Forecast of Vietnam's Economic Development and Demand for Banking Services in the Coming Years

trade protection measures may take other, more sophisticated forms, such as anti-dumping, regulations on technical standards, etc. The process of market opening at the international level will encounter some obstacles, but at the national level it will continue to be promoted through bilateral and regional trade agreements.

During the 2011-2020 period, the shift of capital flows between countries increased sharply, especially in the form of foreign direct investment (FDI). China and India will continue to be among the countries receiving the most FDI in the world; the US and developed countries are still the main investors. In addition, outward investment from developing countries also tends to increase sharply, mainly between countries with the same level of development. Investment in developed countries is mainly through mergers and acquisitions (M&A) between large corporations and transnational corporations (TNCs), while investment in developing countries is mostly new investment - basic construction investment. Indirect investment also continues to increase during the 2011-2020 period, mainly through investment in the stock market.

In the currency market, the exchange rates between major currencies have not fluctuated much because the major economies in the world have all grown well. The USD continues to be the main reserve currency, along with other important currencies such as the EUR, JPY, and NDT. There is a high possibility that a common Asian currency will emerge with important influence in the world currency market due to the increasing position of the economies in this region in the international arena. Real interest rates in the world in the period 2011-2020 continued to decrease and this trend is forecast to continue until 2050. The savings and investment rates in the group of countries with increasing aging populations such as Japan, the EU, etc. will decrease, while in countries with young populations such as developing countries in Asia, Africa, and Latin America, this rate will increase.

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The world labor market in the period of 2011-2020 will be affected by the trend of economic globalization and demographic changes. Globalization makes it easy for labor to move between countries and regions. The Asia-Pacific region is still the region with the largest labor force in the world. In addition, the world population in the period of 2011-2020 will grow more slowly and mainly in developing countries, so the labor force of the world economy will mainly be concentrated in these countries; thereby increasing the migration from economies with low levels of development to economies with higher levels of development.

In general, in the period 2011-2020, the world economic forecast has the following outstanding features: First, the globalization of the world economy is increasingly strong. Second, bilateral, regional and multilateral economic links continue to expand, promoting the development of regional and world economies. Third, science and technology increasingly affirm their role as one of the most important direct production forces of the world economy. Fourth, the world economy still contains many potential risks such as the overheating of developing economies, increasing energy demand, negatively affecting natural resource reserves and the living environment. Fifth, world economic activities are gradually shifting to Asia, especially East Asia, turning this region into a new world economic center alongside strongly developed economies such as the US, EU and Japan. Sixth, developing countries play an increasingly important role in the development of the world economy.

3.1.1.2. Forecast of Vietnam's economic development and demand for banking services in the coming years

* Impact of the world economy on Vietnam's economic development strategy to 2020

- Regarding economic growth: According to EIU, Vietnam's economic growth rate in the period 2006-2010 reached 7%, compared to the world average of 4%. However, in the next period (2011-2020), if there are no strong breakthrough economic policies, Vietnam's average economic growth rate is forecast to decrease significantly, to only 4.6%. Therefore, Vietnam's average economic growth rate from 2006 to 2020 will reach 5.4%, although higher than the average of the Asian region, it is still behind China, India and Pakistan. In the period of 2011-2020, the world economic situation is developing in a favorable direction, along with important changes in the internal economy (completion of the 2006-2010 plan, joining the WTO...), the State's policy mechanisms focus on economic development, Vietnam will continue to have significant development steps, achieving a satisfactory position in the region.

- For trade: In the period of 2011-2020, the development of the world economy in general and the economy of each country in particular is a good opportunity for Vietnam's exports because the demand for Vietnam's goods and services will increase. In addition, the potential market for Vietnam's exports is very large. However, Vietnam's exports will face considerable competitive pressure from ASEAN countries and neighboring countries in the Asian region. In the condition that Vietnam's goods and services are not competitive enough, losing the "home" market is entirely possible. In particular, with the trend of high-tech goods increasingly accounting for a large proportion of the export turnover of countries, Vietnam with its science and technology level lagging behind other countries will face many difficulties. Within the framework of the WTO, being considered a non-market economy for 12 years after joining (2007-2019), Vietnam will certainly be at a disadvantage compared to other countries in trade disputes resolved under WTO regulations.

- Regarding capital flows into Vietnam: In the period of 2011-2020, Vietnam will become a destination that attracts a lot of FDI from investors around the world, especially through the form of outsourcing. Outsourcing activities in Vietnam during this period will target both manufacturing and high-tech sectors. FDI in high-tech industries is a common trend in the world. Meanwhile, because China is aiming to attract FDI in high-tech industries, investing countries will gradually shift their manufacturing and processing industries to locations with similar advantages in human resources and development level with China, in which Vietnam is a priority choice. In addition, the implementation of the ASEAN Investment Area (AIA) in 2015 will promote investment flows, both direct and indirect, from ASEAN countries to Vietnam. This is also an opportunity for Vietnam to invest in neighboring countries in the region.

- For the budget: In the period of 2011-2020, although Vietnam has to implement tariff reduction commitments when joining the WTO, ASEAN linkages and bilateral agreements, budget revenue will not be affected significantly because revenue from import and export activities only accounts for 19-22% of total budget revenue. Domestic revenue may face some obstacles because reducing import tariffs will increase competitive pressure for domestic manufacturing industries. However, from another perspective, the domestic revenue rate will not decrease because opening the market means the economy will grow more firmly and people's income will increase. In addition, because protection is limited to a number of economic sectors, the burden on budget expenditure is not too large. In the long term, the budget balance remains relatively stable.

