Solutions to the development of foward dp at vietnam joint stock commercial bank for industry and trade,graduation thesis

STATE BANK OF VIETNAM BANKING ACADEMY Foreign Language Faculty GRADUATION THESIS SOLUTIONS TO THE DEVELOPMENT OF FORWARD D/P AT VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE Lecturer : M.A Nguyen Phuong Lan Student : Le Thi Huong Giang Class : ATCB – K13 Ha Noi, May 26th 2014 STUDENT DECLARATION I, Le Thi Huong Giang, declare that the graduation thesis entitled Solutions to development of forward D/P at a Vietnamese commercial bank is the result of my own research with no material previously studied The research has been carried out on the basis of theoretical foundation and actual situation on international payment by forward D/P at Vietinbank over three years from 2011 to 2013 I assure that all data in my thesis is definitely accurate and reliable Signature Le Thi Huong Giang ACKOWLEDGEMENTS This graduation thesis could not be completed without the guidance and support of important individuals who provided me with great assistance during the period of time I carried out this research Firstly, I would like to express my sincere thankfulness to all the teachers in Banking Academy in general and the teachers in faculty of foreign language in particular, who dedicatedly provided me with solid foundation of knowledge during my four – year course at the university Secondly, I wish to give my deep gratitude to my supervisor, Mrs Nguyen Phuong Lan, who enthusiastically supported me by giving me advice and worthy suggestions, simultaneously offering me prompt correction when I was not on the right way Her contribution was of great importance in the completion of this graduation thesis Last but not least, I am very grateful to my beloved family for their great emotional support They are my emotional prop and always give me encouragement during the time when I carried out this study LIST OF ABBREVIATIONS Number Abbreviations Original WTO World Trade Organization ASEAN Association of Southeast Asian Nations D/P Document against Payment D/A Document against Acceptance L/C Letter of Credit B/E Bill of Exchange Vietinbank Vietnam Joint Stock Commercial Bank for Industry and Trade Techcombank Vietnam Technological and Commercial Joint Stock Bank Vietcombank Joint Stock Commercial Bank for Foreing Trade of Vietnam 10 Agribank Vietnam Bank for Agriculture and Rural Development 11 BIDV Joint Stock Commercial Bank for Investment and Development of Vietnam 12 MB Military Commercial Joint Stock Bank of 13 SBV State Bank of Vietnam 14 ICC International Chamber of Commerce 15 URC Uniform Rules for Collection 16 SWIFT The Society for Worldwide Interbank Financial Telecommunication 17 BOP Balance of Payment 18 GDP Gross Domestic Product 19 VND Vietnam Dong 20 USD United State Dollar LIST OF GRAPHS AND TABLES Figure 2.1: forward D/P transaction Figure 3.1: The number of forward D/P transactions at Vietinbank in the period of 2011 – 2013 .14 Figure 3.2: Turnovers of payment by forward D/P at Vietinbank in the period of 2011 – 2013 .15 Figure 3.3: Proportion of payment by forward D/P in total turnover form collection in three years from 2011 to 2013 16 Table 3.4: customers’ satisfaction with Vietinbank’s international payment services 17 Figure 3.5: Correspondent bank network of some Vietnamese commercial banks in 2013 22 TABLE OF CONTENTS CHAPTER 1: INTRODUCTION 1.1 Rationale 1.2 Objectives .2 1.3 Scope and subject of the study .2 1.4 Research methodology 1.5 Thesis structure CHAPTER 2: LITERATURE REVIEW OF INTERNATIONAL PAYMENT BY FORWARD D/P IN COMMERCIAL BANKS .3 2.1 Definitions and Characteristics of forward D/P 2.1.1 Definitions 2.1.2 Characteristics of forward D/P 2.2 Advantages and disadvantages and role of forward D/P in international trade 2.2.1 Advantages 2.2.2 Disadvantages 2.2.3 Role of forward D/P in international trade 2.3 Parties to forward D/P transactions 2.4 Forward D/P operation process 2.5 Factors affecting the development of forward D/P in commercial banks 2.5.1 Objective factors .7 2.5.2 Subjective factors 2.6 Norms reflecting the development of forward D/P at commercial banks 10 CHAPTER 3: THE REALITY OF INTERNATIONAL PAYMENT BY FORWARD D/P IN VIETINBANK 12 3.1 History and development of Vietinbank 12 3.2 The reality of international payment by forward D/P at Vietinbank 13 3.2.1 The number of D/P transactions 13 3.2.2.Turnovers of payment by forward D/P at Vietinbank 15 3.2.3 The proportion of payment by forward D/P in total turnover from collection 16 3.2.4 Customers’ satisfaction 17 3.3 The assessment of international payment by forward D/P at Vietinbank 18 3.3.1 Achievements 18 3.3.2 Limitations and causes 19 CHAPTER 4: MEASURES TO DEVELOP INTERNATIONAL PAYMENT BY FORWARD D/P AT VIETINBANK 23 4.1 Orientations toward the development of forward D/P at Vietinbank during the next period 23 4.1.1 General orientations of Vietinbank in the next period 23 4.1.2 Orientations toward the development of international payment by forward D/P 23 4.2 Solutions to develop