Competitiveness and competitive ability
Concept of the theory of enterprise’s competitiveness and
The term "competitiveness" is widely utilized across various fields, including economics, trade, law, politics, military, ecology, and sports, frequently appearing in professional literature, newspapers, and mass media In a market economy, competitiveness is not just a common occurrence; it plays a crucial role in the economic development of nations The study of competitiveness has its roots in renowned theories such as classical competition theory, new-classical competition theory, and modern competition theory.
In today's competitive landscape, the focus has shifted from an antagonistic approach to one that emphasizes cooperation Competitiveness is no longer about eradicating rivals; instead, it revolves around quality, design, pricing, and supportive services With numerous competitors in the market, the challenge of eliminating others has become increasingly complex.
Competitiveness of an enterprise is the strategyof a bussiness with their competitors at the same sector.
Role of competitiveness
Competitiveness has a important role in commodity production in particular and in economics in general Competitiveness has not only positive impacts, but also negative impacts.
Economic competitiveness is adjusted by social institution, state intervention.
To enhance competitiveness, it is essential to shift from an adversarial mindset to one of cooperation that benefits all parties involved For instance, when Walmart entered the Chinese market, local enterprises became vital suppliers, leading to the fact that 60% of Walmart's products worldwide are sourced from China This collaboration allowed China to leverage Walmart's global presence to promote its goods internationally Therefore, Vietnam must adopt a similar approach, focusing on intelligent competitiveness and strategic partnerships.
Competitive ability
General theoretical development process of enterprise’s competitive ability
The study of competitiveness in the economy and enterprises has a long history, but a systematic examination of competitive ability began in the 1980s and continues to evolve today.
Theories of competitive ability concentrate on 3 approach ways, include: Theory of traditional trade, Theory of industrial management and strategic management school, according to Thorne.
Researchers have conducted extensive studies on competitive ability, notably Momaya (2002) and American authors like Henricsson et al (2004), who systematically classified and measured enterprise competitive ability into three categories: competitive ability of activity, competitive ability of exploitation and asset utilization, and competitive ability to process.
Research strategy plays a crucial role in enhancing and sustaining competitive ability, capturing the attention of researchers and evolving significantly, as highlighted by the statistics from Momaya and colleagues Consequently, the theory of competitive ability in enterprises has diversified into various trends, schools of thought, and approaches globally.
Research plays a crucial role in assessing competitive ability, leading countries like the US and England, along with international organizations such as the World Economic Forum (WEF), the Organisation for Economic Co-operation and Development (OECD), and companies like Standard & Poor’s and Moody’s, to conduct extensive studies and publish their findings These results are of significant interest to various nations and businesses, highlighting the importance of competitive analysis in the global landscape.
Concept of enterprise’s competitive ability
The concept of competitive ability lacks a unified understanding today It is frequently linked to an enterprise's ability to achieve its objectives and is influenced by three key factors: the core values of the enterprise, its primary goals, and the targets that enable it to perform effectively, as noted by Buckley (1988).
Look back material in the internal and external country, there are many opinions of enterprise’s competitive ability There are some opinions of remarkable enterprise’s competitive ability.
First, competitive ability of enterprise is retaining ability and expansion market share, returning enterprise’s profit.
Second, competitive ability of enterprise is confronting ability the attacks of other enterprises
Third, competitive ability is synonymous with labour productivity
Fourth, competitive ability is synonymous with retaining and improving competitive advantages.
In addition, no-less opinions identify enterprise’s competitive ability with business ability Thus, as giving the concept of enterprise’s competitive ability, need to take care of several following problem:
First, the concept of competitive ability is suitable for conditions, background and developing level in each period.
Competitive ability reflects the capacity of enterprises to engage in competition, encompassing not only their ability to absorb and utilize production factors and market their goods but also their proficiency in expanding product presence and innovating new offerings.
Third, enterprise’s competitive ability should express suitable competitive methods, including tranditional methods and modern methods – not only based on comparative advantage, but also competitive advantage, the regulation.
