VAFI proposes to gradually send deposit interest rate to zero percent

The Vietnam Association of Financial Investors (VAFI) has recently made a proposal on deposit interest rates. According to VAFI, deposits in VND for short and medium terms are from 3.5 percent to 6.2 percent per annum, which is extremely high compared to other countries, leading to high lending interest rates, causing disadvantages for enterprises and a large number of low- and middle-income consumers.
According to VAFI, Vietnam's economy has solid premises to gradually bring the deposit interest rate to zero percent per annum, such as political stability, fast-growing economic development, and double-digit export growth. Moreover, Vietnam is in the position of a country with a trade surplus and earning a huge amount of foreign currency annually, thanks to continuous export growth. It receives tens of billions of US dollars of overseas remittances every year. Foreign currency reserves at the State Bank of Vietnam continued to increase sharply. Vietnam’s stock market has prospered despite the Covid-19 pandemic. The bond market has also developed rapidly and is gradually attracting individual investors to participate.

To gradually bring the deposit interest rate to zero percent per annum, VAFI proposes some solutions, including limiting the speculative cash flows into the real estate market and applying progressive property tax collection from the second house onwards at a low enough level to prevent speculative cash flows then gradually increasing as other countries.

By Hanh Nhung – Translated by Bao Nghi

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