LV Thạc sỹ_The letter of credit service in VCB

NATIONAL ECONOMICS UNIVERSITY ADVANCED EDUCATIONAL PROGRAM ***************************** BACHELOR’S THESIS IN FINANCE THE LETTER OF CREDIT SERVICE, IN VIETCOMBANK, HAI DUONG BRANCH Table of Contents Chapter 1: Literature Review .2 Chapter 2: Research Methodology .9 2.1 Qualitative method: 2.2 Quantitative method: 10 2.3 Observation method: 11 Chapter 3: Theoretical Background .15 3.1 Definition: .15 3.2 Legal background: .22 3.3 Vietcombank’s standardized procedures: .25 Chapter 4: Perfor4mance of L/C in Vietcombank – Hai Duong branch 30 4.1 Underwriting performance 30 4.2 Accounting results 36 4.3 Evaluation 44 Chapter 5: Conclusion 48 ~2~ Chapter 1: Literature Review International trades and payment for goods sold in international sales transactions have been observed for long, due to the problematic nature of such transactions The economic entities which have their business in different countries, are therefore subject to different national legal systems Furthermore, the seller will often transport goods across large distances and across national borders Under such circumstances, the seller has a great interest in ensuring that it will receive payment for goods sold once the goods leave its possession and control, and the buyer has a corresponding interest to ensure that the seller has dispatched conforming goods before making payment in terms of the sale agreement When goods travel across national borders, they are moved outside the jurisdiction in which the seller resides; thus, any attempts to regain control or possession of the goods will be significantly more difficult for the seller Similarly, if the seller does not receive payment once the goods are delivered, it is all the more difficult to pursue the buyer for payment The seller will deliver goods to a foreign jurisdiction where he has little influence, and possibly very little knowledge of the applicable law Foreign law may govern many aspects of the transaction including procedures to obtain payment, and the seller may be required to obtain any court order necessary to enforce such payment, through a foreign forum, where it does not have easy access to the wheels of justice This may prove to be inconvenient and expensive Similarly, if the buyer makes payment for the goods prior to receiving delivery, and if the seller fails to make delivery or delivers nonconforming goods, then the buyer is left facing a similar prospect of pursuing the seller in a foreign jurisdiction Since Vietnam became a member of World Trade Organization (WTO), the exchange activities between us and other countries have increased dramatically This kind of trading has brought domestic markets various benefits, thus is strongly encouraged by government and many economic participants However, ~3~ the greater level of import and export transactions are conducted, the more demand on capital flows must be facilitated in term of many currencies for settling payments Since Vietnamese Dong (VND) is quite illiquid and rarely accepted outside of Vietnam, our international trade calls for a huge amount of strong currencies to buy foreign goods and services This puts a great burden on domestic financial and monetary systems, and demands for considerable fiscal innovative in an attempt to help Vietnamese companies initialize payments and be on equal footing with foreign trading partners Regarding this topic of international payments, the government and many financial institutes face with great dilemma of supporting the flow of strong foreign currencies and maintaining the strength of Vietnam Dong relative to such currencies The harmonic environment must be achieved through resolving many conflicts between different controversial issues, such as promoting economic growth and controlling inflation, encouraging factors of production import and reducing trading deficit, and facilitating international capital flows and ensure the strength of domestic currency or exchange rate With all such complex objectivities, the most common and favorable tool for financing international trades is the Letter of Credit or L/C The fact and application have proved that this payment channel processes many advantages and effectiveness over other choices, to secure payment in an international trade transaction, in a way that takes care of the interests of both the seller and the buyer For long period of time, Letter of Credit has been originated and viewed as most reliable channel for import and export activities For many developed countries, the L/C is not only a payment tool, but also an investment security The issuing volumes of L/C in primary markets are extremely large, and secondary markets which are structured to circulate it are also active with various services associated Data and indicators from these markets become important to present the economy as much as CPI or stock indexes Its role of encouraging the capital flow at global trading scale is critical; and the L/C system is regulated by many ~4~ international authorities and regulating systems In Vietnam, the L/C service has just been established for about ten years; and the young age makes it just stay in primary market Moreover, there is only one type of financial institutes which are allowed to issue and accept the L/C; which are commercial banks The value of