Joint Swedish-VietnameseMaster’s Programme

MASTER’S THESIS

NGUYEN HONG VAN

Opening The Market for Banking Services

in line with the Commitments made by Vietnam on its WTO Accession

SUPERVISORS:Prof. Christina MoёllDr. Bui Ngoc Cuong

Preface and Acknowledgements

The author would like to express many thanks to Professor Christina Moёll, Faculty of Law, Lund University, Sweden; Doctor Bui Ngoc Cuong, Hanoi Law University, and my teachers, relatives, friends and colleagues for their support during the process of writing this thesis.

1

Table of Contents

Preface and Acknowledgements.................................................................................1Table of Contents.......................................................................................................2Abbreviations.............................................................................................................4Executive Summary....................................................................................................51. Overview of banking services and international commitments of Vietnam

on opening banking services market in the WTO’s framework...................7

1.1 Overview of banking services and the opening up of banking services as part of globalization......................................................................................7

1.1.1 Overview of banking services.................................................................71.1.2 Opening up the banking services market in the context of globalization.

...............................................................................................................14

1.2 International commitments of Vietnam on opening up its services market within the WTO’s framework....................................................................18

1.2.1 Commitment on licensing foreign credit institutions to supply banking services in Vietnam...............................................................................22

1.2.2 Commitment on regulating the form of financial companies are licensed to operate in Vietnam............................................................................24

1.2.3 Commitment on regulating the form of financial services that can be provided in Vietnam..............................................................................25

1.2.4 Commitment on regulating the capital ratio of foreign banks may own in a Vietnamese bank.............................................................................25

2. The current situation regarding Vietnamese law on banking services and completing the implementation of the commitment to open up the banking services market within the WTO framework.............................................27

2.1 The current situation regarding Vietnamese Law on banking services......272.1.1 Current overview of the banking system and the Vietnamese Banking

Law........................................................................................................272.1.2 Influence of international commitments on opening banking services on

Vietnam Law.........................................................................................302.1.3 The adaptation of Vietnamese Law on Banking in line with its

commitments on joining the WTO........................................................32

2.2 Completing the work on Vietnamese Law to fully implement the commitments on opening up the banking services market within the WTO framework..................................................................................................40

2.2.1 Completion criteria for various regulations of Vietnamese Law and the international commitments on opening up the banking services market................................................................................................................40

2.2.2 Proposal of solutions to the correct implementation of the international commitments on opening up the banking services market of Vietnam.41

Conclusion................................................................................................................44Table of Statutes and other Legal Instruments.........................................................46

2

International Treaties and Conventions....................................................................46National Legislations................................................................................................46Vietnam46

Bibliography.............................................................................................................47

Official Reports and other Documents.....................................................................47Monographs..............................................................................................................47Articles in Journals, Anthologies etc........................................................................48

Abbreviations

ASEAN Association of South East Asian Nations

3

GATS General Agreement on Trade in Services

GDP Gross Domestic Product

FDI Foreign Directive Investment

IMF International Monetary Fund

NA National Assembly of Vietnam

SRV Socialist Republic of Vietnam

WTO World Trade Organization

WB World Bank

VND Vietnam dong

USD US dollar

4

Executive Summary

Vietnam was officially recognized as the 150th member of the World Trade Organization (WTO) on 11th January 2007. This event marked a new stage in the process of integrating Vietnam into the international economy in general and the banking sector in particular. However, faced with the need to implement the commitment undertaken as part of the integration process, Vietnamese banking services regulations were found to contain many weakness. These regulations contain many contradiction, Vietnamese financial ability is generally weak, the management mechanism for banking activities has not caught up with modernization nor conformed to international practices and standards and many forms of banking services have no adequate legal framework… These shortcomings make it hard for Vietnam to implement its commitments effectively and to make full use of the advantages that integration brings. A series of questions arise. What was the real situation of the law on banking services in Vietnam when it joined the WTO? What problems were identified when implementing the commitments? How can Vietnam overcome these shortcomings?... All of these problems need to be studied carefully and then resolved both in theory and in practice.

The purpose of this thesis is to clarify the theory and practice of modifying the law on banking services in accordance with Vietnam’s commitments on WTO accession and with international practice in general.

This involves the following tasks: - Clarify the concept of banking service according to international practices

(the WTO agreement) and the particular requirements of member countries wishing to open up their banking service market.

- Clarify Vietnam’s commitments on opening up the banking service market in the framework of the WTO agreement.

- Clarify the situation of Vietnamese Law when linked to its international commitments within the WTO framework. Such an analysis is the scientific foundation needed to help reform the law in the direction of opening up the banking service market.

The thesis will focus on the commitments on opening up banking services market undertaken following WTO accession and on how Vietnam is in fact implementing these commitments. However, because the regulations on opening up the banking services market are based on the law of banking services in general, this research

5

needs to be seen against the background of a study of regulations of Vietnamese and WTO regulations of banking services in the light of 4 of the commitments undertaken: (i) commitment on licensing foreign credit institutions to supply banking services in Vietnam, (ii) commitment on regulating the form of financial companies licensed to operate in Vietnam (iii) commitment on regulating the form of financial services that can be provided in Vietnam, (iv) commitment on regulating the capital ratio of foreign bank ownership of a Vietnamese bank.

This thesis combines the analyzing, comparing and synthesizing methods. The analyzing method is used to evaluate the current state of the law on banking services in Vietnam. The comparing method is used to compare Vietnamese regulations with the WTO regulations as well as international practice. The synthesizing method is used to evaluate and draw conclusions on each matter studied and give recommendations for improvement. Moreover, to strengthen our argument, we provide illustrative statistics where necessary.

Base on this research, the thesis hope to give an overview of the theory and practice of the current law on banking services in Vietnam and makes some proposals aimed at effectively implementing the commitments made on WTO accession and strengthening the competitive capacity of the banking service sector.

6

1. Overview of banking services and international commitments of Vietnam on opening banking services market in the WTO’s framework

1.1 Overview of banking services and the opening up of banking services as part of globalization

1.1.1 Overview of banking services 1.1.1.1 The concept of Banking Services

a. The concept of “Services”:Today, service activities are developing strongly and are now playing an important part in the economy of most nations. In the 1990s, services made up 40% of GDP in Uganda, 50% of GDP in Zambia, more than 60% of GDP in Korea and Brazil and 80% of GDP in Canada1. (In Vietnam, according to the General Statistics Office ,

services made up 37,98% of GDP in 2004).2 However, there are many different concepts of services, none of which is accepted globally.

According to many researchers, services can be understood in both a broad and a narrow sense.- In the broad sense, services are considered the third economic sector, which includes all economic activities other than industry and agriculture. This point of view is held by economists such as Allan Fisher and Colin Clark3. Clark defined services as “forms of economic activities which are not included in the first and second sectors (industry and agriculture)”. - In the narrow sense, services are understood to be the “software” of visible products, closely related to the production process and visible product exchange. An example is the Honda product warranty service which is a service connected to the sale of Honda motors, carried out after sales in order to support and enhance sales activity overall.

In Vietnam, there are various ways of understanding the concept. According to the Vietnamese encyclopedic dictionary, services are activities to meet the demand of

1 National Committee on international economic cooperation (2005), General view of service commercial liberalization, National Politics Publishing House, p.21.

2 National Committee for International Economic Cooperation Office (2006) “WTO integration documents of Vietnam”, p.182.

3 James R. Melvin, History and Measurement in The Service Sector: a review, Review of Income and Wealth, series 41, number 4, December 1995, p.484.

7

production, business and life4, such as entertainment, health and education services in daily life; transport, information and consulting services in business. According to Prof, PhD. Nguyen Thi Mo: “Services are laboring activities crystallized into invisible products which, although of value, cannot be touched”.5 Compared with the encyclopedia definition this makes it clearer that services consists of invisible products.

International organizations like the International Monetary Fund (IMF) or World Trade Organization (WTO) define the concept by determining the areas which are regarded as services and then just listing and classifying them. The General Agreement on Trade in Services (GATS)6 GATS does not define the term but indirectly refers to the concept by way of the 4 modes for providing services.

Modes of providing services according to GATS: (a) Cross- border supply: In this mode, the service provider the and customers are

each in their own country but the service is provided from the territory of one country to that of another. For example, express-service or transporting oil through a pipeline.

(b) Abroad consumption: In this mode, customers have to go to the country of the provider to buy the service, such as the service of being examining and medically treated in a foreign country or studying abroad.

(c) Commercial presence: In this mode, service providers set up their presence in the country of the customer through a legal entity such as a branch, representative office or subsidiary company. For example, banking services, distribution services.

(d) Natural presence: In this mode, providers appoint representative in the country of the customer to provide services there. For example, providing experts, researching the market.

4 Encyclopedic dictionary, p.167

5 Prof. PhD. Mo, Nguyen Thi, “Choosing steps and solutions for Vietnam to open trade in services”, Political Argument Publishing House, 2005, p.14

6 GATS is a system of regulations of the WTO multilateral adjustment to trade services. This Agreement derives from the Uruguay round negotiations and includes obligations and principles, the index of each field and the specific commitments by each country aimed at opening markets. 29 terms of GATS applies to all service sectors including the banking service sector. These provisions state the principle that all Member States must comply with: (1) Most-Favored-Nation, (2) Transparency, (3) National treatment, (4) Market access.

8

According to the WTO classification, services are divided into 11 main branches; each branch is again divided into sub-branch, the total number of sub-branches being 155 ones.7 The main branches include: Business services (including services relating to specialities and professions, such as legal consultancy, accounting, auditing, promotion…), information services (including services relating to delivery, telecommunication, and audio vision), construction services, distribution services (including activities of wholesaler, retail, dealer), education services, environment services, financial services (including services relating to banking, insurance, security), medical services, tourism services, culture-entertainment services and transportation services.