international payment by forward D/P at Vietinbank 24 4.2.1 Improvement of banking technology .24 4.2.2 Improving quality of payment staff 25 4.2.3 Stepping up marketing activities .26 4.3 Petitions 27 4.3.1 Petitions to the Government 27 4.3.2 Petitions to the State bank of Vietnam 28 4.3.3 Petitions to exporting and importing enterprises 28 Conclusions 30 LIST OF REFERENCES .31 Foreign Language Faculty Graduation Thesis CHAPTER 1: INTRODUCTION 1.1 Rationale Since officially joining WTO in 2007, Vietnam has gradually integrated in ASEAN’s as well as the world economy Trade barriers have been gradually lifted, bringing many favorable opportunities but Vietnam also has to cope with big challenges resulting from integration and globalization Exporting and importing enterprises always have to face many difficulties such as barriers in languages, geography and discrepancies in customs or consumption habits between countries and limitations of parties involving in transactions as well Additionally, enterprises themselves also contain potential risks due to their limitations in some aspects, says, operational scale, financial capacity, lack of experience and knowledge of international rules From this reality, international payment operation by commercial banks was found to help enterprises reduce risks in transactions Over the past years, banks have paid much attention to developing international payment in both quality and quantity and they has become the important bridge between importing and exporting businesses in forwarding documents and making payment In Vietnamese commercial banks, international payment by collection, especially by forward D/P condition has become more popular because of its safety and its benefits to parties in transactions as well However, in order to exist and create reputation in market in the context of unstable economy with weak banking system, banks have to continuously improve quality of international payment in general and payment by forward D/P in particular Capturing shortcomings and finding solutions will support fast development of international payment and meet well diversity and scope expansion of payment demand Vietinbank has been well aware of this reality, then has been approaching and scoping market share in international payment section In reality, its international payment by forward D/P has experienced a slow development due to lack of experience and limited specialized knowledge of the bank and also low demand of enterprises, The foremost duties of Vietinbank, therefore, to satisfy the high and diversified demand of customers along with attract more customers to Le Thi Huong Giang Course 13 Foreign Language Faculty Graduation Thesis forward D/P by its safety and effectiveness From this reality combining with knowledge I have learnt at Banking Academy, I have chosen the topic “Developing forward D/P in a Vietnam Join Stock Commercial Bank for Industry and Trade” for my graduation thesis 1.2 Objectives Systematizing theoretical issues of international payment by forward D/P in commercial banks Giving data analysis and assessment on reality of payment by forward D/P at Vietinbank Proposing solutions to develop forward D/P at Vietinbank 1.3 Scope and subject of the study Subject of study: theoretical issue and practice related to quality and development of payment by forward D/P of Vietinbank Scope of study: mainly focusing on research on development of payment by forward D/P at Vietinbank during the stage of 2011 – 2013 1.4 Research methodology Basic scientific research methodologies used are comprehensive analysis, synthesis and comparison, combining with graphs, tables and figures by year collected from a Vietnamese commercial bank to illustrate research issue and make it clearer 1.5 Thesis structure In addition to the beginning, conclusion and references, the main content of the gradual thesis comprises of four chapters: Chapter 1: Introduction Chapter 2: Literature review of international payment by forward D/P Chapter 3: The reality of international payment by forward D/P at Vietinbank Chapter 4: Solutions to the development of forward D/P at Vietinbank Le Thi Huong Giang Course 13 Foreign Language Faculty Graduation Thesis CHAPTER 2: LITERATURE REVIEW OF INTERNATIONAL PAYMENT BY FORWARD D/P IN COMMERCIAL BANKS 2.1 Definitions and Characteristics of forward D/P 2.1.1 Definitions According to the Trade Finance Guide released by U.S Department of Commerce on April 12, 2007, concepts related to Collection method are defined as follow: - Documentary collection (D/C) is a transaction whereby exporter entrusts the collection of payment to remitting bank (exporter’s bank), which sends documents to a collecting bank (importer’s bank), along with instructions for payment Funds are received from importer and remitted to exporter through banks involved in the collection in exchange for those documents - D/P stands for Documents against Payment, an arrangement under which an exporter instructs the presenting bank to hand over shipping and title documents to importer