From the above requirements, give the concept of enterprise’s competitive ability as following:
An enterprise's competitive ability hinges on its capacity to retain and enhance its market position through effective product sales, expanding its distribution network, and efficiently utilizing production factors to achieve sustainable economic benefits.
Factors influence on competitive ability of enterprise
Enterprise competitiveness is influenced by various factors, as outlined in M Porter's "Diamond" model, which identifies six key groups: demand conditions, factor conditions, suppliers, sector competition, random factors, and state factors These influences can be categorized into two main groups: internal factors, which pertain to the enterprise itself, and external factors, which relate to the broader market environment Understanding these factors is crucial for enhancing an enterprise's competitive ability.
Internal factors significantly impact a company's competitive ability The World Economic Forum (WEF) identifies five key groups that influence this ability: management capacity, quality of manpower, marketing capacity, innovation capability, and research and development capacity.
The traditional approach identifies several internal factors that influence an enterprise's competitive ability, which can be categorized into four key groups: management capacity, technological proficiency, financial resources, and the professional skill level of employees These factors collectively play a significant role in determining the competitiveness of a business.
Some main factor have influence on enterprise’s competitive ability as following:
- Business management and organisation level and capacity
- Enterprise’s marketing capacity determining ability of demand
- Developing and researching capacity of enterprise
- Factors relate to competitive level in business sector of enterprise, enterprise’s positon is comparative with others.
External factors significantly impact a company's competitive ability, as highlighted by the World Economic Forum (WEF) using M Porter's "Diamond" model The WEF categorizes these factors under the "Business Environment of Enterprise," detailing 56 specific norms that quantify and rank countries across four key factor groups.
First, input-factor conditions, including 5 groups: infrastructure material– technology, main infrastructure, human resources, technology infrastructure, financial market. Second, conditions of demand: buyer’s preference, legal situation of consumer, information techonology, …
The effectiveness of local suppliers significantly impacts the quality and quantity of resources available, while the presence of specialized research and education services enhances innovation Additionally, the level of cooperation among various economic sectors plays a crucial role in fostering growth, alongside the local supply capacity for machine parts and associated components.
Fourth, background for enterprise’s strategy and competitiveness, including 2 groups are motivation and competitiveness (invisible barrier, competitive of local producers, antitrust effectiveness.
According to tranditional logic, external factors are divided into groups as following: market, policy – regime, infrastructure, support sectors …
SITUATION ASSESSMENT OF COMPETITIVE ABILITY OF
Overview of the history and development of Agribank
In 1998, the Agricultural Development Bank of Vietnamwas established by Decree
No 53/HDBT dated 26 March, 1988 of the Council of Ministers (now the
Government) with the reform of the financial system and the introduction of commercial banks in Vietnam.
On 14 November, 1990, President of the Council of Ministers (now the Prime
Minister) signed Decision No 400/CT on establishment of the Vietnam Bank for Agriculture (VBA) to replace the Agricultural Development Bank of Vietnam.
On 1 March, 1991, the Governor of the State Bank of Vietnam issued Decision No 18/NH-QD on establishment of representative office of Vietnam Bank for
Agriculture in Ho Chi Minh city.
On 30 July, 1994, by Decision No.160/QD-NHN9, The Governor of the State Bank of Vietnam approved new innovative management system model of the VBA
On March 7, 1994, the Prime Minister's Decree No 90/TTg established VBA as a State-owned Corporation, featuring a structured organization that includes a Board of Directors and a General Director The corporation's framework encompasses an internal control apparatus, subsidiaries with both dependent and independent accounting units, and a clear distinction between executive and non-executive roles, ensuring that the Chairman of the Board and the General Director hold separate positions.
On 15 November, 1996, authorized by the Prime Minister, the Governor of the State Bank of Vietnam issued Decision No 280/QD-NHNN to rename the Vietnam Bank for Agriculture (VBA) into Vietnam Bank for Agriculture and Rural Development (VBARD).
