Expectation on development of financial service after joining TPP

Trans-Pacific Strategic Economic Partnership Agreement (TPP) was officially signed by 12 member states in Auckland, New Zealand on 4th February 2016. TPP creates an extremely “open” playing field for member states. It might not need to reiterate about the impact of TPP for the economic – society life of Vietnam in particular and of all member states in general, TPP is expected to bring flourishes for the whole economic of Vietnam after a long time of crisis. 

Opening market and doing transparency of management for financial service industry

Strengthening access to financial markets and particular in opening up the type of financial - banks services are focused and is a highlight point in the chapter on financial services of TPP. Member states of TPP have to commit not to distinguish between local financial service supplier and abroad one, member states must allow foreign financial institutions to supply cross-border trade in financial service on some kind of field, member states must protect foreign investment and doing transparency all works related to management for financial service industry. 

In Vietnam, reinsurance and retrocession cross-border service shall be opened. Vietnam gives national treatment to foreign stock service supplier with respect to some of service such as cross-border financial data processing service; cross - border advisory and other auxiliary service related to banking account transactions. Simultaneously, Vietnam shall open cross-border Portfolio management service.

Clearly, financial service industry shall have opportunity to attach foreign investment to meet specific demand of this industry regarding capital, technique and high capacity of management and governance. The extensive participation of foreign investors will also facilitate the expansion of cooperation, enhance capacity of administration and finance for domestic financial services suppliers.
 
TPP is expected to bring growth to the financial services industry of Vietnam.

In order to coordinate and supervise the implementation of commitments on financial services in TPP and consider issues related to financial services given by a party, as well as participating in the settlement of disputes, member states agree to establish a committee named as Financial Service Committee, and each member state shall appoint an officer working in the financial services sector to participate as a member of this Committee.

TPP not only open financial services markets, but also create investment protection mechanisms by adding of commitments related to investment protection such as dispute settlement mechanisms, principle of MST minimum treatment, protecting investors before the risk of expropriation...

According to forecasts, foreign investment into Vietnam will grow strongly in the coming period. This is an opportunity for the banking system to strengthen liquidity and increase business opportunities. The development of many economic sectors after participating TPP also opens up opportunities for commercial banks and financial institutions operating in Vietnam are funding support and services for manufacturer and trader in the future.

In addition, the banking system has access to trust fund in the world with lower costs due to the position of Vietnam will improve a lot after participating TPP. Accordingly, Banks "have a chance" to repeat stage of miracle development as in 2006 when Vietnam joined WTO, but intensity may be lower [1].

Lawyer. Cao Thi Hoa - Vietthink Law Firm.

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[1]. Nguyen Thi Huong Thanh, Banking Strategy Institute – State Bank of Vietnam, “Impact of Trans-Pacific Strategic Economic Partnership Agreement (TPP) to banking sector of Vietnam”