In the emerging market of Vietnam, full of opportunities, enterprises need to focus not only on their business but also on effectively managing idle funds to maximize profits. With the continuous development and opening of Vietnam’s financial market, various banks have introduced a wide range of financial products for enterprises, providing excellent opportunities for optimizing fund allocation. However, how to strike a balance between yield, risk, and liquidity has become a key challenge for every financial decision-maker.

This article will delve into the financial products offered by major banks in Vietnam, summarizing the characteristics, advantages, and potential risks of different products. Whether you are an enterprise already rooted in Vietnam or considering entering this vibrant market, our analysis will provide strong support for your financial strategy, helping you seize opportunities in the competitive business environment.

Let’s explore together how to make your idle funds “work harder” and inject new momentum into the sustainable development of your enterprise.

Overview of Enterprise Financial Products from Major Vietnamese Banks

The Vietnamese banking sector has undergone tremendous changes over the past decade. With the rapid development of the financial market and its gradual opening, major banks have launched a wide variety of enterprise financial products to meet the needs of enterprises of different scales and industries. This section will focus on introducing enterprise financial products from Vietnam’s four major state-owned commercial banks and several leading joint-stock commercial banks, providing a comprehensive market overview for enterprise decision-makers.

Among state-owned commercial banks, Vietcombank, as the largest commercial bank, offers one of the most convincing financial choices. Its main products include flexible-term deposits, allowing enterprises to choose deposit terms ranging from 1 month to 5 years according to their interest needs, with competitive market rates. Additionally, Vietcombank offers structured products that combine term deposits and foreign exchange market derivatives, providing enterprises with potential higher returns. For enterprises needing to improve cash flow, the bank’s bill discounting business can help enterprises monetize receivables in advance. Vietcombank’s products are characterized by high security and operational convenience, especially suitable for small and medium-sized enterprises with lower risk tolerance.

In contrast, VietinBank has launched more complex financial solutions targeting large and medium-sized enterprises. Among these, cash pool management services help group enterprises achieve centralized management and allocation of internal funds, improving overall fund utilization efficiency. It also provides bond investment plans for enterprises, giving them opportunities to participate in high-grade corporate and government bond investments. For import and export enterprises, the bank’s foreign exchange swap business can effectively help manage exchange rate risks. VietinBank’s products focus more on providing comprehensive financial solutions for enterprises, rather than just deposit services.

As a state-owned bank serving the “agriculture, rural areas, and farmers,” Agribank’s enterprise financial products stand out with their unique features. The bank has launched agricultural industry chain finance, providing fund support and financial services for agriculture-related enterprises throughout the entire chain from planting to processing and sales. Considering the cyclical nature of agricultural production, Agribank also offers cyclical deposit products corresponding to agricultural product seasons, providing enterprises with flexible deposit term choices. Furthermore, the bank supports green credit investments, offering preferential interest rates to enterprises focused on sustainable development. Agribank’s products are particularly suitable for agricultural enterprises and small and medium-sized enterprises operating in rural areas.

Bank for Investment and Development of Vietnam (BIDV), as a bank supporting national key projects, also has distinctive enterprise financial products. BIDV has launched project financing products where enterprises can invest idle funds in national key construction projects, yielding comparable returns. For core enterprises, BIDV provides equity investment funds, an indirect investment channel. With the deepening of China-Vietnam economic and trade exchanges, BIDV has also developed cross-border RMB business, offering RMB financial products to help enterprises cope with exchange rate risks. BIDV’s products are more suitable for large enterprises with strong financial strength and higher risk tolerance.

Besides state-owned banks, joint-stock commercial banks in Vietnam are active in the enterprise financial market, usually offering more flexible and innovative products. Taking Techcombank as an example, the bank is known for its technological innovation capabilities and provides intelligent cash management systems for enterprise clients. Through AI algorithms, it helps enterprises achieve automated optimization of financing. Techcombank verifies financial products combined with supply chain management, launching supply chain financial services to provide integrated solutions for core enterprises and their upstream and downstream partners. Furthermore, the bank offers customized financial solutions based on enterprise scale, industry characteristics, and risk preferences. Techcombank’s products are particularly attractive to emerging enterprises that value efficiency and innovation.

In serving small and micro enterprises, Vietnam Prosperity Bank (VPBank) stands out. The bank has launched micro-enterprise special financial products, providing low-threshold, highly flexible financial products for small and micro enterprises with annual turnover less than $500,000. VPBank has also developed an online financial platform where enterprises can perform 24/7 financial operations through a mobile app, meeting the instant needs of modern enterprises. The bank’s innovative co-branded credit card financial product links enterprise expenditure with financial returns, realizing “consumption is investment”. VPBank’s product design fully considers the practical needs of small and medium-sized enterprises, with distinctive features in convenience and inclusiveness.