NHNo and Rural Development of Vietnam (VBARD) operates under the model of 90 corporations, state enterprises are a special activity under the Law on Credit
Institutions and under the direct management of the State Bank of Vietnam Agribank system in 2009 to include:
- 180 branches and more than 2,300 rooms for a transaction spans from urban to rural areas;
- 02 representative offices, one in the Central Region, one in the Southern region;
- 01 overseas branches in Phnom Penh - Cambodia
- 05 centers : Center for Information Technology, Training Center, Card Center, Payment Center, Center for prevention and treatment of risks.
The article discusses eight key underlying companies, which include Financial Leasing Companies I and II, a Securities Limited Company, a Banking Services and Commercial Printing Company, an Operating Fine Arts and Jewelry Company, an Insurance Company, a Tourism and Trade Company, an Investment Development Company, and a Food Operating Company.
- 01 joint venture banks: Joint-venture banks Vietnamese - Thailand (Vinasiam)
Operational status of Agribank
2.2.1 The main products of Agribank
Agribank offers a variety of loan credit products tailored to meet diverse financial needs, including consumer loans, business real estate loans, and loans for securities trading Additionally, they provide student loans, loans for foreign employees, and working capital business loans Agribank also facilitates savings for loans, export financing, procurement of fixed assets loans, and investment project loans, ensuring comprehensive support for both individual and business financing requirements.
Cash deposits; Current accounts, savings deposits (savings deposits guaranteed by gold, deposits ladder); certificates of term deposits, deposit account with a term; Money by other banks.
Bid security, performance guarantee, contract guarantees, payment refund guarantees, payment guarantee, warranty for work and equipment; loan guaranty; other guarantees.
L/C; Authorizing expenditure; authorized to collect, collection, remittance, the discount vouchers.
Remittance services through accounts, Western Union payment options, and card services are essential for managing revenue and expenditure Payroll cards and electronic money transfer services facilitate domestic transactions, while treasury services and service accounts enhance financial management Additionally, multilateral payment services and foreign exchange trading services provide comprehensive solutions for global financial needs.
2.2.2 Results of Agribank operations to 2009 and the first quarter of 2010.
Despite challenges in both the domestic and global economies, Agribank has achieved positive results in 2009 and the first quarter of 2010, thanks to the collective efforts of the entire system The financial performance of Agribank is detailed in the following table.
Table 2.2.2.1: The financial situation of Agribank from 2007 to the first quarter of
( Source: Agribank’s Annual Report in 2007 - to the first quarter of 2010)
According to the table shows above, the business activities and the financial situation of the Agribank in 2009 and to the first quarter of 2010 has grown better
As of the first quarter of 2010, Agribank reported a total capital of 505,103 billion, reflecting a 4.13% increase from December 31, 2009 The bank's equity rose from 19,843 billion in 2009 to 20,257 billion, alongside a net income of 3.810 billion and a bad debt ratio of 2.6% This capital growth has enhanced Agribank's equity, positioning the bank to strengthen its competitiveness during the integration period.
Despite a volatile business environment, Agribank achieved impressive results in the first quarter of 2010, with total capital reaching 456.193 billion This reflects an increase of 5.378 billion, or 5.95%, compared to 2009 Notably, funds in local currency rose by 4.2%, while foreign currency funds increased by 2%.
Mobilized funds from customers reached 205.589 billion, accounting for 45,07% of total capital Agribank ensures diversified, appropriate and high stability capital structure.
Specific capital structure by economic sectors, maturity and currency is expressed in the following table:
Table 2.2.2.2(a) : Structure of Agribank mobilize capital from 2007 to the first quarter of 2010
- Deposits from the state treasury, SI
UTDT capital, central bank lending
(Source: General report on the business plan of Agribank from 2007 to the first quarter of 2010)
Agribank's capital mobilization structure reveals that funds sourced from the public and deposits from economic organizations constitute a significant 85% to 88% of total capital This high proportion indicates a strong stability in Agribank's funding sources.
