Btt Implementation Status at Eximbank Table 2.12 Btt Operation Status at Eximbank in 2007

- Stable operating situation, financial capacity to ensure payment of debts

must be paid on time according to the sales contract.

- Belong to the list of buyers specified by the general director for each period.

2.4.8.2 Method of application

Currently, Eximbank is implementing three main payment methods:

 BTT each time

 Limit-based payment

 BTT Coin

2.4.8.3 Interest and fees for implementing BTT

- Interest and fees are agreed upon by Eximbank and the customer, in accordance with current regulations of the State Bank and recorded in the BTT contract.

- Realized interest rate: According to the interest rate schedule announced by Eximbank from time to time.

- Overdue BTT interest rate = 150% of interest rate stated in BTT contract

- The BTT fee is collected once by Eximbank when advancing capital to customers according to the BTT fee schedule announced from time to time.

2.4.8.4 BTT levels and limits

BTT level = (BTT receivable value – BTT fee) * advance rate.

In which: the advance rate depends on the customer's financial capacity and level.

Buyer's creditworthiness but not exceeding 90%.

2.4.8.5 BTT implementation status at Eximbank Table 2.12 BTT operation status at Eximbank in 2007

(Source: Eximbank)

Lead

Quarter I	Quarter II	Quarter III	Quarter IV	All year
BTT Sales	15,200	28,175	50,833	56,468	150,676
Advance payment	10,757	22,009	43,054	129,717	205,537
Advance balance	3,249	11,638	20,037	23,982	23,982
Interest	133,104	134,896	242,813	267,094	777.91
Fee	28,207	35,075	47,286	58,861	169,529
Total number of sellers	9	19	30	37

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From the table we can see that the BTT situation at Eximbank in 2007 increased steadily.

In the fourth quarter, BTT's sales increased nearly 4 times compared to the first quarter, while outstanding debt increased nearly 7 times.

times. This shows that the bank's BTT activities are increasingly effective. The number of customers is also increasing steadily. If at the beginning of the year, the number of customers participating in BTT was only 9, then at the end of the year, this number was 37 (an increase of more than 4 times).

This is a good signal and is the number being recorded from Eximbank's BTT activities in the past.

recent times

2.11 Limitations that need to be overcome at commercial banks during implementation

Firstly , the advantage of BTT is that there is no need to use commercial paper to finance and resolve all commercial disputes, but only need to have contracts and commercial invoices that have been stamped with ownership transfer. In the condition that Vietnam only has the Law on Transfer Instruments and does not have sub-law documents guiding its implementation, the widespread use of BTT contracts still faces many obstacles.

Second , the BTT products at commercial banks in Ho Chi Minh City are currently not diverse. Banks have only implemented BTT with recourse, and mainly implemented domestic BTT. Meanwhile, foreign bank branches in Vietnam such as Duestche bank, Citi Bank... have implemented BTT without recourse and that is also the form that BTT units in the world are applying.

Third, the speed of issuing BTT of commercial banks in Ho Chi Minh City is not fast. While foreign BTT units only take about 24 hours to review invoices, assess customers and make decisions on BTT implementation, commercial banks spend a lot of time on this work.

Fourth, the current fees of commercial banks in Ho Chi Minh City are not really attractive.

Mr. Karl-Joachim Lubitz, Chairman of the International Factoring Association (FCI), affirmed that the cost of this service in Vietnam is still quite high, higher than the world. In fact, when using Factoring, customers have to pay two fees, which are the service fee and the interest paid on the advance payment. It is reasonable to collect these fees, but it is very difficult to convince customers to use the service because they can use short-term loans to finance the amount they need Factoring and only have to pay interest on the loan.

Fifth, BTT as well as other businesses also have certain risks but

Commercial banks currently do not have risk compensation reserve funds and BTT insurance.

Sixth, in the process of implementing BTT, commercial banks currently do not separate BTT activities and credit granting activities. Some banks do not have a separate BTT implementation department. In addition, credit appraisal criteria and BTT implementation appraisal are not yet separated although the appraisal of these two operations is completely different.

2.12 Causes of limitations

2.12.1 Objective causes

Regarding the limitations of the BTT operating regulations of credit institutions to implement BTT, we have analyzed in the above section, however, when put into operation, many difficulties still arise. In Clause 1, Article 13 of the BTT operating regulations of credit institutions, BTT operations are not recognized without written acceptance of the buyer.