only if the importer fully pays the accompanying bill of exchange or draft (Also called cash against documents) - Forward D/P is a kind of D/P, in which the importer must pay B/E within X days after the documents have been presented 2.1.2 Characteristics of forward D/P - Importer does not have to pay at sight but within X days after documents are presented - Importer has right to accept B/E but only receives the documents when he/she honors the B/E at the maturity date However, if payment is guaranteed by bank, importer can receive documents without immediate payment - A usance B/E is an optional tool in a forward D/P transaction Le Thi Huong Giang Course 13 Foreign Language Faculty 17 Graduation Thesis The three pie charts above show us the changes in proportion of forward D/P in total turnover from collection in the stage of 2011 – 2013 It is clear that there was a steady increase in the proportion during the period and that turnover from forward D/P always made up a large proportion in total turnover from collection Standing at 57% in 2011, value from forward D/P transactions increased, resulting in a slight rise in its proportion of 2% one year later The year 2013 witnessed a faster growth of forward D/P when it made a major contribution of up to 64% to total turnover We can see that forward D/P has become the main operation of collection method of the bank in recent years This is partly due to the convenience and safety of this type in comparison with D/P and D/A In reality, importer has a period of time to find funds for payment while exporter is still safe because he just hands documents to importer when receiving proceeds already, thus forward D/P is beneficial to both exporter and importer That is the reason why this type is being used more widely in international payment However, the data presents a slow growth of forward D/P, requiring the bank to find suitable measures with the aim of improving both quality and quantity of forward D/P transactions 3.2.4 Customers’ satisfaction Table 3.4: customers’ satisfaction with Vietinbank’s international payment services Criteria Amount of Competitivenes Bank’s s of service fee image 81 75 Credibility Convenience Serving style 68 65 51 satisfied customers (%) (Source: Report of international payment Dept – Vietinbank) The table shows the number of customers who are satisfied with international payment service at Vietinbank in total number of 100 customers participating in the survey conducted in 2013 by the bank It can be clearly seen from the table that Vietinbank’s competitive fee gains the highest satisfaction of customers with 81% Le Thi Huong Giang Course 13 Foreign Language Faculty 18 Graduation Thesis It is inferred that in the eyes of customers, Vietinbank’s service fees are quite competitive in comparison with other commercial banks The bank’s image ranks at the second among criteria with 75% of customers asked This appreciates customers’ feeling on Vietinbank and quality of international payment services offered by the bank Besides, the bank also achieves customers’ trust with a relatively high percentage of 68% It proves that Vietinbank is initially successful in creating credibility of its customers in international payment field This is an extremely valuable asset which plays a key role in the development of the bank because customers transact with the bank only when they see safety and creditability The next criterion is convenience To be more specified, convenience is assessed on factors, namely, correspondent bank network, procedures, transaction points, types of services and quick response of services to customers From customers’ point of view, convenience of the bank’s services is acceptable with satisfaction level of 65% Last but not least, serving style of payment staff does not live up to customers’ expectation when just over 50% of customers appreciates bank’s payment staff This is a major shortcoming that the bank needs to fix promptly 3.3 The assessment of international payment by forward D/P at Vietinbank 3.3.1 Achievements Over the past few years, by non – stop attempt of both Vietinbank’s leadership and staff, its payment by forward D/P has obtained remarkable achievements as follow Firstly, the bank has succeeded in increasing all norms of forward D/P, namely, number of transactions, turnover of payment by forward D/P and proportion of forward D/P in total turnover from collection A rise in number of transactions leads to a rise in turnover from collection fee – a quite safe source of turnover for the bank Despite making a small contribution to total turnover, it proves that the bank has paid more attention to such operation in terms of quality and quantity That success is also the proof of an increase in customers’ satisfaction with bank’s quality of service The reason comes from many factors In recent years, leadership Le Thi Huong Giang Course 13 Foreign Language Faculty 19 Graduation Thesis has carried out effective strategies to retain patrons and attract new customers Fee preference policy to enterprises that