Over the years, the share of funds mobilized for terms exceeding 12 months has been steadily increasing Additionally, the capital structure mobilization by currency consistently shows that over 86% of the total mobilized capital is in a single currency.
Agribank has demonstrated consistent capital growth over the years, maintaining a stable capital structure that supports sustainable development and meets increasing credit demand The growth rate of mobilized funds from 2007 to the first quarter of 2010 is illustrated in the following chart.
Table 2.2.2.2(b) : Capital mobilization of Agribank period 2007- the first quarter of 2010
(Source: General report on the business plan of Agribank from 2007 to the first quarter of 2010)
The credit growth situation in the period 2007 to the first quarter of 2010 of
Agribank is 24% per year To the first quarter of 2010, outstanding loans to the economy reached 370,367 billion, up 16,255 billion (up 4.6%) than in 31/12/2009.
The initiative aims to enhance the efficiency of investment capital in agriculture, targeting farmers and rural areas by 2010, with a vision extending to 2020 The goal is to ensure that loans in this sector represent 70% of total loans by 2020, with households and individuals receiving approximately 55% of these loans Additionally, the plan seeks to increase the average outstanding debt per household to 20-25 million VND by 2010, and to 50 million VND by 2020.
Table 2.2.2.3 (a): Lending by economic sector situation period 2007- to the first quarter of 2010
(Source: report on plans Agribank general business from 2007 - to the first quarter of
Table 2.2.2.3 (b): The proportion of loans by economic sectors in the first quarter of
(Source: report on plans Agribank general business in the first quarter of 2010)
To support economic stability and growth, the Prime Minister's decision on interest rate support has been implemented, benefiting 1,337,651 customers with nearly 194,293 billion VND by Agribank as of December 31, 2009 This represents almost 30% of the total outstanding loans under the interest rate support scheme across Vietnam's banking system, with Agribank accounting for 56.8% of these loans in the agricultural sector and rural areas, serving 95% of its customers Agribank has also taken significant steps to enhance credit quality by revising regulations and policies for a more flexible approach, focusing on key sectors for sustainable development, and ensuring safety and efficiency in its operations Additionally, the bank has implemented mechanisms for interest rates, charges, and loan security, while enhancing inspection quality, classifying debts, and adhering to risk reserve requirements in line with international practices.
- Credit quality and provisioning issues and handle risks.
In recent years, the credit quality of Agribank has always been improved, particularly bad debt in 2009 accounted for 2.6% and 2.5% of total loans in the frist quarter of
In 2010, Agribank consistently adhered to the regulations set by the State Bank regarding loan classification and provisioning risks, aligning with international standards The bank actively managed outstanding debts in accordance with the directives from both the Government and the State Bank.
(Source: report on plans Agribank general business in the first quarter of 2010)
From 2008 to early 2010, Agribank experienced a gradual decrease in bad debt ratio; however, the rate remained high due to the 2008 economic crisis, ongoing economic decline, inflation, and significant fluctuations in the financial market Despite some recovery in 2009, it was insufficient to fully counteract the previous downturn.
2.2.2.4 Co-operation and international payment:
In the first quarter of 2010, Agribank launched the initiative "Development of Products and Services for International Payments and Foreign Currency Business." This scheme focuses on delivering fast, accurate, and secure international payment operations Agribank has gained the trust and appreciation of both domestic and foreign partners, evidenced by accolades such as the "Outstanding Young Professional International Accounting" certificate from Citibank, the "Quality International Payment" award from Standard Chartered Bank, and the "Cooperation on Product Innovation" award from JP Morgan Chase.
Table 2.2.2.4 (a): Sales of payments in the frist quarter of 2010
(Source: report on plans Agribank general business in the first quarter of 2010)
In recent years, international payment sales have consistently increased, with ongoing improvements in the quality of the entire payment system, ultimately attracting more export customers.