Also according to this regulation, the BTT service only applies to receivables arising from the purchase and sale of goods and does not apply to the service sector, a very developed sector today.

As analyzed in the section on difficulties in implementing BTT in Vietnam, up to now the information environment of the economy has not been transparent, the causes from the enterprises are also a cause; therefore, there are still difficulties and limitations in implementing BTT at commercial banks.

2.12.2 Subjective causes of BTT units

Because Vietnam's economy still has many potential risks, the BTT units currently mainly perform BTT for large enterprises. Determining this target customer is to reduce the number of customers who are small and medium enterprises because these are the enterprises that really need BTT services.

BTT units still require businesses to have collateral when implementing.

This is an unreasonable requirement compared to BTT activities in the world.

The financial capacity of BTT units (mainly commercial banks) is still low. Although commercial banks have tried to increase their charter capital in recent years, this capital is still low compared to other foreign banks. Therefore, many commercial banks are not interested in implementing BTT services because the cost of providing this service is quite high.

The level of understanding of international law, appraisal ability in insurance business, and risk management skills of employees are not high.

Chapter II Summary:

Through the data on the actual situation of BTT activities in the world, it is very positive.

and is growing rapidly in depth and breadth.

BTT has been implemented in Vietnam since 2004. Up to now, the results of BTT activities in Vietnam in general and commercial banks in particular have been quite modest, with many difficulties in the implementation process. From the perspective of macro management, the legal regulations of the state are still too general and not close to the actual situation, thereby causing difficulties and inadequacies in the implementation of BTT units. We have focused on analyzing this issue very carefully.

In addition, for BTT units in Vietnam, BTT products are very new products, BTT units do not have much experience in handling operations of this product, besides, Vietnamese enterprises are still very timid, the concept of only liking to use familiar products... has caused difficulties for BTT activities. The process of implementing BTT at Vietnamese joint stock commercial banks therefore still has many weaknesses, errors and potential risks.

Therefore, it is urgent to propose solutions on the macro and micro levels.

is now very necessary. This issue will be presented in chapter 3 of the topic.

4. Macro solutions

1.2 For the State Bank.

1.2.1 Issuing specific accounting standards when implementing BTT

Up to now, BTT has been implemented for about 4 years but the State Bank has not yet issued a standard accounting regulation. Therefore, BTT units have had to build their own accounting regime according to the guidance regulations of other products and services and the actual operations of the enterprise. Typical examples are Asia Commercial Joint Stock Bank, Hanoi Commercial Bank (HBB)... Therefore, it leads to a situation where the accounting regime of BTT units is not consistent with each other, making it very difficult for relevant agencies to manage and follow.

monitor the development of this new product. Therefore, the issuance of accounting standards

Design for BTT products is essential.

The promulgated accounting regulations must meet the following basic requirements:

- Firstly , it must comply with the current accounting principles and standards applied in

businesses operating in the field of financial accounting.

- Second , ensure consistency and rigor when applied in practice.

- Third , ensure clarity and coherence when reflecting BTT activities in the books.

Accounting of BTT unit.

- Fourthly , for import and export activities, accounting regulations must comply with international practices, as well as treaties and agreements that Vietnam participates in. Currently, there are 3 Vietnamese banks participating in FCI: Asia Commercial Bank, Vietcombank, and Techcombank.

- Fifth , in the process of economic integration that is increasingly deep and wide as it is today, the regulations on accounting for BTT activities will certainly not meet all situations that occur in reality. Therefore, these regulations need to be open, that is, they can be updated and supplemented when necessary.

1.2.2 Coordinate with relevant agencies to issue legal documents to protect BTT activities.

Up to now, the legal regulations on BTT activities are not really complete and still have many shortcomings as analyzed above. Therefore, the State Bank needs to rely on the actual operation process in Vietnam in the past as well as other legal documents to issue legal documents to protect BTT activities. These documents need to meet the following requirements:

- Rank

First , what documents and reports do the buyers and sellers need to provide to the unit?

BTT when using this product.

- Rank

Second , the level of processing of information provided by buyers and sellers. General management incentives when buyers and sellers participate in BTT activities.

- Rank

Third , the level of intervention of regulatory agencies in BTT activities.

