Graduate School of International Studies Ajou University
Vietnam is now on the way to access WTO and actively integrate into the global economy. To do so, Vietnam has to reform its economy to adapt the world-wide competition and meet the requirements for that integration. One of very important sector that must be reformed as soon as good is financial sector.
During nearly 20 of implementation ？Renovation？ process, known as doi moi, Vietnam has achieved significant successes in reforming its weak and inefficient financial system. Several big commercial banks were established and have been operated independently with State Bank of Vietnam. In addition to the state bank of Vietnam, there is a group of joint stock banks that are permitted to mobilize money and make loans. Recently, the stock market has been opened with two security stock exchange centers at the North and the South. Vietnamese government is also trying to improve its financial legal framework to create more favorable conditions for accelerating the financial sector reform process.
However, the financial system of Vietnam remains very thin. The percentage of non-performing debt in banking system, which is still dominated by state, is still considerable high. There was little consumer lending and few financial instruments were available. The secondary credit markets and reinsurance markets that server to offset uncertainty and risks in advanced economies were almost entirely absent. Therefore, the demand to reform the financial sector is extreme necessary, especially when this country is trying to be a member of WTO by the end of 2006. The government has implemented many programs, policies？to improve this financial sector from 1986 up to now. However, Vietnamese financial reform process is still a controversial issue that wastes a lot of ink and paper of many economists, policy makers？What steps should be taken to restructure the banking system? How and in what way to develop capital market effectively? What do the financial system must prepare to access WTO smoothly?
Korean financial crisis started from 1998 seriously devastated not only its financial system but also the whole economy. Right after that crisis, the Korean government has been carried you a wide range of resolutions to restructure its banking system individually and financial sector as a whole. Thanks to those resolutions, Korean economy gradually recovered and developed consistently. What are the lessons that Vietnam can learn or should not learn from Korean financial sector reform process? Based on Korean lesson, what should the Vietnamese government do to deal with all the above questions?
Based on those facts, the research named ？Banking reform in Vietnam: Lesson from restructuring banking system of Korea？ is aimed to find out useful experience of Korea in restructuring their banking system and then, make some comments, suggestions or solutions to what the Vietnamese government is doing in order to restructure and reform its financial system to be more competitive and effective.