In the first quarter of 2010, Agribank experienced a significant shift in its approach to product service development, showcasing 182 facilities that successfully catered to modern market demands The impressive results from 2009 highlighted Agribank's effective implementation of State Budget revenues and various financial products, including savings accounts, credit security, and insurance tailored for agriculture, forestry, and fisheries As a result, many of Agribank's utility products and services have gained recognition and trust among customers and partners alike.
Some proposed solutions to improve the competitiveness of Agribank
3.2.1 Apply SWOT analysis to provide solutions to improve the competitiveness of Agribank
-Sustainable and high economic growth & economic growth is considered in the future.
-International economic integration is created for VN
-Competitiveness is happened fiercer and fiercer in the financial and banking sector in the domestic banks and foreign banks
-There are more and more competitive between comptitiors about approach with high technologies and experiences from advanced nations around the world.
-More market potentiality -Financial and credit policies of Vietnamese Government is to better.
-Diversification in the banking sector technology, ability
- Competitiveness with the different finance institutions about products such as: insurance companies, financial leasing groups
- Uncontrol the fluctuation of foreign currency.
- Unconsistent policy system espencially in the financial,banking and credit sector.
-Unsafety in technology security and weak awakeness of local people about electric commercial -Shortage of experinced and ability human resources and effect to competitors
-Agribank network has known as the biggest bank about scale and quantity so
Agribank can have abudant market and create favourable conditions for its development path
- Agribank has known as the leading bank in the
State Bank of Vietnam which has sustainable market place with the abundant clients from
Usage strength to take advange of opportunity:
* Market development and penetration strategy
- Take full advanages of network to expand market, products & services and meet the market demand.
- Confirm the position and affirm
Usage strength to lessen the danger:
* Concentration strategy depend on difference.
- Strengthen the finance power to ensure the current and long time competitiveness ability of Agribank
- Study the service product development to meet the demand of clients and create rural to urban area
-Agribank is considered as one of the strongest trade mark in Vietnam
-Agribank is increasingly developed by supporting of
Agribank trade mark by product and service quality
- Take advnages of supporting of Vietnamese
International Orgazanizations to approach the cheaper fund source and advanced technology of developed countries in the world the differences in the competitiveness
(only in agriculture, forestry and fishier area)
-Weakness in management mechanism and backward thought in leading staff.
Deploit opportunity to overcome weakness.
Overcome weakness to take advantage of opportunity
Overcome weakness to lessen the danger
These above analysis of SWOT mode can give some methods to strengthen competitive ability of Agribank as following:
3.2.2.4 Promote strength to take advantage opportunity:
In the context of our remarkable economy in the world, it is necessary for Agribank to promote strengths to take full advantage of current and future opportunities such as:
Agribank, recognized as the pioneering bank in Vietnam, is dedicated to expanding its network to enhance market development, diversify its products, and effectively meet the needs of its clients.
Agribank is recognized as one of the most prestigious and robust banks in the financial sector, which underscores its commitment to reinforcing its brand identity and enhancing its competitive edge.
Agribank benefits from the support of the Vietnamese Government, sponsors, and international organizations, enabling it to access affordable funding sources and advanced global technologies.
3.2.2.2 Develop opportunities to overcome weakness :
In the context of deep integration and compound growth, the Vietnamese economy, particularly the banking sector and Agribank, is presented with numerous new opportunities To capitalize on these opportunities, Agribank should focus on fostering cooperation and expanding partnerships, enabling access to modern technologies and advanced management practices globally Furthermore, leveraging cutting-edge technology is essential for Agribank to develop innovative and practical products that cater to client needs.
3.2.2.3 Usage strengths to lessen the danger:
In the competitive banking sector, Agribank must leverage its strengths and address its weaknesses while seizing market opportunities to overcome challenges To achieve this, Agribank should prioritize enhancing its financial power, which is essential for maintaining competitiveness By investing in new technologies, improving infrastructure, and upgrading facilities, Agribank can ensure effective business operations and foster sustainable growth.
