of international banks, via their own networks.
Payment fees
Payment fees are applied on funds transfers between resident
and non-resident accounts. and cheque collection
Custody and securities settlement1
Depository services via security
Vietnam Securities Depository (VSD).
Comment
service providers.
The VSD provides central registration and depository services
for the securities of listed and unlisted public companies and
government securities.
Securities transfer is generally by book-entry transfer between
the depository accounts of selling and buying members, with
simultaneous adjustment of ownership information.
Securities delivery at the VSD and cash transfer at the settlement
bank (Bank for Investment and Development of Vietnam) are
carried out simultaneously, under delivery versus payment
principles.
BIS Model
®® Model 3.
Settlement cycle
®® T+3 for equities.
®® T+1 for bonds.
1.
Data as at February 2017.22 HSBC Treasury Management Profile 2018 | Vietnam HSBC Treasury Management Profile 2018 | Vietnam 23
Electronic
Banking
Some banks offer Electronic banking is available in Vietnam and offered by the
majority of the country’s banks. There is no bank-independent
electronic banking standard; each bank offers its own proprietary
incentives for system for corporate banking purposes.
Internet and mobile banking is offered by Vietnam’s leading
customers to use international and domestic banks for both corporate and retail
purposes. Around 44% of commercial banking customers
mobile banking in
currently use digital banking services1.
Some banks in Vietnam have started offering incentives for
order to increase customers to use mobile banking in order to increase the take-up
of their services. LienVietPostBank and Viêt Capital Bank, for
example, discount transaction fees for some payments through
the take up of their their Viet and Payoo apps. VietinBank and VPBank, offer improved
interest rates to customers who make online deposits.
services, such as Vietnam has an estimated internet penetration rate of 52%2;
mobile penetration was 147% at the end of 20163. A quarter of all
discount transaction
subscribers own a smartphone2.
fees for payments
made through an
app.
1.
KPMG: Bright prospects seen for digital banking, 2017.
2.
www.statista.com.
3.
www.budde.com.au.24 HSBC Treasury Management Profile 2018 | Vietnam HSBC Treasury Management Profile 2018 | Vietnam 25
Trade Quantitative controls may be imposed temporarily
on imports of goods such as eggs, tobacco, sugar
Finance and salt by the Ministry of Trade in conjunction
with the Ministry of Planning and Investment.
Imports Vietnam is a member of the 21-member Asia-Pacific Economic Licences Key import partners
Documents Cooperation (APEC) forum, which intends to lift all trade and Licences with quotas are required for exporting textile and
In order to import goods into Vietnam, a customs declaration, investment barriers in the region. clothing products, rice, timber products and some minerals.
commercial invoice, bill of lading, packing list, terminal handling
receipts, inspection reports and, in certain cases, certificate of There are 45 import tariffs rates applied over three categories: Taxes/Tariffs and other fees
preferential tax rates, special preferential tax rates and ordinary Taxes are levied on some exports from Vietnam. China 34%
origin or health certificate are required.
tax rates. South korea 14.2%
Licences Prohibited exports Singapore 6.5%
Licences with quotas are required from the Ministry of Trade for Imports from countries with Most Favoured Nation (MFN) status A negative list (of products that may not be exported) is in Japan 6.4%
importing some motorcycles, guns and bullets. in trade relations with Vietnam receive preferential tax rates. operation. It is prohibited to export rare species of fauna and flora, Hong Kong 5.1%
Special preferential tax rates apply to imports from countries that forest timber, non-medical drugs, toxic chemicals, and military Thailand 4.5%
Quantitative controls may be imposed temporarily on imports by have signed a special preferential tariff agreement with Vietnam, equipment.
the Ministry of Trade in conjunction with the Ministry of Planning such as free trade agreements and tariff alliances.
and Investment. Quantitative restrictions are imposed on the Financing imports and exports
import of goods such as eggs, tobacco, sugar and salt. All other imports are subject to ordinary tax rates, the highest Imports
Key export partners
being 135% (for cigarettes and cigars). The average MFN import There are no financing requirements for imports.