In my opinion, the concept of services can be understand like this: “Service is the by-product of the laboring process. It does not exist as an object but is consumed together with the process of provision in order to meet the demands of production and of human life”.

Services have some attributes as follows:8

First, a service has the characteristic of Intangibility: Services are invisible and immaterial. Services are things which “cannot drop to your feet” when being sold.9

You cannot touch it or drop it on your feet like other common goods because a service product does not exit as an object. For example, when you buy a bottle of milk, it may fall on your feet if you or the seller are not careful. But this problem never happens with services. On the other hand, you cannot assess its quality before consuming it. For example, a customer cannot evaluate the quality of a spa shop if she does not directly use that service.

Second, a service has the characteristic of Inconsistency: It is difficult to determine the quality of services because they depend on the context that creates them, such as provider, time, and place of provision. For instance, the quality of training at a foreign language center may be different when teachers at different levels teach. Even the same teacher can have a successful lecture in one class but fails in another since the level of success depends not only on raw ability but also on equipment and mood….

7 See Document MTN.GNS/W/120 of the WTO

8Vice Professor, PhD Nguyen Huu Khai, MA. Vu Thi Hien “Vietnamese services, competitive capacity and international economic integration”, Statistics Publishing House, Hanoi 2007, p.9

9 Liberalizing International Transactions in Services, p.1

9

Third, a service has the characteristic of Inseparability: One of the characteristics of a service is that with a service product, consuming coexists with providing the service. A service is consumed when it is produced, and the process of provision stops when service consumption stops. On calculating the output of the economy, the Bureau of Economic Analysis, U.S Department of Commerce also gave a general definition of service: “Services are those whose products cannot be stored and are consumed at the time and place where trading activities take place10”.

Forth, a service has the characteristic of Inventory: Services cannot be stored; this means that service products cannot be produced in advance and stored to wait to be consumed. However, this characteristic is only relative, since some service products are in object form, as in design services, where drawings are visible and can be stored.

(b) Concept of “Banking Services”:Similar to the concept of service, there are many different ways of understanding the concept of banking service. Before reviewing this concept, let us find out what a “bank” is.

In the past, a bank was often defined by its function (services provided) in the economy. In fact, many financial organizations including security companies, security intermediary companies or leading insurance companies are now trying to provide banking services. And banks are competing by expanding the scale of the services they provide, such as securities, insurance and many other new services. The public is becoming unable to distinguish banks from some other kinds of financial organization.

There is one view that : A Bank is a financial organization which provides various categories of financial services, especially credit, savings and payment services, as well as implementing more financial functions than any other business organization in the economy”.11

In Vietnam, provision 2, Article 20 of The Law on Credit Institutions12 provides that: “A Bank is a form of credit institution permitted to conduct all banking operations and other related business operation…”.

10 Encyclopedia of Business and Finance (2001), Vol.2, Macmillan, p.762

11 For a general view of banks and banking services, see www.saga.vn, accessed 9th

October,2008

12 This Law was passed by the X Legislature of the National Assembly of the SRV in its second session on 12 December 1997 (The Law No. 02/1997/QH10) and was amended and supplemented by the Law on amending and supplementing a number of Articles of the Law on Credit Institutions, passed by the XI Legislature of the NA of the SRV in its fifth session on 15 June 2004 (the Law No. 20/2004/QH11).

10

In the book “Modern Banking”, David Cox stated that: “Most professional activities of commercial banks are called banking service or foundations for developing such service”.13 According to the viewpoint of this writer, banking services constitute all the professional activities carried out by a bank, which is just a kind of business.

In Vietnam, banking services are controlled by the Law of Credit Institutions, yet this law does not give a definition or explanation of banking services. The phrase “banking services” is mentioned in provision 7, Article 20 of The Law on Credit Institutions: “Banking operations mean monetary business and provision of banking services, with the regular and principle operations being the taking of deposits and the use of such deposits to extend loans and to provide payment services”. So, here, “banking services” means one of the activities of a Bank.

In some Vietnamese books, newspapers and magazines, without giving a definition, writers often list various types of banking service. According to this, banking services are understood in a broad and narrow sense:- In the broad sense, banking services includes all currency, credit, payment and foreign exchange activities of the banking system14 (This viewpoint fits the way of classifying banking services used by the WTO15 as well as in many developed countries). - In the narrow sense, banking services only consists of fee receiving activities such as money transfers, guarantee, foreign exchange business, international payments…16

Here, we would like to research issues relating to banking services in the broad sense of the word as it is mainly understood in the modern world.

1.1.1.2 Characteristics of banking services.

Beside the general attributes of services mentioned above, banking services have the following features:

(a) Banking is a highly sensitive activity for the economy.The banking system is regarded as the nervous system of the economy. Banks play the key role in distributing finance and managing most financial transactions. And the bankruptcy of a single bank may cause the collapse of the whole system, as we

13 Cox. D (1997), Modern Banking, Politics Publishing House, p335

14 See “Develop Vietnam’s financial service market in the process of integrating”. Thai Ba Can, Tran Nguyen Nam

15 According to the WTO’s classification, banking service is a component part of the financial service sector in general and was ranked as the 7th sector, sub-sector B.

16 See Professor, PhD. Nguyen Thi Quy, Modern Banking Service, 2008, Scientific Society Publishing House, p.8

11

have just seen. Banking operations, hence, have a direct effect on the stability of the national economy.

(b) Diversity of banking service forms.Unlike trade in commodities, trade in services takes various forms. While the object of a commodity trade is particular goods, the object of trade in service is forms of providing services which are based on the capacity of the service provider. These forms are recognized throughout the world. Banking service is one of the branches of the trade in services, so it also reflects this. On the other hand, beside the traditional services with a long history, such as bank deposits or lending services, banks are increasingly broadening the category of services and providing new services for customers, always being helped by the development of new technology. Banks today are even becoming “financial supermarkets”17 according to Peter Rose.

(c) Subject to interference of the government through measures affecting the capacity of the banking service.

Interference of the government into trade in service is only implemented through preventing provider’s capacity of providing or consumer’s capacity of consuming service. An activity of providing and consuming normal service requires the presence of service provider and consumer. Only by managing effectively or gaining necessary reorganization of service transaction, can the government make full use of those measures. In banking service, the government makes influence on ability of providing and consuming banking service through measures such as building and implementing national monetary policy or using Law as the tool of manage and maintain order of banking operations…

1.1.1.3 Classification of banking services

Banking services can be classified in different ways, each of which has a certain value.

- Based on the time factor, banking services are divided into:(i) Traditional services including: (a) Foreign exchange service, (b)

discounting commercial papers and commercial lending, (c) receiving deposits, (d) preserving valuable property, (e) providing transactional accounts, (f) providing confidential services..

(ii) New services: (a) consumer loan services, (b) financial consultancy, (c) cash management, (d) services relating to buying and hiring equipment, (e)

17 Peter Rose (1999), Commercial Bank Management, Irwin McGraw Hill.

12

selling insurance services, (f) providing services regarding securities, (g) providing investment bank service …18

This classification is a foundation on which to construct a legal framework, State policies, measures of the Bank (strategy, organization, applied technology, monitoring activities, risk control ....) suitable for each type of service, especially the more modern kind, to promote the best possible performance.

- Based on the functions of banks, banking services are also classified into:1. receiving savings from the public2. lending in all forms3. providing finance4. paying and transferring money5. guaranteeing6. currency exchanges…19

The meaning of this classification will help us to determine what are banking activities and what are not.

The classification of banking services plays an integral role in both theory and practice, as the success of banks depends on their capacity to determine the financial services that society needs, providing those services effectively and selling them at a competitive price.

1.1.2 Opening up the banking services market in the context of globalization.

1.1.2.1 Necessity of opening up the banking services market

It is necessary to open up the banking services market for the following reasons, all of which acquire greater force in this time of globalization:

First, opening up the banking services market is what the economy demands As we known, “capital” is always a “hot” topic in most countries, especially in the

developing countries. Demand for capital is increasing, especially in the context of a financial crisis of global magnitude. Opening up the banking services market will increase Foreign Direct Investment (FDI) capital sources.

After a long period of tightly protecting domestic bank markets, many countries which were implementing economic reforms in the 1990s, especially average-income

18 See General view of banks and banking services, www.saga.vn, accessed 9th October, 2008

19 See Syllabus of Vietnamese Law on Banking, Hanoi University of Law, The People’s public security publishing house, 2007

13

countries such as those in Latin America, Eastern Asia, Middle-Eastern Europe, started reducing or removing the barriers preventing Foreign Direct Investment (FDI) from flowing into the banking area. Currently, many nations allow foreign investment in banking not only by opening offices or branches but also by investments in domestic banks. The value of FDI investing in the financial area of developing countries increased dramatically from 2.5 billion USD in the period 1991 – 1995 to 51.5 billion USD in 1996-2000 and 67.5 billion USD in 2001-2005.20 The participation rate of foreign countries can be measured by the proportion of the total value of the banking system which they hold.

On the other hand, opening up the banking services market will also help foreign investors take part in privatizing state-owned banks

Generally,, opening up the banking services market will help the big banks in America and Europe expand into promising markets in developing countries and buy weak banks, restructuring and selling them or otherwise benefiting from their activities.

Second, opening up the banking services market aids in the integration of the international economy.

Opening up the banking services market conforms to multilateral commercial agreements, to EU rules (for several countries in Middle Europe and Eastern Europe), to IMF rules (for countries affected by the economic crisis) or to the accession requirements of the WTO (for the WTO’s member countries).