this letter is only meaningful to entities which have titles on it; and secondary usage is prohibited This makes researchers, whenever want to explore this market sector, must go straight to the bank and examine the current situation of L/C business in Vietnam During my last year of undergraduate period, the university asks students for certain time of having an internship, to gain practical knowledge in working environment For which, I decide to apply for a commercial bank, the most important entity in the financial system, which produces the majority of services in Vietnam, and also responsible for the L/C underwriting Among many options, I target Bank of Foreign Trade of Vietnam (Vietcombank), one of four largest banks, which is also specialized in import and export activities, thus has the most developed L/C service After two months staying with the Vietcombank, I have chance to understand much more about international payment methods, and observe how L/C is actually provided in a real situation Once gathering reasonable materials about this topic, I decide to write a comprehensive paper about “L/C service in Vietcomebank”, to present a general information, analyze the operating results, and suggest some solutions or enhancements Regarding this L/C topic, there are many dedicating research papers which have been conducted to explore various aspects of international payment tool I, as a follower, have reviewed many reference materials, in an attempt to gather reasonable, academic information for my study Mostly, I look up from three sources: the Vietcombank’s information storage, the university’s library, and the internet base From such, there are some significant writings which I enjoy great ~5~ knowledge derivation from; they are:  From the Vietcombank’s information storage: Trần Hồng Vân (2008), “UCP 600, Những thay đổi cần bi ết ứng dụng quy trình tốn Thư Tín Dụng” This paper was written by a Vietcombank headquarter staff in International Payment Department; and served for purpose of listing significant changes of UCP 600 in comparison with other previous version, and explaining how the administrative procedure for Letter of Credit should be adjusted in accordance Since the Uniform Customs and Practice for Documentary Credits (UCP) is the primary set of rules on the issuance and use of L/C; it utilizes by Vietcombank and many other commercial banks as the ultimate, comprehensive standard The writer, from the standing point of an underwriter with much experience in L/C service, had justified this new UCP version and demonstrated in certain cases how its adjustments would affect the L/C process She stressed that the new rules in general calling for consolidation among commercial banks, thus suggested reasonable modifications for Vietcombank in detail However, since Vietcombank is under much control of State Bank of Vietnam and other authorized units; her recommendation also took into account many government’s policies during 2008 period Most of solutions in this paper have been approved and put into practice for the bank’s internal procedure; and from that turning point, there has not been other significant changes Thus, in order to study the current L/C service of Vietcombank, I have taken a deep review and audacious reading from this research paper  From the university’s library: Đặng Vương Anh Et Al (2010), “Lựa chọn chế tỷ giá hối đoái bối cảnh phục hồi kinh tế Việt Nam, trọng tâm 2010” ~6~ This research explained the foreign exchange mechanism of Vietnam, given considerable government’s control in order to direct domestic economy toward recovery after financial crisis of 2008-2009 It started with a firm theoretical background of exchange rate regimes, which have been experienced and recognized through the history of multinational trading Each regime was demonstrated in detail regarding mechanism, development, and effects on a nation which applies it For any country, how the government wants to define the domestic currency relative to others influences internal markets and diplomatic relationships at macro level This will stream the value of exchange rate across payment tools, including Letter of Credit In addition, this thesis had also drawn out a picture of the exchange rate system in Vietnam during 2008-2010 periods which witnessed many great fluctuations and difficulties At that time, the US’s financial crisis had spread out, confronted many other countries, and brought in such destructive effects; thus, to defense Vietnam economy, the government must intervene with various restrictions Their total effects on exchange rate and payment systems were illustrated and justified in sophisticated manner This research provides me the comprehensive insight about international payment system in Vietnam, and helps me to fully understand corresponding actions of Vietcombank for L/C service  From the internet base: Ficom S.A v Socialized Cadex, Credit Research Foundation (1980), “Understanding and using Letters of Credit” This reference source is a very basic and common writing, which specializes in terminologies and general structure of Letter of Credit Firstly, the paper explained many standardized terms which had been internationally accepted, such as: beneficiary, issuing and confirming bank, revocability and negotiability The paper was among first comprehensive