The future of finance and telecommunications in the context of the EVFTA

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The conference "Vietnam’s Finance - Telecommunication sectors, opportunities and challenges from EVFTA". Photo: H. Diu

On the morning of October 23, in Hanoi, Vietnam Chamber of Commerce and Industry (VCCI) in collaboration with the institution of Friedrich Naumann Foundation for Freedom (FNF) held a conference "Vietnam Finance – Telecommunication Sectors, opportunities and challenges from EVFTA”.

According to VCCI statistics, the commitments of the EVFTA will help Vietnam's GDP increase by 2.18 percent -3.25 percent in 2019-2023; increase from 4.57 percent -5.3 percent in 2024-2028 to 7.07 percent -7.72 percent in 2029-2033.

In particular, financial services (banking, insurance, securities) and telecommunication services are sectors with remarkable commitments to opening Vietnam's market at a higher level than WTO commitments. However, many minimum standards are being set in State management of these services, of which, the EU is a partner with strengths in financial and telecommunications services. Therefore, the EVFTA is predicted to have a significant impact on the future of Vietnam's financial and telecommunications market.

Vice President of VCCI Hoang Quang Phong said that in the EVFTA, commitments related to financial and telecommunications services are in the group with a special approach. Accordingly, on the one hand, liberalisation of these sectors is improved, on the other hand, these are also sensitive services associated with the stability of the national economy, information security, directly affecting all socio-economic activities. Therefore, these sectors should be controlled carefully.

Also, at the conference, delegates were introduced to EVFTA commitments affecting the financial sector; commitments related to insurance, banking and securities; and direct/indirect impacts from the EVFTA on Vietnam’s financial market and financial service providers.

Talking about the impacts of the EVFTA on the finance and telecommunications sectors, Director of the VCCI’s Centre for WTO and Economic Integration Nguyen Thi Thu Trang, said, for direct impacts, the financial sector will not have a great impact on foreign investment because it only adds reinsurance service and the commitment level will remain. For the telecommunications sector, it will not open new telecommunications services, but in terms of commitment there will be no major changes in the first five years. After that, the opening level will be higher than the WTO commitments on the level of foreign capital in joint ventures and value-added services without network infrastructure for fully foreign-owned enterprises

In addition, indirect impacts from the EVFTA are increasing service demand; helping improve the business environment in a more stable way. Thereby, bringing about investment opportunities in EU economies and opportunities in cooperation with EU partners.

In addition, according to Nguyen Thi Thu Trang, the financial and telecommunications sectors will face competition pressure from foreign service providers in the context of FTA integration. In addition, the use of information technology, information security, transaction safety and customer requirements are also challenges from the EVFTA that Vietnam’s economy is facing. Therefore, businesses need to understand clearly and fully the commitments that apply them in the production and business process.

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In addition, experts at the conference also said that to take advantage of opportunities and overcome challenges of the financial and telecommunications sectors, businesses need to be more professional and improve their services; develop and offer services meeting the customers’ need; promote the application of technology, electronic banking; regularly review and improve security techniques and information security; and at the same time, review and strictly control the financial and banking operations and processes.