Overall, the Vietnamese banking industry provides diversified financial choices for enterprises, ranging from traditional term deposits to innovative supply chain finance and cross-border RMB business, almost meeting the needs of all types of enterprises. State-owned banks, with their strong capital strength and extensive networks, provide safe and reliable financial products; while joint-stock commercial banks offer more flexible and innovative choices for enterprises.

When choosing financial products, enterprises need to comprehensively consider their own industry characteristics, fund scale, risk preferences, and future development plans. At the same time, they should closely monitor policy changes in the Vietnamese financial market and interest rate trends to ensure optimal financial decisions. With the further opening and deepening of Vietnam’s financial market, we have reason to believe that more innovative enterprise financial products will emerge in the future, providing more support for enterprise financial management.

Comparison of Different Types of Financial Products (such as Term Deposits, Money Market Funds, Bonds, etc.)

In Vietnam’s rapidly developing financial market, enterprises face diversified financial choices. Each financial product has its unique characteristics, advantages, and potential risks. This article will delve into comparing the main types of enterprise financial products in the Vietnamese market, including term deposits, money market funds, bond investments, etc., helping enterprises make wise financial decisions based on their own needs.

Term deposits have always been the most commonly used financial tool for Vietnamese enterprises. Its advantages lie in high safety and stable, predictable returns. In Vietnam, most commercial banks offer flexible deposit terms ranging from 1 month to 5 years, with interest rates usually increasing with the deposit term. Taking Vietcombank as an example, as of 2024, its 6-month enterprise term deposit annual interest rate is about 5.5%, while the 2-year term can reach 6.8%. Deposits are particularly suitable for enterprises with stable operations and lower risk tolerance. However, its disadvantage is reduced liquidity, and early withdrawal may face interest loss.

In comparison, money market funds are increasingly favored in the Vietnamese enterprise financial market. This type of product invests in short-term money market instruments such as treasury bills and commercial paper. The money market fund products launched by Vietnam Fund Management Company (VFM) are a typical example. These funds usually offer slightly higher returns than term deposits while maintaining relatively high liquidity, with enterprises typically able to redeem funds within 1-3 working days. The average annual yield of money market funds in the Vietnamese market has reached 7-8%, but it should be noted that this yield is not guaranteed and will change according to market conditions.

For enterprises with higher risk tolerance and pursuing higher returns, bond investment is an option worth considering. Vietnam’s government bond market has developed rapidly in recent years, offering not only government bonds but also corporate bonds. Government bonds are known for their high safety, although with relatively low yields, usually between 3-5%, they are ideal for enterprises pursuing stability. Corporate bonds offer higher yield potential, with bonds issued by some high-quality enterprises reaching annual yields of 9-11%. However, investing in corporate bonds requires enterprises to have additional risk assessment capabilities and closely monitor the financial status of bond issuers.

In Vietnam, there are also some innovative financial products worth noting for enterprises. For example, structured deposit products combine traditional deposits with financial derivatives, providing potential higher returns for enterprises while guaranteeing the principal. Techcombank has launched structured deposits linked to foreign exchange rates, which can exceed normal term deposits by 1-2 percentage points if exchange rate trends are favorable.

For enterprises involved in international trade, cross-currency financial products are extremely important. With the deepening of economic and trade relations between Vietnam and China, some banks like BIDV have launched RMB financial products. These products can not only help enterprises manage exchange rate risks but also gain additional returns when the RMB appreciates.

It’s worth mentioning that when choosing financial products, enterprises cannot only focus on other factors, but need to consider multiple factors. First is the liquidity need; if an enterprise may need a large amount of funds in the short term, then money market funds with higher liquidity are more suitable. Second is risk tolerance; financially sound large enterprises may be more suitable for allocating a certain proportion of bond investments, while small and micro enterprises may tend to choose term deposits with high safety.

Moreover, enterprises should also consider the operational convenience of financial management. Online financial platforms launched by banks like VPBank allow enterprises to allocate and manage funds 24 hours a day, which is a great advantage for modern enterprises that value efficiency. The tax implications also cannot be ignored, as different types of financial returns may face different tax treatments, and enterprises need to consider comprehensive after-tax returns.

As Vietnam’s financial market continues to deepen, we expect more convincing financial products to emerge in the future. For example, green bonds related to environmental, social, and corporate governance (ESG) may become a new investment hotspot. For enterprises with social responsibility awareness, this is not only a way of financial management but also a path to fulfill social responsibilities.

