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Vietnam Foreign Currency Management
In the 1980s, the Foreign Trade Bank, under the authorization
of the State Bank of Vietnam (formerly the National Bank of
Vietnam), made payments for imports. Headquartered in Hanoi, with
a branch in Ho Chi Minh City, the Foreign Trade Bank managed
Vietnam's foreign currency holdings and related matters, such as
the resolution of debts owed foreign countries. The Foreign Trade
Bank also conducted Vietnam's relationship with the
World Bank (see Glossary), following Hanoi's
assumption of the memberships
held in the Asian Development Bank and the International Monetary
Fund (IMF) by the government of the Republic of Vietnam (South
Vietnam) until 1975
(see Banking
, this ch.).
Vietnam was, in addition, a member of the Comecon-affiliated
International Investment Bank and the International Bank for
Economic Cooperation in Moscow. Under the terms of Vietnam's
Comecon membership, the International Bank for Economic
Cooperation extended limited credit in transferable rubles (for
value of
ruble, see Glossary) for transactions not cleared
through bilateral Soviet-Vietnamese trade agreements; the bank
also maintained a convertible foreign exchange account for
Vietnam.
In order to increase exports, the government used incentives.
Bonuses for export production were introduced in 1980, and
extended in 1985, to reward cooperatives and other collective
entities that met their export production quotas. Incentives to
increase exports also were applied through the government's
manipulation of foreign exchange disbursement. In general,
foreign exchange for import companies either was carefully
allocated in the state plan or was determined by the relevant
ministries on an ad hoc basis when the companies requested
convertible currencies for their operations. The amount of
foreign exchange allocated to a company for import operations,
however, was determined by the amount of foreign exchange earned
by the company exports. Tying foreign exchange allocations to
export earnings was intended to act as an incentive to boost
export production. The government also required that most export
companies turn in between 10 and 30 percent of their foreign
exchange earnings. Beyond this general guideline, however, many
enterprises were permitted to retain all or a portion of their
hard currency earnings in the form of special credits against
State Bank accounts. Companies operating in a developing region
such as the highlands, for example, were granted a five-year
holiday during which they could retain all foreign exchange
earnings. Those exporting major commodities such as coal, rubber,
and marine products were allowed to retain between 80 and 100
percent of their hard-currency earnings for use in necessary
import purchases. Centrally controlled enterprises in the field
of tourism were completely exempted from turn-in requirements,
and companies that borrowed hard currencies from abroad received
preferential status.
Under a system of procurement subsidies, export companies
applied for funds to cover gaps between procurement costs and
their export revenues. The Ministry of Finance, through its
Export Support Fund, disbursed these subsidy payments to the
centrally administered trading corporations. Local corporations
could receive a subsidy mix based on profits from imports and
payments made by local governments. All such subsidies were
limited, and companies exceeding the limit could lose their
export permits.
Data as of December 1987
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