Leverage the support of the Vietnamese Government and global organizations to expand your network and develop innovative products and services that cater to client demands This approach will enhance competitiveness and mitigate risks, allowing for sustainable growth in the market.
3.2.2.5 Overcome weakness to lessen the danger:
Agribank faces significant challenges in competitiveness within the banking sector, highlighting the need to transform its weaknesses into opportunities To enhance its competitive edge, Agribank must implement strategic changes that strengthen its position in the market.
Fristly, diversifying service products, improve service quality based on the advantage of network, building new products development strategy
Secondly, improve and better the role of management in the banking business activity such as: asset management, rish management, human resource management…
Thirdly, enhancing human resource based on staff education and training with the new theory and understand the role of clients in the development of bank
Fourthly, always bettering salary system, reward system and recruitment to attract good human resource and ensure that the staff have enough management capacity in the current and future period
To enhance the presence of Agribank, it is crucial to implement effective development policies and strategies that promote the brand and image both in local and international markets.
Group capacity building measures within the Agribank 1 Improving asset administration
Effective asset administration is crucial for a bank's success, influencing factors such as liquidation, profitability, and price competitiveness To enhance asset management, Agribank must implement strategic measures to optimize its performance and ensure sustainable growth.
- Perfect and speed up report works, ensure the report’ effectiveness
- Build and apply the asset administration mode Confirm and affirm the position of asset administration
- Combine harmoniously among credit risk administration – asset administration
3.3.2 Perfecting credit works and preventing risks.
Credit works always have risks, so in order to prevent and lessen the danger of credit, Agribank must apply solutions as following:
- Analysis and evaluate exactly the number of lending client is one of important method in investment expressed through 4 ways:
Evaluate business and production management ability of leaders: The leader in the enterprises plays an important role and decisive factor in the success or failure of business process
Evaluate financial capacity of enterprises and firms
Evaluate infrastructure and technology of enterprises
To mitigate risks, it is essential to distribute investments among various investors rather than concentrating capital into a single client or investment Consequently, Agribank should prioritize diversifying its loan types and investment areas to enhance financial stability and reduce potential losses.
- Study socio-economic situation: Currency situation is related to built credit policy. This method is armed to give loan policy to ensure the safety for investment activities of Agribank
To enhance business stability and legal protection, Agribank must strengthen its internal inspection and auditing processes to promptly identify and address potential issues Additionally, it is crucial for Agribank to meticulously review the legal foundations before establishing correspondent relationships with other firms, ensuring compliance and safeguarding the bank's interests.
3.3.3 Diversifying traditional products and developing new product a) Product diversification
To attract and retain clients effectively, banks must enhance the flexibility and convenience of their fund mobilization strategies Currently, EURO cash is gaining popularity and value in the market, yet few banks in Vietnam are focusing on this trend Agribank should prioritize the development and implementation of innovative methods for mobilizing EURO cash to meet the growing demand and stand out in a competitive landscape.
Agribank needs to streamline its loan procedures to address existing issues and better serve its clients, particularly those who hold deposits with the bank By simplifying the loan process, Agribank can enhance customer satisfaction and effectively meet the diverse needs of its clientele.
Agribank is committed to enhancing its card offerings by diversifying the types of cards available, alongside strengthening traditional card options This strategy aims to boost card competitiveness and cater to the growing demands of customers Additionally, the bank is focused on introducing innovative products to further enrich its card services.
An automatic investment account is designed for customers with surplus funds looking to invest By setting a limit and a deadline, customers can ensure that Agribank automatically reallocates their funds to accounts with higher interest rates, maximizing their investment potential effortlessly.
- Account with preferential interest: For customers have the big remaining in the long time and the account holders have no use money in account and high interest about 2.1%/year.