have high frequency of trading at Vietinbank is a good example for that Secondly, Vietinbank has achieved more diversified customer categories In the beginning, customers of the bank were mainly state enterprises However in recent years, Vietinbank has approached to non – state enterprises, a basis to increase sales and profit from forward D/P of the bank Next, there has been an increase in the number of banks that Vietinbank concretes relations with This provides the bank with quickness and safety in transactions and risk reduction As mentioned, at the present, Vietinbank has correspondent relationship with over 900 banks and financial institutions in more than 90 countries and territories in the world Such a wide network makes it easy for the bank to exchange market information and knowledge about customs as well as law of partner’s countries In conclusion, the true reform in mechanism of management and operation of Vietinbank not only maintains its position among top leading commercial banks of Vietnam but only brings it impressive achievements with steady growth over the years 3.3.2 Limitations and causes  Limitations Beside encouraging success, there have been some weaknesses that inhibit the development of payment operation by forward D/P at Vietinbank Firstly, there was still a great imbalance between turnover from import and export forward D/P During the period of 2011 – 2013, turnover from import forward D/P always made up a large proportion to more than 50% of total turnover from forward D/P and the growth rate of import forward D/P outdid that of export forward D/P Beside the external factors, it reflects a shortcoming of the bank in enhancing export payment operation Secondly, the ability to promote products of customer relation department is still limited Although collection by forward D/P is a quite simple operation, after being introduced about the product, customers are still vague on the order, procedure and Le Thi Huong Giang Course 13 Foreign Language Faculty 20 Graduation Thesis how to proceed the transactions Payment staff have not yet explained in detail to customers and lived up to their satisfaction These make it difficult for Vietinbank to create impression on new customers who use the bank’s product for the first time and retain those customers with the bank Thirdly, marketing strategies of the bank have not yet aimed at foreign companies located in Vietnam To be more specific, not only forward D/P but also other products of Vietinbank mainly aim at domestic enterprises and these products are designed in line with real demand of only domestic importers and exporters However, the fact is that foreign companies prefer products of foreign banks to those of domestic banks Therefore, it is not easy to attract foreign importing and exporting companies  Causes  Objective causes First of all, legal framework on collection in general and forward D/P in particular is still inadequate There has not been a specific document to govern this business in Vietnam up to now and commercial banks still have to use URC 522 of ICC for this type of transaction Although international documents are standardized and able to be applied to many countries, it is not always consistent with Vietnam customs and conventions Moreover, the barrier in language makes it easy for bank staff to get misunderstanding if they are not good at professional in international payment The second reason is that the world economy has undergone great changes in recent years For an integrating and growing economy as Vietnam’s, being suffered from bad impacts is inevitable The national inflation rate reached to extremely high level in 2011 (18.6%) and suddenly plunged to 6.81% in 2012, continuing to decline in 2013 Additionally, the average growth rate in the stage of 2011 – 2013 was only 5.6% per year which was a lowest level within past 13 years In theory, such unstable economy with low GDP cannot be a good platform for the development of international trade Moreover, instability in international politics causes an increasing number of unsold exports and thus affect badly to national trade balance Le Thi Huong Giang Course 13 Foreign Language Faculty 21 Graduation Thesis The next factor that should be mentioned is the increase in stiff competition in banking sector especially in international payment field Although Vietinbank has taken advantages of its strength to develop international payment operation, it is not easy to outperform such leaders in this field as Vietcombank and Techcombank Besides, other prestigious domestic banks are trying to draw customers by interesting policies on marketing, fee,… Since Vietnam joined WTO, the government encouraged foreign banks to Vietnam financial market As a result, domestic commercial banks in general and Vietinbank in particular have to face great threat from reputable foreign banks such as HSBC, ANZ,…when they are clearly weaker than their foreign rivals in terms of financial capacity, professional working style and widespread correspondent bank network The next thing is