Credit institution system

The Hanoitimes – Vietnamese laws have not accepted cryptocurrency as a medium of exchange in the country.

The State Bank of Vietnam (SBV), the country’s central bank, and government agencies are working on a legal framework to manage cryptocurrency and virtual assets.

Vice Governor of the State Bank of Vietnam (SBV) Dao Minh Tu at the press conference. Photo: Nhat Bac

The information was released by Vice Governor of the SBV Dao Minh Tu at a monthly government’s press conference on March 2, saying that bitcoin and other cryptocurrency are not legal tender and lawful means of payment in Vietnam.

“Vietnamese laws do not allow such cryptocurrency to act as a kind of legal tender in Vietnam,” Tu said.

In another move, the Ministry of Finance has set up a research team on cryptocurrency and virtual assets to propose changes in laws related to these issues accordingly.

People face huge risks taking part in illegal forex trading

Tu, meanwhile, also reiterated the SBV’s stance regarding current operation of foreign exchange (FX) trading platforms in Vietnam that only credit institutions with permission from competent authorities are authorized to provide such services on the domestic and international markets.

“So far, local authorities have not issued license for any forex trading floor. Therefore, all transactions on these floors are illegal,” stressed Mr. Tu, urging investors to be cautious from advertisements of these platforms with promises of soaring profits despite current difficult economic climate.

People taking part in illegal forex activities, therefore, face huge risks and are not protected by law, added Tu.

Tu noted investors before putting their money on any investment channel should consult local authorities and credit institutions.

Some investors admitted greedy is a major reason for them to participate in forex trading activities. However, they argued a lack of legal framework regulating such activities has directly led to a growing number of such platforms operating publicly and attracting ill-informed investors.

The Hanoitimes – Investments in forex trading platforms, seen as illegal, would not be protected by law, said a senior official of the central bank.

Credit institutions with permission from the State Bank of Vietnam (SBV) are the only ones allowed to provide foreign exchange (FX) trading and derivatives services on the domestic and international markets.

Vice Governor of the State Bank of Vietnam Dao Minh Tu at the press briefing. Photo: Nhat Bac.

I nvestors should be cautious in participating in illegal forex trading platforms, said SBV’s Vice Governor Dao Minh Tu at a monthly government’s press briefing on December 2, referring to the case of growing numbers of such platforms are calling for investment with promises of soaring profit.

“So far, local authorities have not issued licence for any forex trading floor. Therefore, all transactions on these floors are illegal,” stressed Mr. Tu.

“Individuals investing in these platforms, seen as violating laws, would not be protected by law,” he noted.

Mr. Tu said during the Covid-19 crisis, legal businesses anywhere around the world could hardly guarantee profit of up to a couple of dozen percent, let alone promises for profit of hundreds of percent per year, which is a sign of fraud.

Vice Minister of Industry and Trade Do Thang Hai noted forex trading platforms in Vietnam are form of illegal multi-level marketing activities that pose high risks in terms of assets losses for investors.

“Those participating in these activities could be subject to a penalty of up to VND5 billion (US$217,500) or five-year jail term,” Mr. Hai stressed.

Some investors admitted greedy is a major reason for them to participate in forex trading activities. However, they argued a lack of legal framework regulating such activities has directly led to a growing number of such platforms operating publicly and attracting ill-informed investors.

The Hanoitimes – Local aviation companies are continuing to face a challenging time ahead.

Vietnam’s aviation industry is predicted to take three years to return to the pre-Covid level of 2019, according to Deputy Head of the Civil Aviation Authority of Vietnam (CAAV) Pham Van Hao.

The International Civil Aviation Organization forecasts two scenarios for the world’s aviation industry. Photo the courtesy of  Vietnam Airlines

There were two scenarios forecast by the International Civil Aviation Organization (ICAO) for the world’s aviation industry, Mr. Hao said at the national conference under the theme “Overcoming crisis, developing Vietnam’s aviation sustainably” held recently in Hanoi.

In the first scenario, the aviation industry will take a V-shaped recovery, plunging to the bottom and then rebounding strongly. In the second scenario, it will be a U-shape convalescence, in which the industry will sink to the bottom and remain there for 3-5 months, along with economic downturn. As a result, the aviation market will decline 48-71% depending on the situation of the pandemic.