For a member of the WTO or a country participating in negotiations to join WTO, the opening up of the market for banking services is a commitment which has to be implemented if membership is to happen.So, opening up the market for banking services derives from the practical demands of the economy and the need to integrate of each nation, especially developing countries, like Vietnam into the international economy.

20 Bank Austria Creditanstalt (BA-CA) report, 2005

14

1.1.2.2 Globalization as the context for opening up the banking services market for WTO member countries .

The term “globalization” understood in the present context is linked to the internationalization of many sectors of which, the most basic is the economic. The economy is however connected to other sectors. Globalization removes political barriers, relies on the progress of digital technology and shrinks distances. And his process is happening on a global scale.

Globalization is linked objectively to two other economic processes :liberalization and integration. The final destination of globalization will be is a united global economy that does not recognise any national boundaries.

Opening up markets in each nation is one of globalization’s key processes. Opening up the market for banking services is fully within this process. The WTO is an organization whose members are admitted through negotiation, which means that besides agreeing to WTO regulations, the new member must open up is commodity and services markets.

Naturally, the commitment on opening up service markets is that the new member commit to loosening the conditions for foreign service providers to get access to the domestic market. However, in practice, countries receiving imported services have a tendency to tighten the conditions for access of foreign service providers to the domestic market so as to protect domestic service providers. In order to have a deeper understanding of this matter, we need to distinguish between commodity commerce and service commerce so that we can understand the differences in market protection.

Due to there being no direct tariff on import or export of services, to restrict the activities of foreign service providers and protect the domestic service provider, the host country can propose measures and conditions to control foreign access at two points of time:21

(i) When foreign service providers want to be allowed to provide services and be present in the host country to provide them.(ii) After they are allowed to provide services and have entered the host country.

The conditions given at the first point of time are restrictions on opening p the market. If these conditions cannot be met, foreign service providers will not be allowed to provide services in the host country.

21 See Multilateral Trade Aid Project MUTRAP II (2006), Q&A about WTO, p.68

15

The conditions at the second point of time are restrictions providing for national priority. These conditions discriminate between foreign service providers and domestic ones

Previous multilateral negotiations tended to avoid service branches since it was thought that services has little ability to be exchanged and transported but today they are regarded as subject to the common development trend affecting all sectors. In the negotiating round in Uruguay (ended in 1994) and the establishment of the General Agreement of Trade in Service (GATS), the members of the WTO made services a decisive element of the multilateral system The facts then showed that liberalization of services can lead to major investments. Nowadays, in the Doha negotiating round, despite many difficulties, the countries are trying to foster the process of service liberalization.

Service liberalization is expressed in a schedule of commitments. According to regulations of the WTO, a schedule of commitments consists of 3 parts: joint commitments, particular commitments and list of measures regarding waiver to Most Favored Nations (MFN).

(i) Joint commitments: include commitments covering all services in the service commitment schedule. This part mainly mentions general matters, such as regulations of investment, mode of enterprise establishment, measures relating to taxation of and subsidies for domestic enterprises…

(ii) Particular commitments: include specific commitments applied to each service in the service commitment schedule. The content of these commitments expresses the level of opening up of each service to Foreign Service providers .

(iii) List of measures regarding waiver to Most Favored Nations: includes measures regarding violations of the MFN principle for services. According to regulations of GATS, a member can violate the MFN principle if that member bring the violating measure into the list of measures regarding waiver to Most Favored Nations and this is accepted by other members of the WTO.

The schedule of commitments includes 4 columns: (i) Column of Branch/sub-branch description: shows name of particular service

subject to a commitment(ii) Column of Market Access: gives list of measures maintained for foreign

service providers. GATS regulates 6 limiting measures: 1) limitation on number of service providers, 2) limitation on total value of transactions or property, 3) limitation on total number providing services, 4) limitation on number of workers, 5) limitation on forms of enterprise establishment, 6) limitation on contributing capital from foreign countries.

16

Therefore, the more measures a commitment schedule can list, the narrower the level of opening up the market for foreign service providers.

(iii) Column of limitation on national treatment: lists measures maintaining discriminatory treatment between domestic service providers and foreign ones. The more measures a commitment schedule can list in this column of, the greater the discriminatory treatment between domestic service providers and foreign ones.

(iv) Column of supplementing commitment: lists measures affecting service providing and consuming operations not belonging to the other limitations. This column describes regulations relating to ability, technical standard, requirements or procedures of licensing.

Measure of accessing “negative approach” and “positive approach”:- A “Negative approach” measure: is the a commitment to allow an unlimited

range of things. This measure is used when giving commitments for services in the schedule. According to this, committing parties will list all the limiting measures applied to services. Except for these measures, no other ones can be applied.

- A “Positive approach” measure: is a commitment to do only those things specifically allowed. According to this, committing parties only commit to open markets for the services appearing in the schedule. They have no responsibility for services that do not appear there.

When opening up the market in providing services, each member country will give priority to banking services or banking service providers of any other member country if they accept the conditions and restrictions which are agreed and regulated in the commitment list of that country.

1.1.2.3 Meaning of opening up the banking services market.

Firstly, opening up the market for banking services will impact positively on

domestic capital markets bank. In fact, foreign capital has a relatively important

position in re-financing the banking sector. If the home country is faced with a

shortage of capital following a serious banking crisis or for any other reason, it needs

capital to produce and do business.

Secondly, on opening up the banking services market, domestic banking will have a new foundation of legal regulations of operating organizing, inspecting or supervising banking which will conform to international practises.

17

Thirdly, opening up the banking services market will help to increase the competitive capacity of existing banks. In particular, it will have an influence on the method of operating and managing existing banks, forcing financial institutes to operate more effectively by re-structuring, reforming the mode of management and reducing expenditure...

In short, opening markets in general, and opening the market for banking services in particular is a complicated issue. However, we must accept that it will change the face of the economy of every nation.

1.2 International commitments of Vietnam on opening up its services market within the WTO’s framework.

Up to the present, Vietnam has only committed to open up its banking services area in a bilateral commercial agreement between Vietnam and Canada, the Agreement for the Liberalization, Promotion and Protection of Investment between Vietnam and Japan and the Commitment on integrating into the WTO. The main content of its commitments in the banking area is found in Vietnam’s commitments on integrating into the WTO.22 The legal foundation for Vietnam’s bringing commitment on banking services to the negotiation table of the WTO is the General Agreement on Trade in Services (GATS).

(a) Overview:Basically, according to GATS, each member country will give the same favorable priority to the banking services or banking service providers of any other member country to the extent of the conditions and articles as well as the restrictions which are agreed on and regulated in the commitment list of that country.

In its negotiations with the WTO, Vietnam committed regarding 11 service branches, covering about 110 of the total 155 sub-branches in the WTO classification, including its commitment on opening up the banking services market.

Vietnam committed to open up the banking service markets in 4 modes of supply, as follows:

- Cross-border supply mode (banking services are supplied from one country to another): Vietnam has not committed except for sections (k) and (l). This means that Vietnam retains its ability to restrict access to the market and maintain national

22 Report No.199/BC-NHNN of State Bank of Vietnam date 21/3/2008 Summarized the Law on Credit Institutions.

18

treatment in the 9 other service sub-branches, that is, except for sections (k) and (l). Foreign organizations can supply the services section (k) provides namely financial information, service of treating financial data, consulting services, brokerage, and the section (l) services of supporting, consulting and brokerage for all other banking services.

- Abroad consumption mode: (consumers or companies using banking services in foreign countries): Vietnam does not limit this mode. This means that Vietnam does not restrict access to the market or national treatment to all the 11 sub-branches of banking and other financial services covered by this. Consumers in other member countries of the WTO are allowed to get access to banking services in Vietnam and are to be treated as Vietnamese citizens.

- Natural presence mode: (individuals travel from one country to another to supply banking services, Vietnam has not committed except for commitments in the general commitment part (foundational commitments). Vietnam maintains the ability to restrict access to the market and national treatment. The commitments listed in the general commitment part continue to apply, they are commitments relating to entering a country and temporary residence there (of individuals).

- Commercial presence mode: (foreign credit institutions set up branches or joint venture companies to supply banking services in another country). This is the most important mode of supplying banking services. Vietnam committed to have “no restriction but exception”. It means that Vietnam agreed to open up its banking services market but make a list of restrictions which can be applied to foreign service suppliers in the column Restriction to access market and Restriction national treatment.

WTO commitments in the banking sector are expressed through: (i) commitments on opening the service market shown in the Service Commitment Schedule and (ii) multilateral commitments shown in the Integration Report of Mission Committee.

(i) Service Commitment Schedule:Particular commitments on banking and other financial services lie in part 7 – “Financial services” - of the Commitment schedule. This part states that: “Commitments on banking and other financial services are to be implemented so as to be compatible with related laws and regulations enforced by Vietnamese bodies in order to ensure compliance with Article VI of GATS23 and Section 2 of Appendix

23 Article VI of GATS provided that: “each Member shall ensure that all measures of general application affecting trade in services are administered in a reasonable, objective and impartial manner”.

19

about financial services”24 but “according to common regulations and based on non-discriminatory treatment, the provision of banking products or services and other financial services has to follow requirements about legal form and related institution”.

Particular commitments on banking services and financial services covers 11 service areas, including:

- Service of receiving deposits and other items of expenditure.- Leasing in all forms, including consumer credit, mortgage credit, factoring

and sponsoring commercial transactions.- Financial leasing and buying- Services of payment and money transfer, including credit cards, payment

cards and loan cards; tourism checks and foreign exchange.- Guarantees and like commitments.- Business on their own or their customers account, at transaction office, in a

transaction market, by agreement or other ways.+ Monetary market tools (including checks, bills of exchange, deposit certificates)+ Foreign exchange+ Exchange rate and interest tools, including products such as exchange contracts, dead-line contracts. + Gold.