limitation of Vietnamese exporting and importing enterprises Most of them lack information about their partners’ countries, foreign consumers’ needs and rules on export and import activities, influencing the quantity of exports, thus affecting the scale of international payment by collection of the bank Therefore, these enterprises are very in need of good consultant services offered by the bank to avoid risk in business process Last but not least, payment by collection itself contains some restrictions Although this is a quite simple payment method with relatively cheap fee, it is evaluated not safe for exporters or sellers Additionally, the prestige of Vietnamese exporting and importing enterprises in the view of foreign partners is not high Therefore, they require a safer and stricter payment method such as L/C to ensure their benefits That is the reason why turnover from payment by collection as well as by forward D/P usually accounts for a small proportion of total turnover from international payment However, when parties have mutual trust after a few successful business deals, they will tend to use collection or remittance to reduce transaction cost  Subjective causes Firstly, Vietinbank lacks emphasis on staff training The bank has not had official training courses for payment staff on specialized knowledge and situation – handling skills Most of the staff are still embarrassed in introducing bank’s Le Thi Huong Giang Course 13 Foreign Language Faculty 22 Graduation Thesis products to customers in a clear and understandable way Customers, therefore, find it hard to follow and easy to make mistakes in the transactions, incurring risk for parties involved Secondly, the bank has not yet paid much attention to marketing payment methods At the present, customers of Vietinbank are mainly its traditional customers who have been with the bank for a long time It has not approached foreign companies and small domestic enterprises In order to attract new customers and expand customer categories in the context of stiff competition, marketing strategies should coordinate with product design division to offer new service packages which are suitable for business condition and needs of these types of companies Finally, network of correspondent banks of Vietinbank is not wide Despite an increasing number of correspondent banks in recent years, it is still quite small compared to other banks with same scale or position Figure 3.5: Correspondent bank network of some Vietnamese commercial banks in 2013 Name of bank Number of Number of countries correspondent banks and territories Vietcombank 1700 120 BIDV 1600 125 Agribank 1065 97 Techcombank 1000 88 Vietinbank 900 90 MB 850 75 (Source: official websites of commercial banks) It can be clearly seen from the table that the number of correspondent banks of Vietinbank has reached to 850 In comparison with the same position banks, it just more than that of MB but much less than other banks originated from state – own banks With the target of becoming the leading bank of banking system and offering international standardized services, it is necessary for the bank to focus on development of a more widespread correspondent bank system Le Thi Huong Giang Course 13 Foreign Language Faculty 23 Graduation Thesis CHAPTER 4: MEASURES TO DEVELOP INTERNATIONAL PAYMENT BY FORWARD D/P AT VIETINBANK 4.1 Orientations toward the development of forward D/P at Vietinbank during the next period 4.1.1 General orientations of Vietinbank in the next period In the context of unstable economy in 2013, Vietinbank has made efforts to overcome all difficulties and challenges in order to fulfill excellently business tasks, develop safely and effectively towards international practices and standards It always maintains and promotes its role of a big state - owned bank and the pillar of banking industry In 2014, Vietinbank will focus all its capacity on promoting the growth and dominating the financial market, enhancing financial capacity and increasing its competitiveness in financial and monetary market The bank will make great effort to restructure comprehensively itself towards modern model, innovate organizational and business model However, the basis target throughout the next period is still maintaining the role as a pillar in implementing policies of the Government and state bank by performing measures to remove difficulties of enterprises, assisting market and complying with regulations on monetary policies Besides, one of the top objectives is investment in technology innovation, improving quality of services and risk management ability All the targets orient to the safe, effective and sustainable development The simultaneous concern is good implementation of social welfare and responsible to community 4.1.2 Orientations toward the development of international payment by forward D/P Besides general orientations, Vietinbank also sets specific ones for international payment and for forward D/P in particular as follow: - Continuing to increase turnover from forward D/P by at least 