Taxes/tariffs and other fees rate currently stands at 10.4%.
Vietnam is a member of the Association of Southeast Asian Exports
Nations (ASEAN) and the ASEAN Free Trade Area (AFTA). Import tariffs are not levied on most types of machinery, There are no financing requirements for exports.
equipment and medicine, or on certain imports from foreign USA 21%
As a member of ASEAN and AFTA, Vietnam has committed to companies included in the Law on Foreign Investment. China 13.3%
lower intra-regional tariffs of between 0% and 5% through the Japan 8.4%
Common Effective Preferential Tariff (CEPT) scheme. Certain Prohibited imports
South Korea 5.4%
goods such as sensitive agricultural products are exempt from A negative list (of products that may not be imported) is in
Germany 4.1%
this. operation. It is prohibited to import certain commodities into
Vietnam, in order to protect fauna and flora, and for national
Tariffs on 99% of the products in the inclusion list of the ASEAN-6 security and moral reasons. Source: The World Factbook. Washington, DC: Central Intelligence Agency, 2017
(https://www.cia.gov/library/publications/resources/the-world-factbook/index.html).
(Brunei Darussalam, Indonesia, Malaysia, the Philippines,
Singapore and Thailand) have been reduced to no more than 5%. Exports
More than 60% of these products have zero tariffs. Documents
In order to export goods from Vietnam, a customs declaration,
The ASEAN-China free trade area eliminates 90% of tariff and commercial invoice, bill of lading, packing list and, in certain
investment barriers between China and ASEAN member states. cases, certificate of origin or health certificate are required.
ASEAN has established free trade agreements with Australia,
India, Japan, New Zealand and South Korea and is negotiating a
free trade agreement with the EU.26 HSBC Treasury Management Profile 2018 | Vietnam HSBC Treasury Management Profile 2018 | Vietnam 27
Useful
Websites
State Bank of Vietnam www.sbv.gov.vn
Leading banks: Bank for Investment and Development of Vietnam (BIDV) www.bidv.com.vn
Commercial Bank for Foreign Trade of Vietnam (Vietcombank) www.vietcombank.com.vn
Saigon Commercial Bank en.scb.com.vn
Vietnam Bank for Agriculture and Rural Development (Agribank) www.agribank.com.vn
Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) www.vietinbank.vn
ASEAN Bankers’ Association www.aseanbankers.org/ABAWeb
Ministry of Finance www.mof.gov.vn
Ministry of Industry and Trade www.moit.gov.vn
Vietnam Chamber of Commerce and Industry vccinews.com
Vietnam Trade Promotion Agency www.vietrade.gov.vn/en
ASEM Connect asemconnectvietnam.gov.vn
Vietnam Insurance Corporation www.baoviet.com.vn
Ministry of Planning and Investment www.mpi.gov.vn
Department of Planning and Investment of Ho Chi Minh City hochiminhcity.eregulations.org Disclaimer
Vietnam Association of Financial Investors www.vafi.org.vn This document has been produced by HSBC Bank plc and members of the HSBC Group (“HSBC”), together with their third-party contributor, WWCP Limited. We make no
representations, warranties or guarantees (express or implied) that the information in this document is complete, accurate or up to date. We will not be liable for any liabilities
Vietnam Investment Review www.vir.com.vn arising under or in connection with the use of, or any reliance on, this document or the information contained within it. It is not intended as an offer or solicitation for business
to anyone in any jurisdiction. The information contained in this document is of a general nature only. It is not meant to be comprehensive and does not constitute financial,
Central Institute for Economic Management www.ciem.org.vn legal, tax or other professional advice. You should not act upon the information contained in this document without obtaining your own independent professional advice. The
information contained in this document has not been independently verified by HSBC.
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