- Monetary agency- Property management such as cash or investment management , all forms of

collective investing management, retirement fund management, deposit services and others.

- Payment for services and financial property balances, including securities, derivative products and other tools.

- Providing and delivering financial information and processing financial data as well as related soft wares or other financial service providers.

- Consulting services, intermediary and other supporting financial services.

(ii) Integration Report of Mission BoardThe Report of the Mission Committee on the WTO integration of Vietnam in the Budget and Monetary Policies Part (from passage 9 to passage 17), Foreign

24 Item 2 (a) of Annex on Financial Services provided that: “Notwithstanding any other provisions of the Agreement, a Member shall not be prevented from taking measures for prudential reasons…Where such measures do not conform with the provisions of the Agreement, they shall not be used as a means of avoiding the Member’s commitments or obligations under the Agreement”.

20

Exchange and Payment Part (from passage 18 to passage 31), Service commerce policy relating banking Part (from passage 482 to passage 486) are of interest.

According to this, Vietnam will implement its obligations about matters of foreign exchange under the regulations of the WTO Agreement and other WTO declarations as well as decisions of the IMF. Vietnam will not apply any other law, decisions or measures that can limit foreign currency supply by any individuals or enterprises so that they can carry out international non-resident transactions in the domestic territory.

The Vietnamese government claimed that its future regulation of licensing of banks with 100% foreign capital will be careful and only cover matters such as capital safe rate, capacity to pay and manage the enterprise. In addition, conditions for branches of foreign banks and banks with 100% foreign capital will be applied without any discrimination. The State Bank of Vietnam regulations conform to articles XVI and XVII of GATS when considering new licensing permission applications, in accordance with conform to the restriction mentioned in the Service Commitment Schedule of Vietnam.25

On the other hand, Vietnam will actively adjust its managing procedure for branches of foreign banks, including requirements for minimum capital, in accordance with international practices that are commonly recognized.26

A branch of foreign bank is not licensed to open transaction points, transaction points’ operation depending on the capital of the branch. Vietnam has no restriction on the number of branches of foreign banks. However, transaction points do not include ATM machineries at the head office. Foreign banks operating in Vietnam are able to enjoy fully most favoured nation treatment on installing and operating ATM machineries. 27

In general, the WTO integration commitments of Vietnam in the financial sector allow foreign credit institutions to operate in Vietnam in different forms, expand their scale and range of supply of banking services, creating a convenient and equal “playground” for banks.

(b) Details:

25? See paragraph 483, Report of Mission Board on Vietnam to join WTO, WTO integration documents of Vietnam, p.187.

26 See paragraph 484, Report of Mission Board on Vietnam to join WTO, WTO integration documents of Vietnam, p.187.

27 See paragraph 485, Report of Mission Board on Vietnam to join WTO, WTO integration documents of Vietnam, p.187

21

The legal issues relating to core banking services when Vietnam joined the WTO include: (i) commitment on licensing foreign credit institutions to supply banking services in Vietnam, (ii) commitment on regulating the form of financial companies licensed to operate in Vietnam (iii) commitment on regulating the form of financial services that can be provided in Vietnam, (iv) commitment on regulating the capital ratio of foreign banks may own in a Vietnamese bank.28 Here are 4 extremely important and specific criteria each with the following commitments respectively:

1.2.1 Commitment on licensing foreign credit institutions to supply banking services in Vietnam

Under the WTO’s integration commitments in the Report of Mission Board,29 the regulations on licensing foreign credit institutions to supply banking services in Vietnam includes: (i) Regulations on licensing conditions for credit institutions operating in Vietnam and (ii) Regulations on licensing procedures and application files for credit institutions.

(i) Regulations on licensing conditions for credit institutions operating in Vietnam:One of the key conditions for establishing a branch of a foreign commercial bank in Vietnam was that the parent bank must have a total assets of more than 20 billion USD at the end of the year prior to application; 30

In order to establish a joint venture bank or a bank with 100% foreign capital in Vietnam, the parent bank must have a total assets of more than 10 billion USD at the end of the year prior to application; To open a financial company with 100% foreign capital, joint venture financial company, financial leasing company with 100% foreign capital and joint venture financial leasing company, foreign credit institution in Vietnam, the foreign credit institutions need to have total assets of more than 10 billion USD at the end of the year prior to application.31

28 Mutrap II (2006), Research on effect of banking service liberalization on competitiveness in banking sector, p.87

29 NCIEC (2006), Report of Mission Board on Vietnam to join WTO, WTO integration documents of Vietnam.

30 See paragraph 482, Report of Mission Board on Vietnam to join WTO, WTO integration documents of Vietnam, p.186

31 See paragraph 483, Report of Mission Board on Vietnam to join WTO, WTO integration documents of Vietnam, p.186

22

Besides representative offices, branches and joint venture banks, foreign credit institutions are allowed to establish banks with 100% foreign capital in Vietnam.

The maximum time permitted for foreign banks or joint-venture banks is 99 years.Basically, Foreign Service providers enjoy national treatment, except for some

exceptions: there are one time domestic subsidies to strengthen and create favorable conditions for the process of equalizing Vietnamese enterprises, for research and developing, for the sectors of health, education and audio vision; and a subsidy to enhance welfare and create jobs for minor domestic banks.

In general, the conditions presented to foreign credit institutions to be granted operating licenses in Vietnam are based on the spirit of openness, meet the principles of the WTO / GATS and are in accordance with the purpose of developing the economy of Vietnam.

(ii) Regulations on licensing procedures and application files for credit institutions:GATS and commitments stipulate that foreign credit institutions (bank branches, joint venture banks, 100% foreign owned financial leasing companies, joint venture financial leasing companies, 100% foreign owned financial companies, etc.) must submit an application letter before opening and operating in Vietnam. There are no detailed regulations on the licensing procedures and application files. However, the Agreement gives general principles relating to administrative procedures, transparency and most favored nations regarding trade in services.

- Article 16 of GATS on market access provided that:+ Art.16 (1): Each Member shall accord services and service suppliers of any other Member treatment no less favorable than that provided for under the terms, limitations and conditions agreed and specified in its Schedule.+ Art. 16 (2): The measures which a Member shall not maintain or adopt either on the basis of a regional subdivision or on the basis of its entire territory, unless otherwise specified in its Schedule, are defined as: Point.16 (2.a): limitations on the number of service suppliers whether in the form of numerical quotas, … or the requirement of an economic needs test; Point.16 (2.e): measures which restrict or require specific types of legal entity or joint venture through which a service supplier may supply a service; Point.16 (2.f): limitations on the participation of foreign capital in terms of maximum percentage limit on foreign shareholding or the total value of individual or aggregate foreign investment.

- Article II (1) on Most- Favored- Nation (MFN) Treatment:+ Point II (1): With respect to any measure covered by this Agreement, each Member shall accord immediately and unconditionally to services and service

23

suppliers of any other Member treatment no less favorable than that it accords to like services and service suppliers of any other country.+ Point II (2): A Member may maintain a measure inconsistent with point II (1) provided that such a measure is submitted to the Council for Trade in Services and this measure should not be applied for over 10 years even if its requirement are met.

- Article III on Transparency:+ Art. III(1): Each Member shall publish promptly all relevant measures of general application that pertain to or affect the operation of this Agreement.+ Art. III(3): Each Member shall promptly and at least annually inform the Council for Trade in Services of the introduction of any new, or any changes to existing laws, Regulations or administrative guidelines which significantly affect trade in services covered by its specific commitments under this Agreement.+ Art.III(4): … Each Member shall also establish one or more enquiry points to provide specific information to other Members, upon request. Appropriate flexibility with respect to the time limit within which such enquiry points are to be established may be agreed upon for individual developing country Members.

However, GATS include several exceptional cases not adjusted under the framework of GATS. Point 3(b) of Article I in GATS excludes: “…the services provided to government authorities for exercising their power”.32

1.2.2 Commitment on regulating the form of financial companies are licensed to operate in Vietnam

Under the WTO’s Report of Mission Board,33 of 01/04/2007, beside representative offices, branches and joint venture banks, foreign credit institutions are allowed to establish banks with 100% foreign capital in Vietnam.

Banks with 100% foreign capital integrated into the market will change the state of banking operations in Vietnam, because they can fully enjoy the same national treatment as commercial Vietnamese banks and establish a commercial presence, by

32 Point 1(b)(i) of the Annex of Financial Services under GATS states clearly that: “The services provided to government authorities for exercising their power include the operations of the Central Bank, the Monetary Authority or any Public Legal Entity that implements financial and foreign exchange policies”.

33 See paragraph 481,485, NCIEC (2006), Report of Mission Board on Vietnam to join WTO, WTO integration documents of Vietnam, p.185&187.

24

opening representative offices, branches, companies, subsidiaries and contribute capital to buy stocks in commercial banks in Vietnam. This means that banks with 100% foreign capital have favorable conditions to develop both wholesale and retail banking services, diversify their banking service, take part in trading process and merge with other banks…

Branches of foreign banks are not allowed to open transaction offices except at head office branches.

1.2.3 Commitment on regulating the form of financial services that can be provided in Vietnam

Under the WTO’s integration commitments in the Service Commitment Schedule,34

foreign credit institutions operating in Vietnam can provide most types of banking service, such as lending, deposit receiving, financial leasing, foreign exchange trading, monetary market tools, arising tools, monetary intermediary acts, property management, payment service provisions and consultancy and financial information.

For deposit receiving operations, branches of foreign banks can receive unlimited deposits in VND from legal persons, and taking deposits from natural person will be allowed in 5 years, from 01/01/2007 up to a maximum level of 650% of the legal capital of the bank, leading to fully national treatment in 2011.