Overall, the Vietnamese market provides enterprises with rich financial choices. From low-risk term deposits to higher-risk bond investments, from traditional bank products to innovative structured products, enterprises can construct confident financial portfolios based on their financial status, risk preferences, and development strategies. In a rapidly changing economic environment, regularly adjusting and optimizing financial strategies will help enterprises not only achieve fund preservation and appreciation but also provide strong financial support for business development.

Risk and Return Analysis

Enterprise financial management is not only about fund appreciation but also the art of balancing risk and return. This article will delve into analyzing the risk and return characteristics of major enterprise financial products in the Vietnamese market, helping enterprises effectively manage potential risks while pursuing profits.

First, we need to understand the basic relationship between risk and return. Generally, higher potential returns are often accompanied by higher risks. This principle applies equally in the Vietnamese market, but due to Vietnam’s rapid economic development and the continuous maturation of its financial market, some unique risks and opportunities have also emerged.

Starting with low-risk products, bank term deposits have always been the most commonly used financial tool for Vietnamese enterprises. Taking Vietcombank as an example, as of 2024, its one-year enterprise term deposit annual interest rate is about 6.5%. Although this yield is not high, the risk is extremely low because the Vietnamese government provides protection for commercial bank deposits. However, enterprises need to be aware that inflation risk may erode real returns. Vietnam’s inflation rate has remained around 3-4% in the past few years, so enterprises need to consider the real yield rate after deducting inflation when choosing term deposits.

In comparison, money market funds offer slightly higher returns while maintaining relatively low risk. The money market funds of Vietnam Fund Management Company (VFM) have achieved an average annual yield of 7-8% over the past three years. The main risk for this type of product comes from short-term interest rate fluctuations, but due to the investment portfolio usually including various short-term financial instruments, the risk is diversified to a certain extent. However, enterprises need to be aware that unlike term deposits, the returns of money market funds are not guaranteed and may face losses under extreme market conditions.

For enterprises with higher risk tolerance, bond investments offer higher yield potential. Vietnamese government bonds are viewed as one of the safest investments, with 10-year bond yields usually around 3-4%. Although the yield is relatively low, there is almost no default risk. In contrast, Vietnam’s corporate bond market offers higher yields, with bonds issued by some high-quality enterprises reaching annual yields of 9-11%. However, investing in corporate bonds requires enterprises to have strong risk assessment capabilities. In 2023, bonds issued by a well-known Vietnamese real estate developer defaulted, causing losses to investors, reminding enterprises that they must carefully assess the issuer’s credit risk while pursuing high returns.

In terms of stock investments, Vietnam’s stock market has performed excellently in recent years, attracting idle funds from many enterprises. The VN Index of the Ho Chi Minh City Stock Exchange (HOSE) hit a record high in 2021, with an annual increase of over 35%. However, the market adjustment in 2023 also reminded investors of the high risk of the stock market. For enterprises considering investing in stocks, it is recommended to diversify risks through professionally managed stock funds. For example, the VEIL fund managed by Vietnam Dragon Capital has achieved an average annual return of over 15% in the past 5 years, but has also experienced significant fluctuations.

For enterprises involved in international trade, exchange rate risk is a factor that cannot be ignored. The exchange rate of the Vietnamese dong against the US dollar has been relatively stable in the past few years, with annual depreciation controlled within 1-2%. However, enterprises still need to be alert to sudden exchange rate fluctuations. Foreign exchange forward contracts and currency swap products provided by institutions such as BIDV can help enterprises effectively manage exchange rate risks. For example, a Vietnamese textile export enterprise successfully avoided losses from a sudden depreciation of the Vietnamese dong in a certain quarter of 2023 by using a 6-month USD/VND forward contract.

Innovative financial products such as structured deposits, although offering higher potential returns, also bring additional complexity and risks. Taking the structured deposit linked to the USD/VND exchange rate launched by Techcombank as an example, customers can obtain an annual yield of up to 12% within a specific exchange rate range. However, if the exchange rate exceeds the predetermined range, the yield may decrease significantly. Enterprises need to fully understand the product structure and potential risks when considering such products.

When assessing risks and returns, enterprises also need to consider macroeconomic factors. Although Vietnam’s economy is growing rapidly, it also faces external risks such as trade frictions and global economic fluctuations. In 2023, due to declining global demand, Vietnam’s export growth slowed, affecting the performance of some industries. Therefore, enterprises need to combine their own business cycles with economic cycles when formulating financial strategies, appropriately increasing the allocation of risky assets during high growth periods and increasing the proportion of defensive assets during economic downturns.

In addition, regulatory risk is also an important aspect that enterprises need to pay attention to. Vietnam’s financial market regulatory environment is continually improving, and new regulations may affect the structure and returns of certain financial products. For example, in 2023, Vietnam’s central bank tightened regulations on commercial bank financial products, requiring higher information disclosure standards, which may affect the supply of some high-yield products.

