Shin Dong Min, CEO of Shinhan Bank Vietnam, tells VET about the impact of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on enterprises in Vietnam.
When joining the CPTPP, Vietnam commits to opening up its market with transparent mechanisms that provide access to foreign investors. How will this impact on Shinhan’s business and development?
Vietnam has committed to opening up its markets, which is likely to result in dramatic movements that impact our business and development.
Firstly, free trade agreements with CPTPP countries will help restructure the country’s import-export market towards a better balance. In general, industries like garments and textiles, leather and footwear, and other labour-intensive sectors as well as agriculture and fishery products will benefit the most from the CPTPP, as exporters have the chance to expand into the other side of the Pacific, to countries like Canada and Mexico. As a result, financing needs for international trade services and exports will certainly increase to meet various demands in payments.
Secondly, thanks to the new provisions in the CPTPP, such as those supporting an integrated Asia-Pacific marketplace, providing investment protection and guarantees, creating new opportunities in services, and protecting intellectual property, it is believed that foreign capital will flow strongly into Vietnam. This means that we will see major benefits from FDI.
With greater opportunities for market access, a service provider of a member country can provide cross-border services to other members. There will then be strong diversification, not only in traditional industries but also new industries such as information and communications technology (ICT). Our investment banking arm, therefore, will have various choices for its investment portfolio.
Last but not least, Vietnam’s economic prospects are expected to improve further, with living standards rising accordingly. This is good news for most sectors, including banking, because the volume of consumption will jump. This will be a driving force for “consuming” our products targeted at individual customers as well as the private wealth management segment.
What benefits does the bank expect from these commitments?
Overall, the export sector will benefit the most from Vietnam’s commitments in the CPTPP. Some of these advantages are better opportunities for new market access for duty-free goods and non-tariff barriers in specific markets, such as agriculture, automotive, footwear and apparel, ICT, and processed food.
The main point is that export growth will promote economic growth and prosperity and have a positive impact on all sectors. As a monetary intermediary connecting supply and demand, the bank will play an important role in providing efficient mechanisms to finance economic activity, hence simulating the banking industry.
For the corporate division, vibrant import and export markets along with the development of manufacturing industries will enhance credit volumes, payments, and international trade services.
For the individual and private wealth management division, higher living standards will stimulate demand for deposits as well as asset management, which are expected to welcome a lot of individual foreign investors.
For investment banking, the strong diversification in the market as well as the emergence of new industries will give us more choices in our investment portfolio.
For digital banking, in recognising the growing importance of e-business, CPTPP members have committed to critical disciplines that facilitate the new digital economy. Accordingly, it is clear that we can benefit from free flows of cross-border data and IT services in digital marketing and customer relationship management for our internationalisation strategy.
Vietnam will also be opened up to new types of financial services. What are your thoughts on expanding new services at Shinhan?
Economic development along with regulations on labour, transparency, and anti-corruption requires Vietnam take the initiative and make greater efforts in completing its legal framework and establishing management mechanisms that both match international treaties and ensure political-social stability.
To ensure the implementation of the agreement, the government has instructed relevant ministries and agencies to review and complete a list of laws, ordinances, and decrees that need amendment or supplementation to make them consistent with the commitments made in the CPTPP. The list names eight laws and four government decrees that need to be amended and supplemented, and proposes the issuance of seven new documents (six decrees and one prime ministerial decision).
In the spirit of initiative and innovation, we actively hope for new changes in our services, especially on the digital platform. The State Bank of Vietnam has not yet released any particular amendments or supplements instructing the banking industry, so it is hard for us to suggest specific products or services that match the CPTPP.
Many have said banking will become more competitive as Vietnam expands its markets. Do you agree?
Firstly, competitiveness among banks in Vietnam has always existed, regardless of the CPTPP. However, there will be changes required by the government after entry to the CPTPP, which will be a chance for banks to further compete with each other by taking advantage of changes to the business environment.
Furthermore, the CPTPP has its own provisions on financial services, aimed at enhancing the development of the financial market in member countries. Accordingly, Vietnam will attract more attention from other major international players in finance and banking.
http://vneconomictimes.com/article/op-eds/shinhan-much-to-gain-from-cptpp