studies about definitions in a Letter of Credit; thus helped banks in various countries to have a unifying source to look ~7~ up Since Vietcombank has just had a short history of providing L/C service, many unclear issues should be reviewed and check from a reliable work Moreover, the use of Letter of Credit as a protective tool for international trade was also examined carefully in this research How a L/C can reduce risk, facilitate trade and accomplish payment purpose through substituting the credit strength of a bank for that of economic entities was clarified in a professional manner Therefore, it had pointed out the mechanism of L/C and the rationale of its popularity in US, Great British, and many other developed countries The paper worked as a starting point, very basic, but reliable ground for me to explore L/C service and find out modifications for Vietnam market and more specifically for Vietcombank From this three main reference sources, I have also associate some other information pools, to derive reasonable support for my study However, there are many differences in presentations which have been observed from above researches: Firstly, I concentrate on practical doings in Vietcombank rather than theoretical knowledge and requirements which are easily noticed and understood by externalities The daily work will be demonstrated in detail, and how accepted standards put influence on my work will be presented with both positive and negative sides Secondly, my time internal is from 2009 to 2011 given unique macroeconomic circumstance and governmental direction We all know that this bank must act strictly in accordance with SBV’s policies; thus, the procedure changes from time to time in order to comply with external influences Therefore, my results are different from previous studies, given the same subject Finally, my scope is not about the whole Vietcombank system in Vietnam, but only the Hai Duong branch where I have the internship For each operation area, the unit must match regional demand with its foreign currency resources; ~8~ thus my work in this branch and the final study are subject to environmental issues which only happen in Hai Duong Keeping these distinctive attributes in mind, I move to the next part of my study Chapter 2: Research Methodology To derive with this final writing, I have gone through a long process which recruited many researching methods:  Qualitative method:  Quantitative method:  Observation method: ~9~ These three research methods can be demonstrated in more detail as: 2.1 Qualitative method: A method of inquiry which employs academic theories and professional disciplines, aims to gain an in-depth understanding about the studying object Most of time, the qualitative method produces information background and welldeveloped assertions in certain cases It also asks for logical evaluation, rational consideration to come up with analytical insight about the subject which will be examined or problem which will be encountered Specifically, the qualitative analysis will search for theoretical background of L/C, relating international standards for this payment channel across countries, and any Vietnamese requirements that Vietcombank must adhere In my study, I start with understanding about legal and theoretical knowledge in general; then observe the written policies of Vietcombank which govern daily work for issuing a L/C I must be familiar with many Vietnamese and international standards regarding commercial trading and payment methods Some general agreed systems that are widely applied are:  Uniform Commercial Code (UCC)  Uniform Customs and Practice for Documentary Credits (UCP)  International Commercial Law In addition, I must follow the bank’s procedure which is subject to daily changes Vietcombank is among the largest commercial bank, thus its system is carefully designed and tailored in an attempt to meet customers’ needs It also has great degree of freedom in packaging financial services; and to some extents, can influence the foreign exchange policies of SBV Therefore, its policies and orientation for each period of time are unique, with many different attributes ~ 10 ~ produces administrative fee for most of time We usually have little level of control; normally, just passively process any documents that are sent from foreign banks and our domestic customers This service results, hence, not show our management or operational capacity; which makes me discuss less about it in comparison with import L/C As what can be observed from the table, the import business was executed in Hai Duong with a slight decrease from 2008 to 2009 then has experienced a regular increasing trend In 2008, our institutional customers enjoyed a positive business environment They operated with high, active level, thus recruited large amount of production supplies from other countries L/C contracts in this year were to buy machineries from Taiwan and Japan Many companies in Hai Duong industrial zone were newly established and believed in a bright prospect of future business; thus, employed great capital investments in comparison with the asset scale Figure 4.1: The exchange rate in Vietcombank, in 2008 Even during 2008 year, there were a widely spread financial crisis, Vietnam was not affected much Especially, the business partners of our customers mostly