- Rank

Information reporting regime of buyers and sellers, BTT operating turnover, industry characteristics of buyers and sellers... that BTT implementing units must report to the State Bank.

1.2.3 There is a need to clearly regulate taxes on BTT activities.

Currently, the regulations on the implementation of BTT of BTT units still do not have clear regulations on BTT activities. Article 18 of the regulations only stipulates that "Tax regulations on factoring activities are implemented according to the provisions of law". As analyzed in the previous sections, the current application of transfer tax is not advisable. Perhaps, when BTT activities have really developed, tax should be applied, and tax collection should be carried out according to a certain roadmap to both encourage BTT development and ensure that there is no loss of revenue to the state budget. If there are tax regulations, the basic content of the tax regulations should ensure:

- Rules

Regulations on tax exemption and reduction levels for BTT units during implementation as well as basic conditions for tax exemption and reduction.

- The

How much does the tax authority intervene in BTT activities?

- The

form of reward when the BTT unit complies with regulations and pays taxes on time...

1.2.4 Issue specific and clear regulations on extension and transfer of overdue debts.

The term of application has BTT activity.

Article 17 of the BTT implementation regulations stipulates: “Regulations on payment extension and overdue debt transfer in factoring are implemented according to the guidance of the State Bank”. As analyzed in the above sections, such regulations are unclear, causing difficulties for BTT implementing units. Regulating this issue is very important. More specific regulations will help BTT units to better evaluate the effectiveness of operations and also help competent authorities to inspect and manage BTT activities well at the macro level, limiting risks to the economy.

These regulations should meet the following requirements:

- When is the term of receivables extended?

- Specific time to transfer from receivables after extension to overdue debt.

- Provision level for extension and transfer of overdue debt.

- Maximum level of BTT amounts extended, transferred overdue debt.

- Regulations and sanctions when BTT units do not properly implement the regulations

term and overdue debt transfer.

1.2.5 Establish a credit information management and regulation center, evaluate the quality of buyers and sellers to provide authentic information to credit control units.

Currently, banks and credit institutions can access information about businesses through

through a separate website called the credit information system (CIC).

Therefore, the construction of new or further development of CIC center is very necessary.

designed for BTT units. This center can perform the following functions:

Firstly: Provide information and evaluate the quality of operations of businesses and companies participating in BTT activities quickly and promptly. This information includes:

● Information on the business industry and address of the enterprise.

● Operational and financial situation of enterprises participating in BTT activities.

● Payment reputation and transaction history of businesses during their operations with credit institutions.

● New state regulations on BTT activities.

The current reality is that the provision of information by businesses is very limited. It can be said that this is a long-term, comprehensive solution not only for businesses but also for all industries and economic sectors.

Second: Create links between BTT units, on that basis create alliances between BTT units to carry out BTT contracts if a BTT unit cannot do it.

Third : Dispute settlement between units implementing BTT.

Fourth : Participate in consulting for BTT units in the process of implementing BTT as well as

international integration implementation

5. Micro solutions

2.2 For banks

2.2.1 Comprehensive marketing of BTT services

2.2.1.1 Must have the right strategy to widely promote BTT products to customers

As we know, a product cannot be used by consumers without knowing anything about the product we provide. And so that product can hardly exist and develop. Therefore, creating awareness about the product for consumers is a very important task to develop the BTT business.

In the Vietnamese market, BTT products are considered new products, consumers are almost unknown and therefore do not see the superiority of this product and therefore cannot use the product. Therefore, in order to develop the product, the first thing BTT needs to do is to introduce customers to the product through seminars, advertisements...

To do this well, BTT units must first train the staff directly implementing the product about the advantages and disadvantages, and at the same time guide the implementation according to the unit's regulations. Only then can the staff introduce the service to customers effectively. The next step is that BTT units need to advertise the product, some measures to help businesses interested in the benefits of payment products:

- Direct sales, direct advertising at the counter to help BTT products reach customers.

client.

- Send letters directly to customers. Letters must contain complete information but be short.

concise, clear and eye-catching to attract customers' attention.

- Organize seminars on BTT products: participants are chief accountants, import-export department heads, and financial directors of enterprises.

- To reach other potential customers, BTT should take advantage of effective communication channels: advertising on media (television, radio, Internet), advertising on the street, organizing events... For example, BTT can

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