Mr. Hao predicted that the first scenario will happen to Vietnam aviation. The CAAV, after consulting market research firms, will submit the schedule on reopening borders for international flights to the government. The reopening, however, would not be carried out broadly, taking into consideration of disease prevention measures.

Ms. Ho Ngoc Yen Phuong, Vietjet’s Deputy General Director, said the low-cost air carrier suffered a nine-month cumulative loss of VND2.4 trillion (US$103.4 million). She also proposed the government to direct credit institutions to offer low-interest loan to the carrier in a term for 3-5 years.

Mr. Nguyen Tien Hoang, deputy head of Planning and Development Department at Vietnam Airlines (VNA), said that Vietnam’s aviation loss was estimated at US$4 billion this year.

“The national flag carrier is likely to be the hardest hit by Covid-19 among others, making a lost of about VND14 trillion-VND15 trillion (US$603.5 million-$646.6 million) this year.

In the context that the purchasing power is weak and inbound tourism still suspended, the airlines have dropped airfares to stimulate domestic travel.

The VNA predicts that the economic downturn and the fear of catching coronavirus on flights will hindrer the recovery of the aviation industry.

Deputy Minister of Transport Le Anh Tuan said that the government has paid great attention to the development of the aviation industry. In addition to financing or creating favorable mechanism to lure investment in infrastructure development, including transport infrastructure and air fleet expansion, the government has focused on building a legal framework to ensure the efficient operation of the industry.

The Hanoitimes – The head of Vietnam’s stock market watchdog urged players to trust the internal strengths of the economy and the resilience of Vietnam’s stock market.

The State Securities Commission of Vietnam (SSC), the country’s stock market watchdog, is considering a number of solutions to help investors and securities firms overcome negative impacts of the Covid-19 epidemic and global turmoil, according to the SSC’s Chairman Tran Van Dung.

Chairman of the SSC Tran Van Dung.

Among them are lowering fees for some brokerage services and easing regulations on margin trading, Dung told Vietnam Financial Times.

At the close on March 9, the benchmark Vn-Index plunged 6.28% to 835.49, the biggest tumble since May 2014 when the standoff between Vietnam and China occurred after China moved an oil rig into Vietnam’s waters.

Dung, however, noted the liquidity of the Hochiminh and Hanoi stock exchanges remained abudant with nearly VND6.5 trillion (US$278.69 million) traded, indicating investors were buying in battered stocks.

Besides, foreign investors remained net sellers but at a moderate amount of VND230 billion (US$9.85 million) on March 9, Dung added.

Dung said the freefall of the stock market was a common situation globally, especially as “all bad news came at one time” that directly impact investor sentiment, including the sharpest decline of oil price since 1991, prompting Goldman Sachs to predict Brent oil could drop to US$20 per barrel this year.

On early March 9, the Japanese government issued lower-than-expected economic data for 2019, heightening fears the global economy may come to a recession under the growing impacts of the Covid-19 epidemic.

The Federal Reserves (FED) on March 3 cut interest rates by 0.5% in an emergency move, prompting 65% of traders to expect the FED to continue lowering interest rates by 0.75% in the upcoming meeting on March 17. If it happens, the cut in the federal funds rate would take the borrowing cost in the short-term markets down to a range of 0.25% – 0.5% and raise concern over the US and global economies going to slow down.

For the Vietnamese stock market, new cases of Covid-19 infections were the main reason for shares going downhill, Dung said. However, Vietnam’s successful containment of the epidemic is just a matter of time, given strong determination of the government and the public.

Moreover, in the mid- and long-term, credit and fiscal support packages from the government will no doubt help enterprises recover, Dung added.

Dung urged enterprises, intermediary financial institutions and investors to trust the internal strengths of the economy and the resilience of Vietnam’s stock market.

Such confidence would help the market to rebound sooner and avoid unnecessary sell-offs, Dung stated.

In the coming time, the SSC would continue to closely monitor the market and only intervene out of necessity, Dung added, stating the authority would strictly punish cases of market manipulation or providing false information for unfair gains.