1.2.4 Commitment on regulating the capital ratio of foreign banks may own in a Vietnamese bank

Under the WTO’s integration commitments in the Report of Mission Board,35 in terms of contributing capital by buying stocks, the total number of stocks which may be held by foreign natural or legal persons in any commercial joint stock bank must not exceed 30% of the chartered capital of the bank, unless Vietnamese Law has other regulations or permission is granted by the appropriate agencies.

In fact, foreign banks are allowed to buy stocks in some Vietnamese commercial joint stock banks and become strategic partner of these banks. Hence, foreign banks can choose different ways of accessing the market and exerting competitive pressure on Vietnamese commercial banks. That foreign banks can become strategic partners

34 See point 7, item B, Service Commitment Schedule, NCIEC (2006), WTO integration documents of Vietnam, p.1050

35 See paragraph 481, NCIEC (2006), Report of Mission Board on Vietnam to join WTO, WTO integration documents of Vietnam, p.185.

25

of Vietnamese commercial joint stock banks also means that the former can make use of the latter’s branch network and use its customers to expand their market share.

However, at the current commitment level, the State Bank retains tools for adjusting the rate and speed of growth of market share of foreign banks by restricting the stocks that may be bought by foreign individuals and organizations in certain situations. The State Bank’s capacity will be an effective managing tool to create favorable conditions for Vietnam commercial banks and give them the necessary transition time to strengthen their competitive ability before foreign banks with advantages of capital, networks, service products and technology fully enter the market.

In short, Vietnam’s commitments on integrating the banking service is basically compatible with the current laws and capacity of Vietnamese banks. Opening up the market in banking service may cause difficulty regarding competitiveness in this area. However, it can be seen that challenges in this area will create good opportunities for other economic fields since, as mentioned above, banking services are the “skeleton” of the economy. Therefore, implementing the WTO commitments is not only in conformity with international commitments but will also provide some motivation to develop the economy and further the integration into the international economy.

26

2. The current situation regarding Vietnamese law on banking services and completing the implementation of the commitment to open up the banking services market within the WTO framework

2.1 The current situation regarding Vietnamese Law on banking services

2.1.1 Current overview of the banking system and the Vietnamese Banking Law.

The Vietnamese banking system is organized on the two-level model, including a Bank of State (Central bank) and credit institutions with different forms of ownership and business. According to the latest statistics on the operation of foreign credit institutions in Vietnam, 2 years after joining the WTO, 33 foreign banks have been licensed to open branches, and there are also 5 joint venture banks with 19 branches, 3 banks with 100% foreign capital, 9 non-banking credit institutions and 54 representative offices in Vietnam. In 2008, in spite of the loss of some branches of foreign banks and other financial companies, the total pre-tax profit was over 1.400 billion VND.36

The main objects of state commercial banks are state enterprises, big private enterprises and the agricultural area; the objects of joint venture banks and branches of foreign banks are foreign capital investment areas; the objects of commercial joint stock banks are small and medium enterprises in the private sector; non-banking credit institutions (financial companies, financial leasing companies) mainly serve the capital demands of certain types of business. In spite of this diversity in forms of ownership and business, Vietnamese banking services have a low growth rate and are not yet living up to their potential. The opening rate of institutions in the service area in general and the banking service area in particular is feeble and does not conform to international practices. In the banking sector, the State commercial Bank still occupies most of its market, so it is easy for it to retain its monopoly position and even discriminate between state commercial banks and other forms of commercial bank.

At present, there are two general regulatory laws regarding banking operations and credit institutions:

36 See Report the foreign affairs task of the State Bank of Vietnam and the activities of the

foregn credit institutions in Vietnam in 2008, http://www.sbv.gov.vn/vn/home/tinHDNH.jsp?tin=3975, accessed 31 December 2008.

27

(1) Law on Credit Institutions no. 02/1997/QH10 on 12/12/1997, modified and supplemented by Law no. 20/2004/QH11 of the National Assembly on modifying and supplementing Law on credit institutions no. 02/1997/QH10 on 12/12/1997 , and (2) Law on State Bank of Vietnam no. 01/1997/QH10 on 12/12/1997, modified and supplemented by Law no. 10/2003/QH11 on modifying and supplementing Law on credit institutions no. 012/1997/QH10 on 12/12/1997 .

These two Laws have proved to be highly appropriate and forward-looking and meet the demands of managing and directing the operation and development of credit institutions. They do not need to be modified and contribute to the stability of the legal environment for banking operation. 37

Besides these two important laws, many legal documents were promulgated, modified and supplemented to be closer to international practice. In fact, these reforms started in early 2004 and are estimated to be finished in 2008.

The Laws and Ordinances relating directly or indirectly to banking services as modified and supplemented include:

- Bankruptcy Law, passed on 15/06/2004 and came into effect on 15/10/2004 (replacing Bankruptcy Law in 1993)/

- Commerce Law, passed on 14/06/2005 and came into effect on 01/01/2006, Civil Law passed on 14/06/2005 and came into effect on 01/01/2006.

- Enterprise Law, passed on 19/11/2005 and came into effect on 01/07/2006;- Contract Buying Law, proved on 29/11/2005 and came into effect from

01/04/2006.- Law on Negotiable Instruments ratified on 29/11/2005 and came into effect on

01/07/2006 (replacing Ordinance on Bill of Exchange in 1999); - Ordinance on Foreign Exchange which was approved on 13/12/2005 and came

into enforcement on 01/06/2006;

Other important legal documents were issued which aim at directly adjusting the activity of banks and credit institutions, including:

- Decision no. 1096/2004/QD-NHNN on 06/09/2004 of Governor of State Bank of Vietnam on factoring activity of credit institutions;

- Decision no. 1452/2004/QD-NHNN on 10/11/2004 on foreign exchange of credit institutions allowed to trade in foreign exchange;

37 Statement No.35/TTr-NHNN on 21/3/2008 by the State Bank of Vietnam sent to the Government Project on the amended Law of Credit Institutions.

28

- Decision no. 351/2004/QD-NHNN on 07/04/2004 of the Governor of State Bank of Vietnam on monetary agency

- Decision no. 475/2005/QD-NHNN on 19/04/2005 and Decision 03/2007/QD-NHNN on 19/1/2007 of the Governor of State Bank of Vietnam on ensuring safety in the whole operation of Credit Institutions.

- Decree no. 22/2006/ND-CP enforced on 28/02/2006 of the Government about organizations and operations of foreign bank branches, joint venture banks, banks with 100% foreign capitals, representative office of foreign credit institutions in Vietnam;

- Decree 141/2006/ND-CP on enforcing the legal capital of credit institution.

These law and legal documents have created a legal foundation in which the banking system can develop and they conform to the requirements of integration. However, as mentioned at the beginning of the thesis, facing the requirements of implementing its international commitments, Vietnamese regulations on banking services have been seen to have shortcomings that need modifying, supplementing and completing. Vietnam’s Government and State Bank have taken some actions regarding this issue. In particular:

- On 02/11/2007, the Governor of State Bank passed Decision no. 40/2007/QD-NHNN on promulgating a Regulation on licensing the establishment and operation of non-stock banking credit institutions.

- On 09/01/2008, the Governor of State Bank passed Decision no. 01/2008/QD-NHNN on opening and terminating operation of branches, representative offices of non-banking credit institutions.

- On 03/12/2008, Governor of State Bank passed Decision no. 2951/QD-NHNN on adjusting the compulsory reservation rate for credit institutions.

- On 05/12/2008, Governor of State Bank passed Decision no. 34/2008/QD-NHNN on modifying and supplementing several articles of regulations on the safety rate in the operation of credit institutions, along with Decision no. 457/2005/QD-NHNN on 19/04/2005 and Decision no. 03/2007/QD-NHNN on 19/01/2007 of the Governor of State Bank. Decision no. 457 and Decision no.03 indicated some problems that needed to be dealt with immediately to create favourable conditions for credit institutions to develop safely, stably and healthily within international standards and practices. The content of modifying and supplementing of Decision no.34/2008/QD-NHNN includes:(1) In terms of contributing capital and buying stocks: A supplement covered the issuing of charter capital for sub-companies having legal entity status, accounted for independently by way of the concept of capital contributing and stock buying (Item 20 Article 2 of Decision no.457).

29

(2) Article 16 and article 17 are also unified. According to this, credit institutes which contribute capital or buy stocks at a rate above the regulated rate must be accepted in documents by the State Bank and meet these conditions: (i) Credit institutions fully implement other rates of safety in their banking operations, have bad debt rate (NPL) under 3% and business operation profits in the last 3 years, (ii) This relates to capital contribution and stock purchasing in credit institutions in financial difficulty and at risk of losing payment capacity and causing a bad effect on safety and the whole credit institution system. (3) Besides, regulations were added on the total capital contribution and stock buying level of credit institutions and sub-companies having legal entity status, which are to be accounted for independently while enterprises that credit institutions control in the same enterprise, investment funds, investment projects, other credit institutions do not exceed 10% charter capital of those enterprises, investment funds, investment projects, other credit institutions (Item 1 Article 17 Decision 457).

However, prior requests for the enforcement of the commitment regarding the regulations of the banking services in Vietnam show inadequacies which need to be amended, supplemented and perfected. This will be further discussed in the latter part of this thesis.

2.1.2 Influence of international commitments on opening banking services on Vietnam Law

As mentioned at the beginning of the thesis, opening up banking services will have an influence on the economy as well as on the Vietnamese law system.

We can see that implementing the international commitments will lead to reforms in banking law, especially to the regulations on the capital safe ratio, the Basel principle of supervising banks and principles of information security…

However, the implementation of the international commitments is also having a negative effect on the Vietnamese Law on banking.

