Vu Duc Dam, chairman of the government office, told a press briefing in Hanoi late last week that local banks will be reorganized to improve their operations and utilization of capital.

Dam also said interest rates are still high and the government has asked the central bank to take further measures to bring the rates down. The government will consider extending tax support for businesses, he added.

Speaking at the press briefing, Nguyen Dong Tien, the central bank’s deputy governor, said some banks were facing difficulties, but the banking system in general is running well.

“Some banks can be big, but it doesn’t mean they are strong, as it depends on their management and risk prevention capabilities,” Tien said. 

The State Bank of Vietnam said late last month that credit institutions in the country need to begin restructuring to improve their competitiveness and achieve sustainable growth. Mergers and acquisitions are effective restructuring measures, the central bank noted.

Power price hike

The government also said it does not have an immediate plan to raise power prices.

A hike will be considered at a suitable time and the government will ask state utility Electricity of Vietnam to disclose all production costs and business results, Dam said.

“If power prices are increased, there will be solutions to support the poor,” he told the press briefing.

Electricity of Vietnam, also known as EVN, is reportedly seeking a price increase of between 10 and 13 percent.

After the latest hike in March, the average retail price stands at VND1,242, or around 6 cents, per kilowatt-hour. EVN said it can only break even when the price is raised to VND1,350.

Dam also confirmed that the government plans to withdraw its investment in EVN Telecom, a subsidiary of the utility company. He said several companies including VTC, FPT and Hanoi Telecom were interested in acquiring EVN Telecom.