Overall, enterprise financial management in the Vietnamese market needs to balance multiple factors. Low-risk products such as term deposits and money market funds are suitable as the foundation for enterprise cash management, while higher-risk products such as bonds and stocks can be used as supplements to improve overall returns. Enterprises should construct diversified investment portfolios based on their financial status, risk tolerance, and business needs.

At the same time, enterprises should also establish comprehensive risk management mechanisms. This includes regularly assessing the risk-return status of investment portfolios, setting stop-loss limits, and establishing emergency liquidity plans. A leading Vietnamese electronic manufacturing enterprise successfully protected the company’s financial returns during market fluctuations in 2023 by establishing a professional financial team and regularly conducting stress tests and scenario analyses.

As Vietnam’s financial market further develops, we expect more innovative risk management tools and products to emerge. Enterprises should maintain an open and learning attitude, staying informed of market dynamics and new product information. Only by viewing risk management as a core component of enterprise financial management can enterprises achieve sustainable financial growth in the rapidly changing Vietnamese market.

Liquidity Consideration Analysis

Enterprise financial management needs to focus not only on yield and risk but also fully consider liquidity factors. Liquidity, the ability to quickly convert assets into cash, is crucial for the daily operations and financial health of enterprises. This article will deeply analyze the liquidity characteristics of major enterprise financial products in the Vietnamese market, helping enterprises effectively manage cash flow while pursuing returns.

First, we need to understand the importance of liquidity for enterprises. In an emerging market like Vietnam, where the economic environment changes rapidly, enterprises may face sudden funding needs or market opportunities. Therefore, maintaining adequate liquidity is not only necessary for risk prevention but also key to seizing opportunities. In 2023, a leading Vietnamese electronic component manufacturer successfully seized an important acquisition opportunity by maintaining sufficient liquidity in its financial management, rapidly expanding its market share.

Starting with high-liquidity products, demand deposits are undoubtedly the most liquid financial choice. Major commercial banks in Vietnam, such as Vietcombank and VietinBank, provide flexible demand deposit services for enterprises. Although demand deposit interest rates are low, usually between 0.1-0.3%, they allow enterprises to deposit and withdraw funds at any time, making them an ideal tool for managing daily cash flow. However, enterprises need to balance liquidity and yield, avoiding too much idle funds in low-yield demand accounts.

Money market funds are another option that balances liquidity and yield. Taking the money market fund of Vietnam Fund Management Company (VFM) as an example, it typically allows investors to complete redemptions within 1-3 working days while providing higher returns than demand deposits. As of 2024, the annual yield of these funds can reach 6-7%. For enterprises that need to maintain high liquidity in the short term but don’t want to completely give up returns, money market funds are a good choice.

Although term deposits offer higher interest rates, they have lower liquidity. In Vietnam, banks usually offer term deposit products ranging from 1 month to 5 years. Taking Techcombank as an example, its 6-month enterprise term deposit annual interest rate can reach around 7%. However, early withdrawal usually faces interest loss. To balance liquidity and returns, some Vietnamese enterprises adopt a “ladder deposit” strategy, dispersing funds into term deposits of different durations to ensure regular availability of maturing funds.

For enterprises with higher risk tolerance, the bond market provides another liquidity option. Vietnamese government bonds have relatively good liquidity in the secondary market, allowing enterprises to quickly convert them into cash when needed. However, corporate bonds may have lower liquidity, especially during market volatility periods. In 2023, the Vietnamese bond market experienced a liquidity crisis, with some enterprises finding it difficult to sell their corporate bonds in the short term, reminding us to carefully assess the liquidity risk of bond investments.

Although stock investments have high liquidity and can be quickly bought and sold during trading hours, their prices are highly volatile, which may lead to significant losses when funds are needed. Therefore, it is unwise to invest core operating funds in the stock market. However, for long-term idle funds, moderate allocation to stocks or stock funds can increase overall returns while maintaining certain liquidity. The open-end funds managed by Vietnam Dragon Capital provide such options for enterprises, allowing weekly subscriptions and redemptions.

When considering liquidity, enterprises also need to pay attention to some innovative products. For example, a “flexible term deposit” launched by a major Vietnamese commercial bank allows enterprises to make partial withdrawals during the deposit term, guaranteeing both high returns and certain liquidity. These products are particularly suitable for enterprises with predictable cash flows but potential sudden needs.

For enterprises involved in international business, the liquidity of cross-border funds is particularly important. The Vietnamese government has gradually relaxed foreign exchange controls in recent years, but enterprises still need to be aware of potential delays in cross-border fund transfers. To address this, some multinational enterprises choose to allocate funds both in Vietnam and overseas to ensure global liquidity. For example, a Vietnamese export enterprise has effectively improved its global fund liquidity and usage efficiency by establishing a fund pool in Singapore.