First, commitments on opening banking service market will mean that a series of regulations on protection in the banking sector will be modified, supplemented or even abolished.

Second, opening up the banking services market in accordance with international commitments when banking law system is not compatible with international practice will cause disorder and a lack of consistency and transparency in the banking law

30

system. There are still several restrictions that discriminate between credit institution forms and interfere with the operations of commercial banks. The ability to manage monetary policies through indirect tools remains weak and the supervisory system to give early warnings on credit institutions also shows weaknesses.

Besides this, domestic banks are under competitive pressure from foreign banks which have better financial capacity, technology, managing capacity and a varied product range of higher quality which can better meet the demands of customers.

Clearly, the restrictions in the operation of foreign banks have to be gradually removed such as: allowing local legal and natural persons to provide banking service in cash. Vietnam also has to terminate certain remaining restrictions on ownership, operation and form of operation of foreign banks Branches of foreign banks like HSBC, ANZ are willing to serve Vietnamese customers. However, a paradox is that while domestic banks are confused by the reforms of administrative procedure, such as the need for household certificate, agency confirmation and identity cards foreign banks are pioneer in simplifying procedures. For instance, ANZ Bank committed to grant car loans in 48 hours, Society General Viet Finance (SGVF) can grant a loan in 10 minutes.38 Besides, the “localizing” strategy is considered an important objective by foreign banks to gain success in domestic market. (The slogan of Vietnam HSBC demonstrated this: “Global bank, local understanding”).

In the coming times, the Government and the Vietnam State Bank need to further check, supplement and modify Vietnamese Law on banking so as to conform to international practice.

The fact shows that, the effects of the global and regional finance market is not small, especially in a period of integration. The financial banking crisis in the USA and Europe in 2008 showed this. The crisis eliminated such famous American institutions, as AIG, Washington Mutual, Lehman Brothers, Merrill Lynch; Bradford & Bingley, Fortis, Hypo Real Estate of Europe followed, and it then spread to Asia with the first case being Yamato Life Insurance Co,39 an insurance group with a long history in Japan. Evaluating the effect of this crisis on Vietnam is still unclear, but “the two directly affected channels to Vietnam are obviously export and investment”.40 The reason is Vietnam mainly exports to the USA, EU and Japan. If growth in these markets falters, Vietnam’s imports will also fall. On the other hand, due to the financial crisis affecting big banks all over the world, it is difficult for

38 Hoa, A (2008), Banking service willing to join in big play yard, Banking Magazine no. 128, p.7

39 http://www.vietnamnet.vn/kinhte/2008/10/809238/ accessed 10 September 2008.

40 Thanh, Vo, Head of Research Department on International economic integrating policy, Central Economic Managing Institute, address in the forum “Stabilize macro economy – challenges and solutions for Vietnam” held on 02/10/2008 in Hanoi

31

these banks to invest in foreign countries. Attracting foreign investment in Vietnam is therefore also affected.

In short, implementing the commitments for integration correctly is mandatory. However, as well as presenting opportunities, there will also be many challenges. So the requirement for commercial banks and credit institutions in Vietnam is that they renew themselves in order to compete effectively and not lose out in “the new play ground”.

2.1.3 The adaptation of Vietnamese Law on Banking in line with its commitments on joining the WTO

2.1.3.1 General comments:

As mentioned above, from the start of the international economic integration, the Vietnamese Government and the State Bank of Vietnam had taken some positive stpes to amend, supplement and enact new laws to create a legal framework for banking activities in accordance with the new situation.

However, comparing the commitments imposed on Vietnam with the regulations in Vietnamese Law on the banking sector shows that there is a lack of compatibility between Vietnamese law and the basic principles of the WTO: (1) No discrimination, (2) National treatment, (3) Not applying "audit the needs of the economy" requirements, (4) Transparency and predictability of the law.

These differences will be studied with respect to a number of areas.

2.1.3.2 Studying the adaptation in several specific areas:

(1)On licensing foreign credit institutions to supply banking services in Vietnam

(a)Regulations in Vietnam LawForeign credit institutions operating in Vietnam must conform to the provisions of Article 106 and Article 108 of the Law on Credit Institutions of Vietnam as follows:- Conditions to apply for an establishment and operating license:

+ For joint-venture credit institutions and 100% foreign owned credit institutions: Foreign credit institutions are permitted to implement banking

activities by the respective foreign authority; Foreign credit institutions are allowed to operate in Vietnam by the

respective foreign authority.+ For branches of foreign banks:

Allowed by the respective foreign authority to open a branch in Vietnam;

32

The respective foreign authority issues a letter confirming its capability to supervise all operations of the branch in Vietnam;

The foreign bank shall sent a letter stating its responsibility for all obligations and commitments of its branch in Vietnam.

- Application file:+ For joint-venture credit institutions and 100% foreign owned credit institutions:

An application for a license for establishment and operation; A charter draft; A business plan for the first three years that specifies the efficiency

and economic benefit of applied banking activities; A list, resumes and certificates evidencing the qualifications and

professional capabilities of the founding members, the members of the Board of Directors, and the Board of Controllers, and the Director General (Director);

An amount and a list of contributed capital and a list of organizations and individuals contributing capital;

Financial conditions and other information relating to major shareholders;

An approval by the competent People’s Committee regarding the site where the head office of the credit institution is located;

The charter of the foreign credit institution; The operating license of the foreign credit institution; Documents evidencing the relevant foreign authority’s permission

for the credit institution to operate in Vietnam; Audited balance sheets and profit and loss statements and other

statements of the last three years of the foreign credit institutions; A joint-venture contract for a joint-venture credit institution; Full name of the Director General (Director) of the joint-venture

credit institution or 100% foreign owned credit institution in Vietnam.

+ For branches of foreign banks: An application for a license for establishment and operation; A business plan for the first three years that specifies the

efficiency and economic benefits of applied banking activities; The charter of the foreign bank; The operating license of the foreign bank issued by relevant

foreign authority allowing the foreign bank to open a branch in Vietnam;

33

Audited balance sheets and profit and loss statements and other statements for the last three years of the foreign bank;

Full name and resume of the Director General (Director) of the foreign bank’s branch in Vietnam.

There are also some regulations related to licensing regulations in the Law on Credit Institutions and documents guiding the implementation of this Law:

+ Jurisdiction licensing activities banks: the Law on Credit Institutions specified that the State Bank of Vietnam is the only office licensing establishment and operation of Credit Institutions in Vietnam. (Before 1997, the Law stipulated that the State Bank was only licensed activities, the licensing Credit Institutions established under the jurisdiction of other agencies).

+ Conditions of licensing for Credit Institutions: the Law on Credit Institutions and documents guiding the implementation provided the specific conditions for licensing for Credit Institutions and added some necessary conditions for the founding member and the organization and operating Charter of Credit Institutions.

+ The Law on Credit Institutions also provided the conditions regarding activities for Credit Institutions to be licensed.

(b) Differences between Vietnamese Law and the WTO integration commitments:Regulations on licensing foreign credit institutions to operate in Vietnam within

the WTO framework as well as that constructed by other bilateral commitments (such as the bilateral Trade Agreement Vietnam – America, Agreement of Promotion and Protection of Investment between Vietnam and Japan, Agreement of Commercial Service in ASEAN etc) mainly relate to legal appearance, minimum charter capital of foreign credit institutions operating in Vietnam and commitments of parents banks to guarantee all responsibilities of foreign credit institutions operating in Vietnam. These commitments do not include regulations on the procedures when foreign credit institutions apply for an operating license but only provide general principles relating to administrative procedure, transparency and most-favoured nation treatment in commercial services. Therefore, considerations relating to the files and procedures when foreign credit institutions apply for an operating license will be based the current legal documents of Vietnam, especially the Credit Institution Law.

Based on the current regulations on licensing foreign credit institutions as well as the actual situation relating to such licensing, we can see several major shortcomings in the licensing of credit institutions in Vietnam legal documents when compared with international practice:

34

- On regulations relating to the legal form of a credit institution:

The Credit Institution Law and guidance documents of this law (Decree 13/1999/ND-CP on 17/03/1999) do not mention the form of sub-bank with 100% foreign capital nor do they regulate the licensing conditions or the filing procedure for it, while the bilateral and multilateral commitments do.

- On regulations relating to the legal capital of a credit institution:

Regulations on the legal capital of credit institution in Vietnamese Law are not adequate and clear.

+ The Credit Institution Law and Decree no. 82/1998/ND-CP on 03/10/998 does not regulate legal capital of the form of sub-banking with 100% foreign capital.

+ The Credit Institution Law also does not regulate banks for investment or banks for development, but Decree no 82 does regulate the legal capital of this form.

- On regulations relating to procedures and files when licensing credit institutions to operate.

The licensing procedure is still verbose as credit institutions have to apply for a sub license for each operation with conditions regulated by legal documents, although credit institutions can prove they are able to meet the conditions.

Further, applying for an operating license is not implemented through one centre – the state bank –to operate in Vietnam, credit institutions have to submit forms to the People’s committee where their head office is located This will cause inconvenience to credit institutions asking for a license to operate in Vietnam.

+ The current time for appraising licensing files is 90 days (once the file is considered valid and sufficient).

+ Regulations on “Project of operating in the first three years, in which the effectiveness and economic benefits of banking operation are mentioned” regulated the operational but not the establishment sector of banks. Therefore, there is a lack of sufficient data and other information on this.

+ The regulations that require documents proving the capacity and professional skill of the persons who establish credit institutions are irrational and contradict previous regulations on the conditions regarding persons who establish credit institutions (they can be organizations or individuals with prestige and the requisite financial capacity). Only managers of credit institutions need to have documents proving capacity and professional skill.