To enhance its competitive edge in currency exchange services, Agribank should implement overseas national currency exchange payment services at home Currently, customers must visit Agribank branches to access these services, while other banks like Dong A Bank and VIB have already adopted home-based currency exchange solutions By leveraging Agribank's online technology and extensive branch network, the bank can offer this convenient service to its customers.
Asset maintenance and strongbox rental services are gaining popularity in developed countries and regions In Vietnam, ANZ and HSBC offer these services at premium rates in Hanoi, while Sacombank provides more affordable options in Ho Chi Minh City This trend is expected to generate significant profits for Agribank as well.
The Automatic Deposit Machine (ADM) allows customers to conveniently make deposits without visiting a bank, saving them time and effort Despite being introduced three years ago, many banks have primarily focused on the Automatic Transaction Machine (AM) services, often overlooking the benefits of the ADM In addition to providing account information and facilitating payments, the ADM enhances customer service by streamlining the deposit process, making banking more efficient and accessible.
3.3.5 Perfect and develop information technology for Agribank.
The evaluation of basic technology as advanced in our country has led to an increase in high-quality products However, the implementation of information technology at Agribank is a complex process that requires significant time and costs Therefore, Agribank must focus on streamlining this process to enhance efficiency and reduce expenses.
Enhance and innovate product offerings by leveraging modern technology, including personal account management and VAT services such as salary payments and service bill copies Introduce investment solutions like asset administration, automated investment management, and capital management, along with connected card services, savings accumulation, insurance savings, and loan products Additionally, focus on developing other valuable ATM functionalities to meet diverse customer needs.
To enhance Agribank's competitive capability, it is essential to strengthen IT training for all staff, from leadership to employees Standardizing IT skills across the organization is a top priority, given the rapid development of information technology and its impact on effective management.
Human resources are a critical factor in the successful operation of organizations, particularly at Agribank In today's world, the emphasis on human resources has increased significantly Despite Agribank's extensive workforce in the banking sector, the management of human resource quality faces several challenges that need to be addressed.
The quality of human resources at Agribank is uneven, with many staff members lacking updated skills, making it challenging for them to meet the growing demands of customers in the banking sector.
- Secondly, the recruitment mechanism of Agribank in the past time is not opened in public or not suitable for real situation
- Thirdly, the salary and allowance of Agribank is still lower than others
In order to overcome limits, Agribank must carry out some followings:
Petition
The development of dealer banking services is influenced by various external factors beyond banking management Consequently, Agribank requires support from the Vietnam Government, the State Bank of Vietnam, and other relevant entities to foster growth in this sector.
The concern of Vietnamese government plays an important role in every filed because of creation of tax support, legal documents, socio-economic policy
3.4.1.1 The Government creates a legal barrier for banking business
Currently, the State Bank of Vietnam's policies impose significant limitations on the development of dealer banking services These regulatory procedures create challenges for banks, hindering their ability to effectively address customer needs and innovate new products.
Enterprises and individuals use banking transactions, preferential tax management for enterprises which has a high transaction rate, unacceptable large expendencies or transaction without banking ….
To enhance the competitive position of domestic commercial banks, it is essential for state management agencies to establish adequate legal frameworks that foster the development of dealer services Clear and transparent regulations regarding borrower obligations are crucial for effective civil relations between borrowers and lenders Additionally, banks face numerous submission and permission requirements to introduce new products; thus, it is vital to implement unified, straightforward regulations that are easily understood and prioritize client benefits Furthermore, government agencies should take the lead in utilizing dealer bank products and services, such as card products and salary systems through accounts.
The current policy environment is deemed inadequate for the development of dealer banks, despite ongoing government reforms Many banks continue to operate in a backward manner, facing overlapping regulations and a deficient legal framework Consequently, banks that seek to implement reforms often find themselves in conflict with existing laws.