When formulating liquidity management strategies, enterprises need to consider their own business cycles and cash flow characteristics. For example, Vietnam’s textile and garment industry usually faces peak orders around the end of the year, so many enterprises increase liquidity reserves during this period. In contrast, the construction industry may need to lock in large amounts of funds for long-term project development, so they can allocate some funds to products with lower liquidity but higher returns.

Moreover, enterprises need to establish liquidity risk management mechanisms. This includes regularly conducting cash flow forecasts, setting minimum liquidity reserves, developing emergency financing plans, etc. A leading Vietnamese food processing enterprise has greatly improved its overall fund usage efficiency and liquidity management level by establishing a comprehensive fund management system that enables real-time monitoring of the fund status of various subsidiaries within the group.

It’s worth noting that the development of financial technology in Vietnam is changing the way enterprises manage liquidity. Some smart cash management platforms launched by banks and fintech companies allow enterprises to view account balances in real-time, conduct quick fund transfers, and even provide AI-based cash flow predictions. These tools are helping Vietnamese enterprises achieve more refined and efficient liquidity management.

As Vietnam’s financial market further develops, we expect more innovative products that balance liquidity and returns to emerge. Enterprises need to stay alert and promptly understand new products and tools to optimize their liquidity management strategies. At the same time, enterprises should also recognize that liquidity management is not just the responsibility of the finance department, but requires collaboration from various departments within the company. Only by integrating liquidity management into the overall operational strategy can enterprises maintain financial flexibility and robustness in the competitive Vietnamese market.

Foreign Exchange Risk Management

Foreign exchange risk management has become an important component of enterprise financial strategy. With the continuous expansion of Vietnam’s foreign trade and the sustained growth of foreign direct investment, more and more enterprises are facing complex foreign exchange risks. This article will deeply analyze the main foreign exchange risks faced by Vietnamese enterprises and discuss effective management strategies.

First, we need to understand Vietnam’s foreign exchange market environment. The Vietnamese dong (VND) adopts a managed floating exchange rate system, with the State Bank of Vietnam controlling the exchange rate through setting daily fluctuation ranges. In recent years, the exchange rate of the Vietnamese dong against the US dollar has been relatively stable, with annual depreciation controlled within 1-2%. However, this apparent stability does not mean that enterprises can ignore foreign exchange risks. In fact, the Vietnamese dong still faces potential shocks from global economic fluctuations, trade frictions, and geopolitical factors.

The main foreign exchange risks faced by Vietnamese enterprises can be divided into the following categories:

Transaction Risk: This is the most direct foreign exchange risk, referring to the risk of changes in the value of receivables and payables due to exchange rate fluctuations. For example, in 2023, a Vietnamese textile exporter signed a large order with a US customer for delivery in 6 months. During these 6 months, the Vietnamese dong appreciated by 3% against the US dollar, resulting in the enterprise receiving about 30 billion Vietnamese dong (approximately 1 million RMB) less than expected.

Translation Risk: For Vietnamese enterprises with overseas subsidiaries, changes in exchange rates may lead to changes in the value of overseas assets when preparing consolidated financial statements. In 2023, a leading Vietnamese dairy company experienced significant fluctuations in its annual financial report due to the shrinking value of its US subsidiary’s assets.

Economic Risk: Exchange rate fluctuations may affect the overall competitiveness of enterprises. For example, if the Vietnamese dong appreciates significantly, it may weaken the price advantage of Vietnamese export goods in the international market. In 2023, the slight appreciation of the Vietnamese dong against the US dollar has already put some pressure on exports in labor-intensive industries.

Inflation-related Risk: Vietnam’s inflation rate has historically been volatile, which is closely related to exchange rate fluctuations. In early 2024, Vietnam’s inflation rate showed a slight increase, partly due to rising import prices, which directly affected the cost structure of enterprises relying on imported raw materials.

Facing these risks, Vietnamese enterprises can adopt the following strategies:

Natural Hedging: This is the most basic strategy, which is to balance income and expenditure in the same foreign currency as much as possible. For example, a Vietnamese electronic component manufacturer established a procurement center in China, settling raw material purchases in RMB, while actively expanding the Chinese market, achieving partial natural hedging of RMB income and expenditure.

Forward Contracts: This is one of the most commonly used foreign exchange hedging tools. Major commercial banks such as BIDV provide foreign exchange forward services. In 2023, a large Vietnamese furniture export enterprise successfully locked in the exchange rate for an order worth $5 million by signing a 6-month USD/VND forward contract, effectively avoiding exchange rate fluctuation risks.