are from China, Taiwan, Japan, and Singapore, which were also not badly affected by US’s failure; thus, conducted things with many favorable attributes Although ~ 37 ~ the data for 2007 is not available due to accounting treatments, a senior staff in our department has told me that the total amount of complete payment in 2008 was considerably higher tin that in 2007 In this period, Hai Duong branch also successful connected three foreign banks in Asia and settled Nostro and Vostro accounts among us Hence, 2008 was quite a successful year for international trading in Hai Duong In 2009, however, we had faced many difficulties which were mainly caused by chaos over foreign exchange market and other financial markets At that time, we had a great lack of foreign currencies; thus, were unable to guarantee many L/C contracts due to many reasons The most significant one is led by operations and situations on the gold and stock exchange markets 2009 was an enthusiastic period of these two investment channels with an introduction of gold exchange floor, and a good recovery of stock markets People had been eager to participate in such, hence demanded a considerable amount of USD and other strong currencies Especially, the gold market was open a free connection with international market, which allowed many free flows of money from Vietnam to other foreign sectors through gold exchanging These made most of foreign currencies which were produced by export activities were not sold back to banks, but to independent investors at higher prices Although the SBV and our headquarter has tried hard to rebalance the currency flow, the fail of primary sources- from export activities, made us a great constraint to conduct international payments with foreign parties During 2009, our branch reserves in term of US dollar, Japanese Yen, and Chinese Renminbi were always at modest level; hence we were not confident in paying capacity and hesitate to underwrite any import L/C ~ 38 ~ Figure 4.2: The exchange rate in Vietcombank, in 2009 In addition, the government restrictions had great negative influence on our business in 2009 From Aprils to October, due to confusing movements of USD exchange rate, it took much time and effort for us to determine the reasonable level for L/C contracts It was the time when American economy had not recovered from the crisis; and the consequences were also greater than what had anticipated with many negative follow-up situations These had made the USD dramatically depreciated against most of other currencies However, the domestic scarcity for dollar still produced counter effects, and created a controversial movement of exchange rate for all three quarter of 2009 Not even SBV, or Vietcombank headquarter was confident on estimating the interbank rate in such sensitive time; and this caused great burden our operation Usually, we had to wait about two hours every morning to have updated exchange rate The time lagging was amplified with working-hour differences among our branch and international partners; thus, delayed the process for several days The unclear exchange rates were also a hardship for accounting purpose; and our department must discuss very seriously everyday in an attempt to have rates and convert L/C contract to VND denomination Many write-offs had been made with senior manager reviews, which most of time caused negative outcomes All had led to a very troublesome 2009 for International Payment Department and our Hai Duong Branch ~ 39 ~ In the next year, the situation had been slightly remedied which were helped much by SBV’s supervisions Throughout the year, Vietcombank had applied the exchange rate regime very flexibly and actively in an attempt to operate L/C channel with best choice of rates In comparison with 2009, more adjustments were made to match up with the black markets and gained access to the foreign currencies inflows Learning much from the previous failure, Vietcombank’s headquarter had been more efficiently to issue exchange rates and verify it on daily basis Figure 4.3: The exchange rate in Vietcombank, in 2010 As what can be observed from the figure, the interbank rate had changed more frequently in 2010 than 2009, both in term of absolute values and the width of range for commercial banks Thus, Vietcombank had also more room to compromise with our customers, and been able to settle reasonable agreements Moreover, we were able to attract foreign currency inflows with the new interest rate policy From June, the whole Vietcombank system had increased the interest rate for time deposit denominated in USD up to 5%, and for payment account up to 2% Such attractive interest rates had triggered many individual ~ 40 ~ and companies to put more USD in their accounts For our branch, a magnificent amount of USD had pumped into institutional accounts, which belong to exporters in Hai Duong Industrial Zone It there were not this interest rate increase, most of payments for theirs exportation would go to the black market and hardly be controlled by commercial banks Furthermore, our international partners had also exploited this policy More balance was remained in their Vostro accounts and they can enjoy the risk-free return Since the situation in other countries was not so good that time, there was little investment or usage of money for foreign banks; thus, keeping