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Dear readers,

Capital flows are considered the lifeblood of any economy, with credit institutions acting as a resting heartbeat that
pumps blood throughout the economic circulatory system.

An economy will therefore “die” if there is no movement of money put to use for productive economic purposes.
In other words, the health of an economy entirely depends on the operations of its credit institutions, which in turn
depend on appropriate legal regulations.

In Vietnam, the existing Law on Credit Institutions was passed by the National Assembly in 2010 and then
amended in 2017. However, the 2010 law and its amendments in 2017 were found to fall short of requirements for
Vietnam’s practical economic performance.

The 15th National Assembly therefore passed the amended Law on Credit Institutions on January 18, 2024, which
was announced on February 19 under an order from the State President. The new Law comprises 15 Chapters and
210 Articles and will take effect from July 1 this year. It regulates credit institutions’ establishment, organization,
operations, early intervention, special control, restructuring, dissolution, and bankruptcy. The new legal instrument
also outlines provisions regarding the establishment, organization, operations, early intervention, dissolution, and
termination of activities of branches of foreign banks, and covers the establishment and operations of representative
offices of foreign credit institutions and other foreign organizations engaged in banking activities. Moreover, it
regulates the handling of bad debts and the collateral associated with bad debts held by credit institutions, branches
of foreign banks, and organizations fully owned by the State with the functions of buying, selling, and handling debts.

At a dialogue on the new Law, held by VnEconomy / Vietnam Economic Times on February 3, with the theme
“Allocating Resources Effectively”, a number of experts noted that handling cross-ownership and bank manipulation
through regulations on ownership ratio limits is among the focal points in the amended Law. Accordingly, the
maximum ownership ratio of a single shareholder is reduced from 15 per cent to 10 per cent, while the ownership
ratio of shareholders and related parties is down from 20 per cent to 15 per cent. This regulation, according to Dr.
Nguyen Quoc Hung, Vice President and General Secretary of the Vietnam Banks Association, will limit manipulation
by shareholders over the operations of credit institutions.

It is believed that the new Law will meet the need for healthy credit resources from organizations and individuals,
especially enterprises, thus contributing to boosting the country’s socio-economic development.

Our Cover Story in this March issue therefore focuses on the effects of the new Law on the country’s economic activities.

DR. CHU VAN LAM
Editor-in-Chief