Currency Swaps: Suitable for enterprises needing long-term foreign exchange risk management. For example, a Vietnamese real estate developer signed a currency swap contract with a bank while issuing USD bonds, converting USD liabilities into VND liabilities, obtaining lower financing costs while avoiding long-term exchange rate risks.

Option Strategies: Compared to forward contracts, options provide greater flexibility. In 2023, a large Vietnamese airline adopted an option combination strategy, protecting itself from the impact of rising fuel prices and USD appreciation while retaining some opportunities for favorable market movements.

Pricing Strategy Adjustment: Some enterprises choose to add exchange rate adjustment clauses to contracts or adopt mixed currency pricing. For example, a Vietnamese machinery equipment manufacturer added a price adjustment mechanism based on EUR/VND exchange rate fluctuations in long-term contracts with European customers, effectively dispersing part of the exchange rate risk.

Accelerating Collection Cycles: By shortening accounts receivable cycles, enterprises can reduce the time exposed to foreign exchange risks. A Vietnamese fruit export enterprise successfully reduced its average collection period from 60 days to 45 days by offering small early payment discounts, significantly reducing the uncertainty brought by exchange rate fluctuations.

Diversifying Financing Channels: Enterprises can consider diversifying financing in different currencies to balance exchange rate risks. For example, a Vietnamese multinational enterprise group successfully reduced its dependence on USD financing and diversified exchange rate risks by issuing SGD bonds in Singapore.

When implementing these strategies, Vietnamese enterprises need to pay attention to the following points:

Comprehensive Risk Assessment: Before adopting any hedging strategy, enterprises need to comprehensively assess their own foreign exchange risk exposure. A leading Vietnamese seafood export enterprise effectively improved the accuracy of risk management by establishing a dedicated risk management team and regularly conducting foreign exchange risk stress tests.

Cost-Benefit Analysis: Hedging strategies themselves have costs, and enterprises need to weigh hedging costs against potential risks. A medium-sized Vietnamese manufacturing enterprise significantly reduced overall hedging costs by conducting detailed cost-benefit analyses and deciding to only hedge contracts exceeding $1 million.

Flexible Adjustment: The foreign exchange market changes rapidly, and enterprises need to regularly review and adjust strategies. A large Vietnamese trading company established a monthly foreign exchange risk assessment mechanism, timely adjusting hedging strategies according to market changes, and performed excellently during the global financial turmoil in 2023.

Improving Internal Control: Effective foreign exchange risk management requires cooperation from the entire company. A leading Vietnamese footwear enterprise successfully integrated foreign exchange risk awareness into daily operations through regular internal training and establishing clear foreign exchange risk management processes.

Utilizing Financial Technology: With the development of financial technology, more and more tools can help enterprises better manage foreign exchange risks. For example, an AI-assisted foreign exchange risk management platform launched by a Vietnamese fintech company provides enterprises with more accurate exchange rate predictions and risk warnings through big data analysis and machine learning algorithms.

In addition, enterprises also need to closely monitor changes in Vietnam’s foreign exchange policies. The State Bank of Vietnam further relaxed foreign exchange controls in 2023, allowing enterprises to conduct foreign exchange operations more flexibly. This provides enterprises with more risk management tools but also requires enterprises to have more professional foreign exchange management capabilities.

As Vietnam further integrates into the global economy, especially participating in multilateral trade agreements such as RCEP (Regional Comprehensive Economic Partnership), Vietnamese enterprises will face a more complex foreign exchange environment. Enterprises need to continuously improve their risk management capabilities and view foreign exchange risk management as part of their core competitiveness. Only in this way can Vietnamese enterprises seize opportunities and achieve sustainable development in the wave of globalization.

Tax Impact

In Vietnam’s rapidly developing economic environment, the impact of tax policies on enterprise financial decision-making cannot be ignored. As Vietnam’s tax system continues to improve, enterprises must fully consider tax factors when choosing financial products to optimize overall financial performance. This article will delve into the tax impact of Vietnamese enterprise financial products, providing a comprehensive tax perspective for enterprises.

Vietnam’s tax system has undergone multiple reforms in recent years, aiming to establish a fairer, more transparent, and effective tax system. For enterprise finance, the most directly relevant are corporate income tax and investment income tax. Vietnam’s standard corporate income tax rate is 20%, which is quite competitive in the Southeast Asian region. However, different types of investment income may face different tax treatments, requiring enterprises to be more cautious when formulating financial strategies.

Taking bank deposits as an example, they are one of the most commonly used financial tools for Vietnamese enterprises. Interest income obtained by enterprises from bank deposits is usually regarded as normal operating income and is subject to 20% corporate income tax. This means that if an enterprise receives 100 million Vietnamese dong in deposit interest, the actual after-tax return will be 80 million Vietnamese dong. Considering this tax impact, some enterprises have begun to seek other financial methods that may have tax advantages.