money in our account was such an astute, profitable gesture Such policies had helped us with stabilized exchange rate and favorable interest rate for quite long period of time, from April until September of 2010 In June and July, there were certain weeks during which the exchange rates in black markets were lower than our quote Residents and companies changed their behaviors, and brought back to us their independent foreign currencies All gave an ease to the international payment activities and our liquidation At the end of the year, we were able to accept many invoices and closed this period at acceptable level of L/C sales Our internal mechanism had also run more smoothly with less paper works We started shortening documentary requirements among relevant entities; which are headquarter, our branch, international partners and customers For example, in 2009, we had to wait an official notification from Vietcombank headquarter in Hanoi to have updated exchange rate However, in 2010, we can work with individual staff there through internal email system, know the new rate and make L/C decisions before the official paper delivered to our branch That paper contained signatures and sealed stamp for confidential purpose, thus it was very time-consuming to be produced Another example was among our branch and regional companies Normally, for an importer which would like us to issue a L/C contract; it must bring all types of documents, ~ 41 ~ mentioned above to our department, all original ones However, in 2010, we started accepting certain types of their copies Some commonly used were the scanned copies, plain typing documents, or photocopied one; which could be sent through email or delivered by post service We would accelerate the administrative process and ask the firm to hand in the original papers later However, we only accepted these for long-time customers which had used our service for years and had many employees that we know in person Most of our operational enhancements were greatly supported by email system; which ensured confidentiality and effectiveness In 2011, we had recovered from the economic downturn and had much benefit from import L/C business line We were able to prolong all positive enhancements from 2010; their effects, in conjunction with general economic recovery, helped everything were done as anticipated 4.2.2 The weight of L/C payment channel: We can know how important the L/C service is in our Hai Duong branch by comparing its total sale with total value of international payments for import activities: 2008 2009 2010 2011 Import L/C 93.78 83.47 101.5 116.6 Total payment 130.54 120.6 128.9 172.58 Table 4.2: Total face amount of L/C and total international payment in Hai Duong branch, 2008-2011 Other channels which can be used for such purpose are:  Cash transference  Documentary collection  Open account The “cash transference” is employed more frequently in comparison with the two other methods; yet all of them are less likely to be used: ~ 42 ~ Figure 4,4: The percentage of L/C payment in Hai Duong branch, 2008 2011 In every year, from 2008 to 2011, 70% of international payments have been generated through L/C channel in our Hai Duong branch This overwhelming percentages make it is needless to confirm the importance of L/C tool for settling import invoices 4.3 Evaluation: From analyzing Vietcombank, Hai Duong branch’s accounting results, I have come up with some personal observations, about the achievable advantages and existing disadvantages of our L/C operation Thus, I want to demonstrate my idea in more detail  Advantages: I will start with some good points of our department which I appreciate The most favorable attribute is that we have a strong base of customers; with many years of business history In Hai Duong, there are some industrial zones which are quite large in comparison with that in surrounding areas They have been established for around 10 years in a location that close to Hai Phong port Thus, most our regional companies involve in international trading; and the amount of such has increased year by year From the early day of 2002-2005, there were only two commercial banks: Vietcombank and Vietinbank that were able to provide L/C service and other sophisticated payment channels ~ 43 ~ Institutional customers, hence, must choose us for their business as the most favorable option From that to now, we have prolonged such irreplaceable relationships with customers with a strong ground of understanding and faith We know the business nature of all companies, get familiar with their foreign partners, and understand their business cycle and timing for certain types of currency Our staff and such companies’ staff have some personal knowledge about each others; and this reduces doubt and accelerates administrative process In 2007-2008, even many commercial banks were opened with many incentives and promotional campaigns to gain market shares; our customers remained loyal with us Until now, we are the bank with largest sale of L/C service in Hai Duong area Aside from above quality, Vietcombank has a strong financial position to be superior among commercial banks in Hai Duong Since L/C contracts are designed for companies, paying for high-value transactions; only our bank has sufficient reserve for such activities in term of many foreign