30% per year, especially focusing on boosting export forward D/P Le Thi Huong Giang Course 13 Foreign Language Faculty - 24 Graduation Thesis Setting up suitable policies on customer care so as to retain traditional customers that have big payment sales to settle business sales, drawing new customers and small and medium enterprises - Developing network of correspondent banks, especially setting relations with leading prestigious banks in other countries and territories in order to more safely and effectively serve international payment by forward D/P - Upcoming years will see a great restructure in human resources with a decrease in the quantity but an increase in the qualified staff Simultaneously, the bank will build a high – qualified staff network at all branches, recruiting more excellent staff at all operations who are able to generate lots of sales and profits for the bank Besides, Vietinbank will continue to perfect mechanism of salaries and bonuses in line with benefits and responsibilities as well as work effectiveness of each staff - Organizing more short – term professional training courses for staff who are weak at professional, contributing to improvement of quality of customer care service 4.2 Solutions to develop international payment by forward D/P at Vietinbank 4.2.1 Improvement of banking technology Technology is a solid foundation for all industries, especially in service industry as banking Therefore, development of banking technology is considered a very important step in business process, the basis for successful transactions and meeting customers’ needs Moreover, with a proper investment, the strength in technology becomes an effective tool of the bank to increase its competitiveness and catch up with other strong rivals This is extremely necessary in the context of stiff competition with integration of new foreign banks Although Vietinbank was successful in being the first bank of Vietnam to apply modern banking technology and e – commerce, the bank constantly innovates and updates modern technology in accordance with international standard In order to take advantage of technology, the bank should focus on development of Core Banking system and SWIFT payment network to make information transfer and risk management effectively and reduce transaction cost Le Thi Huong Giang Another concern is to Course 13 Foreign Language Faculty 25 Graduation Thesis strengthen cooperation in technology between the bank with foreign banks and financial institutions to get their technological support 4.2.2 Improving quality of payment staff Beside technology, human factor also plays a key role in the long – term development of a bank Therefore, the bank should pay attention to comprehensive development of human resources Especially payment staff are required to be excellent in professional and knowledgeable at international practices They deal directly with customers in transactions, thus their attitudes and qualification are decisive to the bank’s service quality and image The bank should pay much attention to following issues: - Setting up a reasonable and scientific recruitment process to ensure that the bank is able to find excellent staff who meet requirement of the jobs - Facilitating potential staff to study abroad with the purpose of learning knowledge and experiences of developed countries These staff will become the main force of the bank in the future - Building suitable policies and measures to use effectively and screen human resource The bank should assess and classifies staff annually to retrain under – standardized staff who not meet requirements, increasing general quality of payment staff - To innovate incentive policies to staff With satisfactory incentives on salaries and bonuses, staff will perform fully their abilities and enthusiasm to their jobs, the bank also retains high - qualified staff Strict implementation of reward and punishment creates competition and motivation for staff to try their best to accomplish set targets - Strengthening compliance with discipline of payment staff Staff need to implement business process strictly, cooperate actively with their colleagues to dealt with problems - Short – term training courses and workshops should be held more regularly so that staff can exchange knowledge and experience with counterparts of other banks Le Thi Huong Giang Course 13 Foreign Language Faculty - 26 Graduation Thesis Another key thing is the attitudes of payment staff toward customers They need to be courtesy and smiling with customers with proper attitude in any situation, even when conflicts occur At the same time, payment staff should enthusiastically answer customers’ questions and guide them to perform procedures 4.2.3 Stepping up marketing activities The Vietnamese financial market sees a large number of commercial banks along with rapid growth in quality of service provision Additionally, Vietinbank has to compete with not only domestic banks but also foreign rivals which are strong in financial capacity, technology and experience Customers are now