- For economic sectors: Vietnam's agriculture in the period 2011-2020 will be affected by the results of the Doha round of negotiations. The end date of this round of negotiations has not yet been determined, however, it is certain that

Its results will mainly have an adverse impact on Vietnamese agriculture. In the industrial sector, following the development trend of science and technology in the world, the proportion of manufacturing industries in the Vietnamese economy will increase. In addition, the trend of peripheral services transferring technology abroad will also have a positive impact on Vietnamese industry, turning Vietnam into a production and assembly base for developed countries, like China and India today. In the service sector, there will be many new types of services in the fields of banking, finance, and insurance. Foreign investors will participate a lot in these fields, therefore, the Vietnamese service industry will develop very strongly, diversifying products, contributing significantly to Vietnam's economic growth in the period 2011-2020.

* Demand for banking services in Vietnam in the coming years

Currently, developing banking services is a hot spot for banks in Vietnam. According to the assessment and analysis of market research experts, the banking services market in Vietnam has a lot of potential to exploit with a growth rate that can reach 30-40%/year.

Vietnam has a working-age population of 60%, and a rapidly growing middle class and urban population. However, only 22% of the population currently uses banking services. With the main target being individuals, households, and small and medium-sized enterprises, retail banking services have many opportunities to develop.

In Vietnam, in recent years, banks have paid attention to and focused on exploiting the retail market such as promoting the modernization of banking technology, developing new, modern and multi-utility service types and distribution channels such as ATMs, Internet banking, Home banking, PC banking,

Mobile banking, Call center... This fact has marked a new development step of the banking service market in Vietnam. In addition, in recent years, the number of successful people in Vietnam is increasing. This leads to the strong development of banking services dedicated to this special customer group.

Thus, the demand for banking services in Vietnam in the coming years is very large and full of potential.

3.1.1.3. General development orientation of the banking industry:

The roadmap for opening the financial market must be carried out on the basis of considering the basic limitations and advantages of the Vietnamese banking system and must comply with the principles of international and regional trade organizations to which the Vietnamese government has committed, eliminating protectionism and discrimination among banks.

Domestically, we must be one step ahead of the liberalization mechanism applied to our

institution

Foreign finance; the opening and relaxation of financial constraints on foreign banks should be carried out in an appropriate order, starting with credit regulations - an area where domestic banks are competitive, then expanding to other areas based on the growth of the Vietnamese banking system.

For the system of commercial banks, the specific orientation to improve competitiveness is:

Firstly, it sets out requirements for restructuring the organization and management standards for joint stock commercial banks, creating conditions for these banks to modernize technology and improve their management skills, effectively participate in the secondary currency market, refinancing operations and the payment system of the State Bank;

Second, reorganize the system of commercial banks; dissolve or merge some weak banks;

Third, improve the financial health of commercial banks on the basis of restructuring overdue debts; Fourth, restructure the organization, especially the departments of risk management, debt and asset management, internal supervision and audit, capital and investment management.

3.1.2. Development orientation of BIDV in the period 2013-2018.

* Business motto:

“Sustainable development - quality - safety - efficiency”

*Motto : " Build BIDV to become a multi-owned, multi-industry bank, operating according to international practices with quality products and services on par with advanced banks in the Southeast Asian region"

*Vision : "The leading quality and prestigious bank in Vietnam"

* Slogan : "Sharing opportunities - successful cooperation"

*Core values : BIDV has identified the core values for its operations as:

- For customers and partners : BIDV always strives to build long-term, trustworthy cooperative relationships, share benefits, and fully fulfill agreed commitments.

- For the social community : BIDV pays attention and proactively participates responsibly in social programs and activities, contributing to the interests and development of the community.

- For employees: With the view that "Each BIDV staff is a competitive advantage" , BIDV commits to creating a professional working environment, equal opportunities for work and career development, while promoting the capacity and passion, and attachment in each employee with the most superior policies and regimes.

* General orientation : Building BIDV into a strong financial - banking group.

3.1.2.1. BIDV's development goals:

Firstly , build BIDV into a leading prestigious and efficient financial banking group in Vietnam, ranked as one of the best commercial banks in Vietnam, reaching an advanced level in the region; continue to affirm its reputation and strong brand. Expand the business network, establish new branches, strongly develop the network of transaction offices, covering all provinces and cities nationwide; improve the operational efficiency of branches and transaction offices, develop international banking services, expand BIDV's business activities abroad.

Second , focus on researching and building a strategy to develop and deploy a retail model, deploying product and service distribution channels to customers quickly and effectively, making the most of the large network and diverse existing products and services to attract customers to use BIDV's banking and financial products and services. Strengthening the connection between the parent bank and member units to cross-sell products, bringing maximum benefits to customers while increasing service income, organizing and arranging highly professional sales staff to maximize sales potential .

Third , Change the form of ownership towards diversifying the ownership structure to innovate the management mechanism, attract more resources, strengthen the control of shareholders, customers and the public over the bank; operate business based on market principles with the goal of optimizing profits and contributing to promoting the economic and social development of Vietnam.

Fourth, Build an information technology development strategy until 2020 to ensure access to advanced world standards, improve and upgrade the Corebanking system and current business modules to actively and effectively support BIDV's transaction processing operations.

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