currencies It is not only about common money such as USD, GBP, or JPY; but also about some illiquid ones like Thailand Baht, Indonesian Rupiah, or Chinese Renminbi We are the bank with largest international payment service, which guarantees higher credit strength, professional and specialized management; our customers can put utter faith in our capacity Such reputation and financial resources make Vietcombank the leading provider of L/C contract for many years; and the future expectation also about our superior role in this sophisticated sector  Disadvantages: In contrast with above acknowledgement, there is certain existing incompetence that I have observed from the L/C business of Vietcombank Even it is the leader in the domestic market; Vietcombank has been targeting the larger, international ground, in which there are many other commercial banks with excellent service Thus, our bank should detect existing disadvantages, and find way to adjust itself ~ 44 ~ The most significant weakness in L/C product of Vietcombank lies in the complication of administrative procedure, in which there is too much paper work and internal process must be approved for a L/C Although documentary assessing is the nature of L/C, the method of doing it in our department is slow and ineffective We not consider customers’ identification taking as first priority, but structured requirements completing as This creates much difficulty and annoyance for our customers if they want financial guarantee from us For example, a loyal customer whom we have known for years is importing a large amount of merchandise The ship has ported in Hai Phong, and he wants to have such materials delivered to his factory for production as soon as possible However, the original documents from the company have not been brought to us yet, but only the copied ones are available We will reject such papers and wait until the official documents are handed in; which will cause much lagging time, and delay for company production Such situation has been remained until 2010, after that, we started accepting unofficial copies to accelerate the procedure However, the requirement for unofficial copies is still complicated in comparison with other foreign banks Many underwriters whom I have worked with admit that with recent development of office-technology such as scanning or code-reading, we can reasonably accept the soft documents from our partners with little risk of paper counterfeit Given this, our customers can work with us instantly and be not constrained by distant or location However, we still prefer physical sending of such documents which obviously consume more time to complete This is truly an annoying attribute of our administrative requirements, and it should be remedied In addition, the slowly adjusted exchange rate is also a reason which has led to great loss for us once providing L/C service In such fluctuating environment as Vietnam, the value of domestic currency, then, must be change rapidly in comparison with other one However, the government, in order to maintain self-sovereign, enforces many foreign exchange rate policies which are sometimes controversial and inappropriate Vietcombank, as the largest bank in ~ 45 ~ foreign exchange sector, and under the great control of SBV must strictly follow all such policies, and operate with inefficient exchange rate system Given the face amount of every L/C contract is considerably large, the inappropriate rates might create much loss for our customers In difficult time for business, this will accelerate their burden and drive them away from Vietcombank, to other banks with more value The situation was experienced in 2009 and caused us great loss; and unlike the previous problem, this one has not had any internal improvement up until now And I feel that Vietcombank has little attempt to change this exchange rate structure These two critical aspects are in the top list of Vietcombank’s agenda, in an attempt to expand the market and promote operational efficiency The target of our bank is toward the larger scale so that other foreign banks can know about us as the representative bank of Vietnam Chapter 5: Conclusion Throughout my study, I have gained certain knowledge about the structure of L/C service provided by Vietcombank in general, and some unique attributes in the operation at Hai Duong branch, which I have an internship period in To sum up, I would like to pinpoint some personal observations about most significant parts in following paragraphs Firstly, regarding the administrative procedure of L/C service, especially import L/C, I find that Vietcombank has developed a very sophisticated structure with many term and techniques that are unlikely to be known by outsiders From the documentary requirements to the mechanisms are all complicated, and designed for knowledgeable users It is understandable since the business line is ~ 46 ~ for institutional customers with help from professional accountants and auditors; and to process international transactions with magnitude of value Most participants in L/C have educated background, and apply it as the most advanced payment channel in Vietnam now L/C is also the most significant payment method for international transactions, which accounts for roughly 70% of all invoice amounts However, as Vietnam is getting more involved