bombarded with many good choices In the climate of such stiff competition, the bank cannot wait for customers but has to actively find the way to draw customers Therefore, Vietinbank should boost marketing strategies to promote its image and find new customers by implementing following measures: - Planning customer care regularly, flexibly and closely with each type of customers: VIP customers, traditional customers and ordinary ones; conducting periodic surveys on the level of customers’ satisfaction toward bank’s services so as to have prompt adjustments, living up to customers’ expectation - Holding exchange meeting with customers to consult customers knowledge of international payment, how to limit risk in collection as well as rules and international practices used, simultaneously introduce new products and services of the bank - Finding new customers through existing customers of Vietinbank In order to be successful by this channel, the bank itself has to satisfy customers with high – qualified services and enthusiasm of payment staff Once customers trust prestige of the bank, they are willing to introduce their relationships to the bank - For customers who no longer transact with Vietinbank, the bank must find out the exact reasons If it was rooted from bank’s shortcomings that made customers disappointed, the bank should timely remedy weaknesses in sales policies On the other hand, if other banks have more attractive policies to draw these customers, Vietinbank needs to adjust its current policies to strengthen bank’s competitiveness Le Thi Huong Giang Course 13 Foreign Language Faculty - 27 Graduation Thesis Maintaining good relations with exporting and importing enterprises It is necessary for Vietinbank to offer special preferences to its patrons, give gifts attached Vietinbank’s image, visit customers on the occasion of important events, regularly hold conferences to close customers to find out their needs offer free consultancy services for wonders relating to international payment 4.3 Petitions 4.3.1 Petitions to the Government The Government should settle micro economic environment and perfect policies such as tax incentives and quotas to facilitate the development of enterprises, since then boosting export and import activities Besides, Vietnam has not yet had any official legal document which governs international payment by collection Instead, banks still use URC 522 issued by ICC to govern collection transactions and disputes incurred It is unfavorable to Vietnamese enterprises when disputes arise International payment is governed by not only international practices but also by national law with the principle that priority is given to national law to solve disputes Vietnamese enterprises have to suffer from risk and losses in many cases Therefore, it is high time the Government issued a legal document on international payment by collection in order to protect legitimate rights and benefits of domestic enterprises Another foremost duty for the Government should be issuing more policies to boost export activities Although goods of Vietnam have been sold in many countries around the world, they are mainly agricultural products with poor categories It is necessary for the Government: - To strengthen trade cooperation and diplomacy activities with strong economies such as European Union, USA in order to expand our export markets Besides, the Government should actively promote the image of the VN with the main export commodities to international friends by regularly organizing fairs and exhibitions - To issue protectionism policies to domestic enterprises, offer tax incentives, and simplify administration procedures to facilitate smooth export – import activities Le Thi Huong Giang Course 13 Foreign Language Faculty 28 Graduation Thesis 4.3.2 Petitions to the State bank of Vietnam  Perfecting legal system for banking activities The SBV should build effective methods of supervision and risk assessment toward international payment operation of commercial banks under international standards It is necessary for the SBV to actively coordinate with relevant ministries so as to finalize regulations and rules on international payment in general and payment by collection in particular so that commercial banks can apply to minimize risks for themselves and for their customers  Settling the exchange rate Exchange rate is one of decisive factors which have great influence on foreign trade as well as bank’s businesses In the climate of intense integration and globalization, great changes of foreign capital flows cause a volatility in demand and supply of foreign currency, which is very hard for entities to predict and control Fluctuation in exchange rate gives rise to unforeseeable risks and losses toward business entities, especially exporting and importing enterprises An increasing exchange rate will boost export activities and constrain import activities and vice – versa, impacting on sales from international payment of banks Therefore, it is essential for the State bank to flexibly regulate