The government must establish mechanisms to support the development of the banking sector, particularly by addressing the State Bank's guideline to increase necessary owner capital from 20 billion to 70 billion per branch, which poses challenges for banks aiming for rapid expansion Commercial banks are seeking assistance through preferential mechanisms, such as tax incentives and support for marketing efforts Additionally, the government should implement regulations that protect borrowers' rights, including updates to Civil and Land laws Legal agencies must prioritize resolving conflicts and assisting banks in recovering overdue debts Furthermore, creating a resale and buy market for consumer lending, including vehicles and apartments, is essential for fostering a more dynamic banking environment.
In the line with WTO integration, Regulations of banking activities must edit orientation with the internationalization as followings:
- Edit the statistic law, update new regulations of banking service by computer .
The decision No 44/2002/QĐ-Ttg regarding electronic vouchers emphasizes the necessity of establishing an organization responsible for the secure storage of vouchers Additionally, it mandates the creation of regulations governing the usage codes within the banking sector to ensure effective management and compliance.
Recently, cash payments have gained significant popularity in banking dealer services, prompting the government to establish legal regulations and a penalty mechanism to address violations related to card usage.
To maintain a sustainable political economy and reasonable inflation rates, the Vietnamese Government should encourage foreign investment, develop services and industries, and increase income for citizens to support local dealers Additionally, it is essential to enhance non-cash payment systems, such as salary payments through ATM cards and the development of automatic vending machines.
3.4.1.3 Creation of modern technology environment
The Vietnamese Government must prioritize the development of infrastructure and technology to bridge the gap with more advanced nations By focusing on technology transfer and implementing strategic training programs in information technology, Vietnam can enhance its technological capabilities and foster economic growth.
The advancement of Post and Telecommunications is essential for the modernization of technology and the enhancement of banking services in commercial banks Additionally, the affordability of phone and internet services plays a crucial role in attracting more users Consequently, fostering the growth of Post and Telecommunications is a vital component of the national economic development strategy.
3.4.2 Petition with The State Bank of Vietnam
The State Bank of Vietnam plays a crucial role in shaping the development of banking services and in proposing supportive policies for new offerings by Commercial Banks Under the law governing credit organizations, Commercial Banks in Vietnam are authorized to provide a wide range of banking services, enabling them to diversify their service offerings effectively.
3.4.2.1 Better policies and mechanism to improve and deploy new banking service
In accordance with national law, it is essential to enhance the legal framework governing commercial banks to facilitate their operations during the integration period These legal documents will guide technological advancements and ensure the safe implementation of modern banking services.
Issuing the banking management mechanism is to create conditions for the development of dearlers of commetcial Banks Commercial Banks will have responsibility to receive the fee as commercial principals
3.4.2.2 Maintainace the orientation and leading strategy in the deployment of dealer services of Commercial Banks
To integrate banking services into the lives of local communities, each Commercial Bank must obtain approval from the State Bank of Vietnam The State Bank is responsible for overseeing the development strategies of these banks to ensure a balanced sector and profitability for each institution while fostering a healthy competitive environment The overarching goal is to enable Commercial Banks to access timely financial information across various sectors and to prevent over-investment in any single area, such as the card industry To facilitate this, the establishment of the Vietnam Card Institution under the State Bank is essential as a management and payment center for banks Additionally, the banking development strategy department must enhance its role to maintain effective state management over currency and credit.
The State Bank of Vietnam is to be the leading bank in the banking technology modernization especially in non-cash payment and improvement of payment means and service quality
Supporting policies are essential for Commercial Banks to enhance investment, cooperation, and lending in infrastructure and banking technology modernization The banking information technology department is crucial in researching and selecting advanced technologies and software products from both domestic and international markets, providing valuable consultation and guidance for Commercial Banks.
In the context of economic integration and transformation, various proposals have been put forth to enhance Agribank's competitive capacity However, these solutions appear insufficient for addressing the specific needs of the bank Establishing a solid foundation for development orientation is crucial, as it will guide the implementation of tailored strategies for Agribank's future growth.