35

+ Some regulations are too abstract and lack detail and clear guidance; it is especially unclear which operations need a sub-license and which operation have enough met conditions. This has an effect on transparency in the regulations relating to licensing.

- On regulations relating to the form and content of licenses for operating credit institutions.

+ Regulations on the content of operating licenses are not in accordance with the changed regulations currently in force law as they are not updated in a timely way. Many credit institutions, especially branches of foreign banks are implementing operations that are not based on their license but on current regulations.

+ The sample form of operating license issued for credit institutions has not been modified or supplemented to be in accordance with regulations and this for many reasons. For example, many professional skills and concepts included in bilateral and multilateral commitments are not clearly understood and the officials of the State Bank have not grasped the nature of these professional competences.

+ Current licenses emphasize listing profession competences but do not regulate the main operational content. Each form of bank has to have one kind of license, and this also applies to banks for investment and banks for development. Up to now Vietnamese Law has not regulated on the professional competence needed by a bank for investment or a bank for development.

+ In line with international integration, Vietnam’s banks will come to diversify their activities and expand their service forms. They will then be activities that just need to be subject to general conditions and there will be others that need more precise restrictions (operation required sub-license). However, at present the distinction between operation needing only conditions and those ones need sub-licenses is not clear and this can lead to problems in the administrative procedures or there may even be operations that banks themselves cannot control.

+ The operation content regulated in the license shows there is still discrimination between Vietnam credit institutions and foreign ones: Vietnam credit institutions can implement some operations that foreign ones cannot or only with restrictive conditions, such as allowing them to receive deposits in Vietnam dong (Vietnam credit institutions can do this without restriction while foreign ones are subject to conditions), or to put in automatic teller machines– ATM ( Vietnamese credit institutions can put them in various places while foreign ones are only allowed to have them at head office). However, this discrimination must stop according to route in order to be compatible with the situation of Vietnam in the WTO.

Point a, Item 1, Article 22 of Credit Institution Law regulates that one of the conditions for a license establishing and operating credit institutions is “having

36

economic demand in the location”. This regulation is not compatible with the WTO integration commitment of Vietnam under the principle “verifying economic demand” regulated at Point a, Item 6 of GATS and the Commitment Schedule of integration commitment of Vietnam.

(2)On regulating the form of financial companies licensed to operate in Vietnam

(a) Regulations accordance with Vietnamese Law:Article 3, Decree no 22/2006/ND-CP41 on 28/2/2006 regulates that: foreign credit

institutions are allowed to establish commercial presence in the following forms: joint venture banks, branch of foreign bank, bank with 100% foreign capital. They can have a representative office in Vietnam.

Article 53, Circular 03/2007/TT-NHNN42 on 5/6/2007 a guide to implementing several articles of Decree no 22 on the rate and mode of contributing charter capital in the following way: Rate and mode of contributing charter capital of members in banks with 100% foreign capitals, of foreign party and Vietnam party in joint venture banks are together agreed by all parties and written clearly in Regulations of Joint Venture Bank, banks with 100% foreign capital, based on ensuring to conform principles:

- For banks with 100% foreign capital: ensure that the rate of contributing capital of the parent bank is over 50% of the charter capital

- For joint venture banks: ensure that the rate of contributing capital of the foreign party is under 50% of the charter capital (except for special cases decided by the prime minister).

In general, the current regulations Law on financial companies wishing to operate in Vietnam are close to the WTO integration commitments.

(b) Different regulations compared with the WTO integration commitments:Current regulations on the operation, management and monitoring of credit

institutions are classified according to the form of ownership. Chapter 7 contains regulations on the operating form, operating content, financial receipts and expenses of foreign credit institutions and their representative offices. Domestic ones are covered by regulations scattered across chapter 1 to chapter 11 of this Law. This is

41 Decree no 22/2006/ND-CP? on 28/2/2006 of the Government on organizing and operation of braches of foreign banks, joint venture banks, banks with 100% foreign capital, representative office of foreign credit institutions in Vietnam.

42 Circular 03/2007/TT-NHNN? on 5/6/2007 of State Bank of Vietnam guides to implement several articles of Decree no 22 regulating rate and mode of contributing charter capital.

37

not compatible with the WTO principle of no discrimination and does not ensure the transparency and predictability of regulations.

(3)On regulating the form of financial services that can be provided in Vietnam

(a) Regulations in accordance with Vietnam Law:Legal document no. 1210/NHNN-CNH43 on 7/2/2007 gives instructions to be

received by VND deposit branches and they are to follow the same route as in Vietnam’s commitments generally. So this was introduced to apply directly to the State Bank of Vietnam.

(b) Different regulations compared with the WTO integration commitments:The law governing the Vietnam State Bank and the Law of current credit

institutions both use the term “banking operation” (the content mainly covers receiving deposits, issuing credit and supplying payment service) instead of the term “banking service” as in the Agreement of trade service. The difference between these two terms has caused some difficulty in implementation. According to GATS/WTO, foreign service suppliers are allowed to appear in the capacity of a credit institutions with 100% foreign capital with a view to supplying one or more than one banking services.

The recent implementation of laws governing credit institutions has shown that using the term “banking service” creates difficulties in determining the operating scale and services supplied by different forms of credit institutions, such as trade banks and non-banking credit institutions.

In addition, the present Banking Law does not fully classify banking services as per the GATS’s annex on financial services.

(4)On regulating the capital ratio of foreign banks owning part of a Vietnamese bank

(a) Regulations under Vietnamese Law:Decree no 69/2007/ND-CP on 20/4/200744 on foreign investors buying stocks of

Vietnam Trade bank contains principles on foreign investors owning these stocks. According to this, the total amount of stock owned by foreign individuals or legal entities is not allowed to exceed 30% of the charter capital of the bank, unless

43 Legal document no. 1210/NHNN-CNH? on 7/2/2007 of State Bank of Vietnam sent to branches of foreign banks in Vietnam with instructions to receive by VND.

44 Decree no. 69/2007/ND-CP on 20/4/2007 of the Government of Vietnam on foreign investors buying stocks of Commercial bank of Vietnam.

38

Vietnam has another regulation or it is permitted by an appropriate Vietnamese authority. In this field, the regulations are close to the WTO integration commitments.

(b) Different regulations compared to the WTO integration commitments:Besides enforcing regulations relating to Vietnam’s commitments to the WTO,

Decree no. 69/2007/ND-CP also contains several restrictions that are not compatible with national treatment principle and market accessing principle. In particular, Article 6 of the decree regulates that: “The strategic investor is only allowed to buy stocks in one Vietnamese bank” or “a foreign credit institution is allowed to participate in the boards of directors of no more than two Vietnamese banks”. These shortcomings need to be modified in the near future.

2.2 Completing the work on Vietnamese Law to fully implement the commitments on opening up the banking services market within the WTO framework.

2.2.1 Completion criteria for various regulations of Vietnamese Law and the international commitments on opening up the banking services market.

The completion of the relevant regulations of Vietnamese Law to fit with the international commitments on opening up the banking services market should be based on the following criteria:

- Regulations have to be close to international standards and practices (CAMELS 45, BASEL II 46), commitments between Vietnam and other countries, or International Organizations (such as the Trade Agreement Vietnam-America, WTO commitments, Promotion and Protection of Investment between Vietnam and Japan, etc.) to avoid conflicts and create favorable conditions for credit institutions to get international access in a convenient way.

- Guidance documents need to be consistent and avoid contradictions between General Law and Professional Law. Regulations covered in more than one of the

45 CAMELS is the abrreviations of Capital, Assets, Management, Earnings, Liquidity and Sensitivity. That are abrreviation standing for indexes that form ranking system for a Bank.

46 BASEL II Agreement is an international agreement about capital secure standard, enhance managing the financial globalization as we as exploiting interest potential and reduce risks. This is considered solution to improve Asian Banks.

39

Civil Law, Law on State Bank of Vietnam and Enterprise Law are unnecessary and the contents to applied to credit institutions should be in specific regulations only.

- The Credit Institution Law should have general regulations applicable to all credit institutions and particular regulations for each kind of credit institution. One should also change the approach from one specifying what is permitted or banned, to one allowing credit institutions to do anything except things that are banned.

In addition, the Credit Institution Law need to correct other shortcomings in the current Vietnamese banking nowadays, such as limiting the number of guidance documents under law, regulating clearly who has the competence to enforce guidance documents, regulating the organization and the operational and managing activity of each kind of credit institutions, removing all forms of national discrimination and creating equality among credit institutions based on the principle of establishing a transparent and equal business environment in banking and other monetary operations.

2.2.2 Proposal of solutions to the correct implementation of the international commitments on opening up the banking services market of Vietnam.

2.2.2.1 In terms of licensing foreign credit institutions to supply banking services in Vietnam

(a) Licensing Conditions:

- For joint-venture credit institutions and 100% foreign owned credit institutions:

+ Amend the regulations on the licensing conditions at Article 106 of Law on Credit Institutions affecting:

First, the requirement on the capital of the parent credit institution. According to Vietnam’s signed or negotiated bilateral and multilateral commitments, the parent credit institution must have at least USD 10 million in capital and its assets must be at least USD 10 million.

Second, the requirement on performance of the parent credit institution. In detail: (1) the capital adequacy ratios should be ensured to be in accordance with international practices and the regulations of the State Bank for three years in a row before applying for a license, (2) no administrative penalties at the highest level according to laws of the home country for at least three years in a row before applying for a license, (3) good rating by well-known international rating agencies for at least three years in a row before applying for a license (examples of well-known international rating agencies are Moody’s or Standard&Poor).

40

+ A commitment of the Supervising Authority of the home country with the State Bank of Vietnam to cooperate in the control, supervision and exchange of and responsibility for information related to the parent credit institution.