exchange rate at a reasonable level to develop foreign trade 4.3.3 Petitions to exporting and importing enterprises Risks arising from payment by forward D/P mainly result from customers who directly participate in transactions Therefore, effective measures to minimize risks and losses must be come from enterprises They may overcome their weaknesses if implementing the following measures Firstly, enterprises must have their own excellent staff who are well – trained in foreign trade and knowledgeable at laws in international payment so that enterprises can build strict contracts and minimize risks for themselves Besides, these staff also must be reliable along with other good personalities to ensure benefits of enterprises Le Thi Huong Giang Course 13 Foreign Language Faculty 29 Graduation Thesis Secondly, because international rules are written in foreign language and hard to be well understood, staff are not only good at specialized knowledge but also foreign language Therefore, enterprises should enhance foreign language skill of their staff by sending them to short – term language courses or organizing foreign language classes at the enterprises Clearly, foreign language skill is an effective tool of improving quality of trade deals with foreign partners Thirdly, prestige and honesty are of great importance in maintaining permanent business relations with partners and of great decision to the existence of enterprises However, in reality, images and prestige of Vietnamese enterprises are not good in the eyes of foreign partners A few Vietnamese companies cheat in business, creating a bad impression on foreign partners toward domestic enterprises, influencing negatively images of other businesses Therefore, Vietnamese enterprises had better eliminate this situation to build a good image to overseas associates Finally, enterprises should foresee risks and losses which may incur when using payment method by forward D/P in their transactions and set provision for it so that they are able to cope with when disputes arise Le Thi Huong Giang Course 13 Foreign Language Faculty 30 Graduation Thesis Conclusions After integration, Vietnam’s economy has undergone positive changes with increased international trade As a result, exporting and importing activities are increasingly focused, causing importance of development of international payment methods Forward D/P is now considered one of the safest methods in international payment transactions Therefore, it deserves commercial banks’ great attention On the basis of various study methods, combining with theoretical knowledge and data on international payment by forward D/P provide by Vietinbank, the graduation thesis has found out following issues Firstly, the thesis has researched general theoretical knowledge about international payment by forward D/P at commercial banks Secondly, on the following part, the thesis has shown reality of payment by forward D/P at Vietinbank by analyzing data collected from the bank in three consecutive years from 2011 to 2013 Finally, the thesis has proposed suitable measures to the development of forward D/P at Vietinbank, simultaneously petitions to the Government, the state bank of Vietnam and also domestic exporting and importing enterprises so as to promote the development of forward D/P method Due to the limit of time and research condition, my graduation thesis still contains many insufficiencies Therefore, it is my honour to get support and advice from teachers for a perfect thesis Once again, I would like to send my sincere thank to teachers in faculty of foreign language in general and my instructor, Mrs Nguyen Phuong Lan, has enthusiastically instructed me during research period of time in order that I can complete this thesis Personally I hope that my research and petitions in this thesis will make a small contribution to the development of international payment by forward D/P at Vietinbank in next period Le Thi Huong Giang Course 13 LIST OF REFERENCES U.S Department of Commerce (April 2007) Trade Finance Guide The International Trade Administration’s (ITA) Office of Finance International Chamber of Commerce (1995) Uniform Rules for Collection, ICC Publication No 522 Nguyen Van Tien (2011) Giao Trinh Thanh Toan Quoc Te & Tai Tro Ngoai Thuong Statistic Publication Nguyen Van Tien (2008) Cam Nang Tai Tro Thuong Mai Quoc Te Statistic Publication Vietnam Bank for Industry and Trade (2013) Annual Report Vietnam Bank for Industry and Trade (2011) Report of International Payment Dept Vietnam Bank for Industry and Trade (2012) Report of International Payment Dept Vietnam Bank for Industry and Trade (2013) Report of International Payment Dept Vietnam Bank for Industry and Trade Documentary Collection Retrieved from website: https://www.vietinbank.vn/web/home/en/product/im_ex_paymt/ 10 Website:http://vietbao.vn/Kinh-te/Vietinbank-Hai-muoi-nam-xay-dung-vaphat-trien/55196407/88/ 11 Website: http://www.vietinbank.vn/web/home/vn/research/11/110130.html 12 Website: http://export.gov/tradefinanceguide/eg_main_043246.asp