Bond investment is another area worth noting. To encourage enterprises to participate in the government bond market, the Vietnamese government provides tax incentives for certain types of government bond income. For example, interest income from certain specific infrastructure construction bonds may enjoy lower tax rates or even be tax-exempt in some cases. This makes government bonds have certain advantages in terms of after-tax yield. In 2023, a large Vietnamese construction company not only obtained stable returns but also enjoyed considerable tax reductions by investing part of its idle funds in government infrastructure bonds.

For stock investments, the tax situation is more complex. Dividend income obtained by enterprises from stock investments usually needs to pay 20% tax, similar to the tax treatment of deposit interest. However, capital gains generated from stock trading are currently not separately taxed in Vietnam but are included in the enterprise’s overall taxable income. This means that if the enterprise’s overall operation is at a loss, stock investment income may be used to offset part of the operating loss, thus not having to pay separate taxes for this part of income in the current year. Considering this point, a Vietnamese medical device company not only increased its income sources but also achieved significant effects in tax planning through a carefully designed stock investment portfolio when facing temporary operational difficulties in 2023.

The tax treatment of fund investments needs special attention. In Vietnam, different types of funds may have different tax implications. For example, for open-end funds, the fund itself usually does not need to pay corporate income tax, but the income distributed by the fund to investors needs to be taxed at the investor level. This means that dividend income obtained by enterprises from funds usually needs to pay 20% tax. However, for certain special types of funds, such as venture capital funds supporting small and medium-sized enterprise development, they may enjoy certain tax incentives. In early 2024, the Vietnamese government introduced a new policy giving a preferential tax rate of 15% to specific funds investing in high-tech fields, which immediately attracted a large number of enterprises to participate.

For cross-border investments, tax issues are more complex. Vietnam has signed double taxation agreements with multiple countries, providing certain tax protection for enterprises’ cross-border investments. For example, according to the China-Vietnam tax agreement, certain types of investment income obtained by Vietnamese enterprises from China may enjoy preferential withholding tax rates. Utilizing this policy, a leading Vietnamese electronic product manufacturer conducted financial management through its subsidiary in China in 2023, not only diversifying investment risks but also achieving optimization in terms of taxation.

However, enterprises also need to be alert to the risks that changes in tax policies may bring. Vietnam’s tax policies are constantly being improved, and some former tax incentives may be cancelled or modified. For example, in 2023, the Vietnamese government tightened tax policies on certain offshore investments, affecting some enterprises’ overseas financial strategies. Therefore, enterprises must closely monitor the direction of tax policies and maintain strategy flexibility when formulating long-term financial plans.

In addition, enterprises also need to consider the compliance of tax planning. Vietnamese tax authorities have increased scrutiny of aggressive tax planning in recent years. Some overly aggressive tax avoidance behaviors may incur penalties or even damage the enterprise’s reputation. Therefore, enterprises should conduct tax planning on the premise of legality and compliance. A positive approach is to maintain close communication with tax advisors to ensure that financial strategies can both optimize tax burden and withstand scrutiny by tax authorities.

As Vietnam’s economy further internationalizes, it is expected that future tax policies will focus more on balancing the interests of local enterprises and attracting foreign investment. Enterprises need to develop a keen tax sense and fully integrate tax factors into various aspects of financial decision-making. Only in this way can enterprises formulate truly effective financial strategies in a complex economic environment, optimizing overall tax performance while achieving fund appreciation.

Financial Advice for Enterprises of Different Scales

The differences in enterprise scale are not only reflected in business scope and resource allocation but also directly affect the formulation of financial strategies. Enterprises of different scales face different challenges and opportunities, thus requiring tailored financial advice. This article will provide detailed financial advice for large enterprises, medium-sized enterprises, and small and micro enterprises respectively, helping Vietnamese enterprises formulate the most suitable financial strategies based on their scale characteristics.

For large enterprises in Vietnam, their financial strategies usually need to consider more complex factors. These enterprises typically have large amounts of capital reserves, so they can adopt more diversified and complex financial solutions. Firstly, large enterprises should establish professional financial teams, and even consider setting up independent fund management centers. For example, Vietnam’s large dairy company Vinamilk has established a dedicated fund management department responsible for formulating and executing group-level financial strategies. This approach not only improves the professionalism of financial management but also better controls risks.