in global economy with more developed countries, the L/C is no good enough to complete certain forms of financial need The new trend will be the flourish of “Factoring” payment channel, but it is till unpredictable I think that in the next five years, L/C will still be able to maintain its significance, but after that it will be replaced by other advanced payment methods Secondly, I discuss about the performance in our Hai Duong branch from 2008 to 2011 During this period, we keep enjoying the demand from many companies in the industrial zone of Hai Duong The production activeness of such area calls for many international transactions; thus, we have chance to sell such a luxurious financial product for our customers In Hai Duong up until now, Vietcombank is the largest bank, so that we can have many advantages and influences on most of regional companies Thus, the common trend of our branch is positive In all these years, only 2009 had a difficulty which was mainly resulted by the macroeconomic downturn Recovering from that hard time, Vietcombank, Hai Duong branch has successfully maintained our reputation and reliability with customers, and is still the market leader in term of international payment Finally, I want to stress two disadvantages in the design of L/C product in Vietcombank; and recommend certain solutions for these issues In order to issue a L/C in our bank, customers have to complete a very complicated process with too much paper-work and time-consumption The idea behind such structure is ~ 47 ~ just to fulfill internal administrative need, but not to meet the customer demand This makes us irrational and inefficient once working with foreign bank from developed countries In addition, the exchange rate policies of Vietcombank are also incompetent and inappropriate from domestic companies for most of time They think that the exchange means much loss for them, but we are the best choice they can have, so that they still use our service This problem, however, is due to the exchange rate regime of Vietnam with much political control, and our bank hardly can change it The other problem makes me suggest that Vietcombank should concentrate on lessening the administrative requirements, and processing papers more effectively We should change from physical to electronically confidentiality with the help of computer technology and internet A good internal telecommunication system can greatly accelerate our process in connection with partners regardless of their locations all over the world If Vietcombank can see the weakness, and be willing to improve ourselves, we can surely be the representative of Vietnam in term of international payment Appendix TS Nguyễn Đức Thành et al (2010), “ Báo cáo kinh thường niên kinh tế Việt Nam 2010” ThS.Đặng Đức Ah et al (2008), “Phối hợp sách lãi suất tỷ giá nhằm đảm bảo tăng trưởng nhanh bền vững trinh hội nhập kinh tế quốc tể Việt Nam” TS Nguyễn Văn Tiến (2006), “Tài quốc tế đại kinh tế mở”, Nhà xuất Thống kê World Bank (2009), “ World Economic Outlook” ~ 48 ~ Tổng cục thống kê (2009-2010), Số liệu thống kê hàng tháng GS.TSKH Lương Xuân Quỳ, GS.TS Mai Ngọc Cường, TS Lê Quốc Hội, 2010, “Tổng quan kinh tế Việt Nam năm 2009 khuyến nghị sách cho năm 2010” http://www.ktpt.edu.vn/website/198_tong-quan-kinh-te-viet-nam-nam-2009-vakhuyen-nghi-chinh-sach-cho-nam-2010.aspx Ngân hàng ngoại thương Việt nam, 2009-2010, “Số liệu tỷ giá hối đoái liên ngân hàng theo tháng http://www.vietcombank.com.vn/exchangerates/ Rate Inflation, 2010, “USA Historical Inflation rate” http://www.rateinflation.com/inflation-rate/usa-historical-inflation-rate.php? form=usair Vietnam Economic Statistic, 2010, “Vietnam Economic Indicators for the year 2009” http://www.economywatch.com/economic-statistics/country/Vietnam/ TS Nguyễn Văn Tiến, (1999) “Cẩm nang thị trường ngoại hối giao dịch kinh doanh ngoại hối”, Nhà xuất thống kê, T.P Hồ Chí Minh Heinz Riehl, Rita M Rodriguez,(2007), “Foreign Exchange and Money Markets – Managing Foreign and Domestic Currency Operations”, McGraw – Hill “ Cơ chế tỷ giá hối đoái việc thu hút đô la việc giảm lạm phát” http://www.saga.vn/view.aspx?id=10515 ~ 49 ~ Nguyễn Thành Kiên , (2008), “Tỷ giá hối đoái vấn đề tỷ giá hối đoái Việt Nam”, Học viện tài ~ 50 ~ List of figure: Figure 3.1: the mechanism of Letter of Credit 17 Figure 4.1: The exchange rate in Vietcombank, in 2008 38 Figure 4.2: The exchange rate in Vietcombank, in 2009 39 Figure 4.3: The exchange rate in Vietcombank, in 2010 41 Figure 4,4: The percentage of L/C payment in Hai Duong branch, 2008 2011 44 List of tables: Table 4.1: L/C Sale of Vietcombank, Hai Duong branch (bil VND) 37 Table 4.2: Total face amount of L/C and total international payment in Hai Duong branch, 2008-2011 43 ~ 51 ~ ... and examine the current situation of L/C business in Vietnam During my last year of undergraduate period, the university asks students for certain time of having an internship, to gain practical... letters of credit incorporate functions common to giros and Traveler's cheques 3.1.2 The Mechanics of Letters of Credit The system of documentary credits that is in use in current international... adequacy of the performance of the beneficiary, nor as to the importance of any particular term of the letter of credit If performance were not made in strict accordance with the letter of credit,