+ The parent credit institution is permitted by the competent authority of the home country to establish joint-venture credit institution or a 100% foreign owned credit institution in Vietnam.

- For branches of foreign credit institutions: Amendment to regulations: the parent credit institution accepts material

responsibility for its branch’s operations in Vietnam because the branch in Vietnam is not a fully separate legal entity.

- For representative offices of foreign credit institutions:Amendment to regulations: the credit institution is permitted by the competent

authority of its home country to establish a representative office in Vietnam.(c) Procedures:Continue reforming administrative procedures, minimizing the time and number

of steps relating to banking operation (especially notarizing procedures and guaranteeing transactions), limiting secondary papers.

Recommendation relating to licensing procedures: the licensing review period should be shortened to 60 working days from the receipt of a complete application file.

(d) Application file:Amendments to regulations on application file for Credit Institutions provided in

Article 108 of the Law on Credit Institution as follows: need to supplement certain

documents like that:

(1) Charter of the foreign credit institution

(2) Operating license of the foreign credit institution

(3) The following documents of the foreign competent authority:

+ Approving the establishment of the joint-venture credit institution or the

100% foreign owned credit institution in Vietnam

+ Stating its commitment to the State Bank to cooperate in the supervision,

control and exchange of information regarding the performance of the parent

foreign credit institution, and to be responsible for the operations of the parent

credit institution.

41

+ Confirming the sound financial status of the parent foreign credit institution

and that it has not been penalized at the highest level according to laws of the

home country for the three years in a row before applying for a license.

(4) Financial Statement of the last three years of the foreign parent credit

institution in accordance with international standards and with Vietnamese

accounting standards.

(5) Confirmation by international rating agencies like Moody’s or Standard &

Poor.

Also needing to be supplemented are: requirements regarding the joint-venture

contract (for the joint-venture credit institution) and The provision regarding a list,

curriculum vitae and certificates of the founding member, members of the Board of

Directors and the Board of Controllers should be replaced by the requirement of the

curriculum vitae and certificates proving the capability and professional competence

of the General Director (Director) of the foreign credit institution’s branch (for

branches of foreign credit institutions).

2.2.2.2 In terms of regulating the form of financial companies licensed to operate in Vietnam

Relating to the inadequacy mentioned above in provision 2(b) part 2.1.2.2, Vietnam needs to amend and modify the Law on Credit Institutions so that existing regulations on the form and content of activities of the kind credit institutions, apply to both domestic and foreign credit institution to be compatible with the non-discrimination and transparency principles of the WTO.

42

2.2.2.3 In terms of regulating the form of financial services that can be provided in Vietnam.

Relating to the inadequacy mentioned above in provision 3(b) part 2.1.2.2, Vietnam needs to promulgate new Laws on the State Bank of Vietnam and on Credit Institutions. In which there should be a clear definition of "banking services", including provisions on the organization and operation of different Credit Institutions to ensure transparency as stipulated by the WTO

2.2.2.4 In terms of regulating the capital ratio foreign banks may own in a Vietnamese bank.

Relating to the inadequacy mentioned above in provision 4(b) part 2.1.2.2, Decree 69/2007/ND-CP needs to be amended to be compatible with the National Treatment principle and market access rules of the WTO.

Conclusion

In the current phase of globalization, opening up markets is an indispensable trend. It must be said that this is also an opportunity for each nation to review its law system and make it conform to international practice which may assist the development of national economy

In 2008, the Vietnamese economy is facing problems: the micro economy is unstable, inflation is increasing, the paying capacity of some banks shows difficulties. Up to now, the economy in general and the banking system in particular

43

had to face the many challenges and obstacles that the financial crisis and world economic slowdown brought. However, the year 2008 has also shown that Vietnam takes very seriously the WTO integration commitments with the result that 2 banks with 100% foreign capital were licenses to operate in Vietnam. The appearance of more and more foreign credit institutions show the attractiveness of the Vietnamese market and indicates that competitiveness will increase in the financial and banking sector.

According to the latest statistics on the operating situation of foreign credit institutions in Vietnam, there are 33 foreign banks licensed to open branches, 5 joint venture banks with 19 branches, 3 banks with 100% foreign capital, 9 non-banking credit institutions and 54 representative offices in Vietnam. In 2008, in spite of the loss of some branches of foreign banks and financial companies, the total pre-tax profit was over 1.400 billion VND.47

As a member of the WTO, the Vietnamese Government has been crafting policies with a view to creating a level playground for all forms of credit institutions in Vietnam’s financial market and making it a more and more convenient investment environment with the hope that foreign investors in general and foreign financial institutions in particular will participate in the market with new products, modern services and the best banking practices.

In the future, the State Bank of Vietnam needs to propose and enforce policies following international standards, enhance competitiveness and create favourable conditions for credit institutions to develop stably and strongly thus contributing actively to the development of the Vietnamese economy and international economic integration.

Through this thesis, the author would like to make contribution to clarify both theoretical and practical matters of building and completing legal framework of banking services, so that it can meet the demand of implementing commitments made by Vietnam on joining the WTO. However, Banking Law is a complicated area which is hard to be treated thoroughly in the scale of this thesis. Therefore, it is necessary to continue researching these matter.

47 See Report on Foreign Policy of State Bank of Vietnam and the activities of foreign credit institution in Vietnam, http://www.sbv.gov.vn/vn/home/tinHDNH.jsp?tin=3975, assessed 13 December 2008.

44

Table of Statutes and other Legal Instruments

International Treaties and Conventions

General Agreement on Trade in Services (GATS), available at:< http://www.wto.org/english/tratop_e/serv_e/serv_e.htm>

National Legislations

VietnamThe law on the State Bank of Vietnam (1997), amendment 2003

The law on credit institutions (1997), amendment 2003

Vietnam-United States Trade Agreement

Law on Transferring Tool (2006)

Ordinance on Foreign Exchange (2006)

Documents under law include: Ordinance enforced by Standing Committee of the

National Assembly, documents enforced by the government, those enforced by

State Bank of Vietnam, those enforced by Ministries, inter-ministerial documents.

45

Bibliography

Official Reports and other Documents

State Bank of Vietnam (3/2008), Document of Law on Institution Project (Amendment).

State Bank of Vietnam(3/2008), Document of Law on State Bank of Vietnam Project (Amendment)

Website of Ministry of Trade, Ministry of Finance, Ministry of Justice, State Bank of Vietnam, Vietnam Chamber of Commerce and Industry, World Bank, WTO.

Monographs

National Committee for International Economic Cooperation Office (2003) “ Basic legal documents of the World Trade Organization - WTO”

National Committee for International Economic Cooperation Office (2006) “WTO integration documents of Vietnam”

National Committee for International Economic Cooperation Office (2007) “Handbook about WTO’s regulations and Vietnam’s integration commitments” – National Economics University Publishing House

National Committee on international economic cooperation (2005), General view of service commercial liberalization, National Politics Publishing House.

National Committee for International Economic Cooperation Office (2006) “Research on banking services in the international economic integration situation” – National Policy Publishing House.

Multilateral Trade Aid Project MUTRAP (2006), Research on effect of banking service liberalization on competitiveness in banking sector.

Multilateral Trade Aid Project MUTRAP II (2006), Q&A about WTO.Vice Professor, PhD Nguyen Huu Khai, MA. Vu Thi Hien (2007) Vietnamese

services, competitive capacity and international economic integration, Statistics Publishing House.

Prof. PhD. Quy, Nguyen Thi (2008), Modern Banking Service, Scientific Society Publishing House.

46

Thanh,Vo Tri, Head of Research Department on International economic integrating policy, Central Economic Managing Institute, addressed in the forum “Stabilize macro economy – challenges and solutions for Vietnam” held on 02/10/2008 in Hanoi

HoChiMinh City Bank University (2008), The activity of Vietnam Commercial Banking System after one year joining into the WTO, Statistics Publishing House.

Cranston.R (1997) Principles of Banking Law, Oxford University Press, second edition.

E.P Ellinger, R.J.A Hooley, E. Lomnicka (2002) Modern Banking Law, Oxford University Press, third edition.

Chenguang.W, Xianchu.Z (1997), Introduction of Chinese Law, Sweet and Maxwell Asia Publishing House

James R. Melvin, History and Measurement in The Service Sector: a review, Review of Income and Wealth, series 41, number 4, December 1995

Encyclopedia of Business and Finance (2001), Vol.2, MacmillanCox.D (1997), Modern Banking, Politics Publishing House Rose.P (1999),Commercial Bank Management, Irwin McGraw Hill

Articles in Journals, Anthologies etc.

PhD. Bui Ngoc Cuong (2007) “Overview of Vietnamese Law on commercial service and commitments on opening service market when Vietnam integrate the WTO” – Law Magazine no.6/2007.

Associate Professor. PhD. Hoang Phuoc Hiep “Modifying law system to implement commitment on accessing the WTO” - Legislation Research Magazine, National Assembly Office no.1/2007

Associate Professor. PhD. Hoang Phuoc Hiep “Completing Vietnamese Law to implement effectively regulations of WTO’s members” – State and Law Magazine no.2/2007.

Hoa,Anh (2008), Banking service willing to join in big play yard, Banking Magazine no. 128

To Khanh Toan, Competitive capacity of Vietnam’s commercial bank in the international economic integration, Economic Research Magazine no. 363, August 2008

Syllabus of Vietnamese Law on Banking (2007), Hanoi University of Law, The People’s Public Security Publishing House.

47

Daniel.C (2007), Banks in China’s commitments of integrating the WTO: “Same bed but different dreams” in Chinese financial service area, International Law Magazine, Vol 11, no 1, Oxford University Publishing.

48