The financial portfolio of large enterprises should be more diversified. In addition to traditional bank deposits, they can consider allocating a certain proportion to bond investments, including government bonds and high-rated corporate bonds. In 2023, a leading Vietnamese real estate developer not only obtained stable returns but also enjoyed tax benefits by investing 30% of its idle funds in government infrastructure bonds. Moreover, large enterprises can also consider participating in some innovative financial products, such as structured deposits or cross-border financial products. The structured deposits linked to USD/VND exchange rates launched by Vietcombank are quite popular among large enterprises, providing potential high returns while helping enterprises manage exchange rate risks to some extent.

For large enterprises with overseas operations, the establishment of cross-border cash pools is an option worth considering. This can not only improve overall fund utilization efficiency but also effectively manage exchange rate risks. A well-known Vietnamese electronic product manufacturer successfully achieved global centralized fund management through establishing a fund pool in Singapore, significantly improving fund utilization efficiency and reducing financial costs.

Medium-sized enterprises need to find a more delicate balance between risk and return when formulating financial strategies. These enterprises typically have accumulated certain capital reserves but may not have as strong risk-bearing capacity as large enterprises. Therefore, the financial strategy of medium-sized enterprises should be primarily stable, while moderately pursuing higher returns. A feasible approach is to adopt a “core-satellite” asset allocation strategy. The “core” part can be allocated to low-risk products, such as bank term deposits or money market funds, to ensure the safety and liquidity of funds. The “satellite” part can consider some higher-risk but potentially higher-return products, such as some high-quality corporate bonds or equity funds.

Medium-sized enterprises should also pay special attention to improving fund utilization efficiency. Using cash management services provided by banks, such as smart deposits and bill pools, can effectively increase the returns on idle funds. The smart deposit product launched by Techcombank has been favored by many medium-sized enterprises, as it can automatically adjust deposit terms based on the enterprise’s fund usage, maximizing interest income while ensuring liquidity.

For rapidly growing medium-sized enterprises, reasonable use of financial leverage is also an important financial strategy. For example, they can consider raising funds by issuing corporate bonds, which can not only reduce financing costs but also optimize the enterprise’s capital structure. In 2023, a medium-sized Vietnamese manufacturing enterprise successfully raised 500 billion Vietnamese dong (about 150 million RMB) by issuing 3-year corporate bonds, providing strong support for the enterprise’s expansion.

Small and micro enterprises face unique challenges in financial management. These enterprises usually have tighter cash flow and weaker risk resistance, so their financial strategy should prioritize ensuring liquidity and fund safety. For small and micro enterprises, highly flexible demand deposits and short-term financial products are more suitable choices. The “Flexible Deposit” product launched by VPBank for small and micro enterprises is very popular, as it allows enterprises to withdraw part of the funds at any time while enjoying relatively high interest rates, balancing returns and liquidity needs well.

Small and micro enterprises should also fully utilize various preferential policies provided by the government and financial institutions. For example, the Vietnamese government has introduced a series of tax incentives and financing support policies to support the development of small and micro enterprises. Some loan products specifically for small and micro enterprises not only have lower interest rates but can also provide financial advice for enterprises. Agribank has launched a “package” financial service for small and micro agricultural enterprises, including preferential interest rate loans and free financial consulting.

For enterprises of all sizes, establishing a sound financial management system is crucial. This includes setting clear financial goals, establishing risk assessment mechanisms, conducting regular financial analysis, etc. Large enterprises may need more complex financial management systems, while small and micro enterprises can start with some basic financial disciplines, such as strictly separating enterprise funds from personal funds, regularly conducting cash flow forecasts, etc.

With the development of financial technology, various intelligent financial tools and platforms provide new opportunities for enterprises of different scales. For example, some artificial intelligence-driven financial advisor systems can provide personalized investment advice for enterprises. An intelligent financial platform launched by a Vietnamese fintech company can automatically generate financial solutions based on the enterprise’s scale, industry characteristics, and risk preferences, which has been widely welcomed by enterprises ranging from small and micro businesses to large groups.

Finally, regardless of enterprise size, the ability to continuously learn and adapt to market changes is key to formulating successful financial strategies. Vietnam’s financial market is rapidly developing, with new policies, products, and opportunities constantly emerging. Enterprises need to maintain an open and learning attitude, regularly evaluating and adjusting financial strategies. A good practice is to maintain close contact with professional financial advisors to stay informed of market dynamics and best practices.

In summary, Vietnamese enterprises, regardless of size, should formulate personalized financial strategies based on their own characteristics and needs. Large enterprises can leverage their resource advantages to pursue more complex and diversified financial solutions; medium-sized enterprises need to find a balance between stability and aggressiveness; while small and micro enterprises should focus on ensuring fund safety and liquidity, while fully utilizing various support policies. Through reasonable financial planning, enterprises can not only achieve fund preservation and appreciation but also lay a solid financial foundation for their sustainable development.