Cross-Border Credit Information Exchange: Promoting Development of Member Economies

An important event on the sidelines of the Senior Financial Officials Meeting (SFOM) under APEC 2017 was recently organised by the State Bank of Vietnam (SBV) in cooperation with the APEC Business Advisory Council (ABAC) and the International Finance Corporation (IFC). This workshop was entitled "Cross-border credit information exchange".

Speaking at the conference, SBV Deputy Governor Nguyen Thi Hong emphasised that the cross-border credit information exchange plays an important and essential role in boosting quality and efficiency of investment and business activities of all member economies.

Inevitable demand
Many countries in the world, including Vietnam, have the two biggest barriers in cross-border information sharing: Legal framework and data standard. In Vietnam, there is no legal framework for cross-border information sharing.

Deputy Governor Nguyen Thi Hong commented, like Vietnam, many APEC member economies lack legal frameworks and standards for credit information in general, and cross-border information sharing in particular. Legal frameworks relating to consumer protection and personal data privacy are not synchronised.

Access to credit information among member economies and with enterprises and among enterprises and with citizens is still narrow and rough. This hinders cooperation expansion, investment and business promotion, and people's access to credit in each member economy.

In the context of extensive globalisation, to ensure fairness and transparency in investment cooperation and minimise risks posed by asymmetric information, interconnecting information networks among credit information systems in APEC member economies has become increasingly urgent.

Representatives from APEC member economies discussed such topics as the need for cross-border credit information exchange; key elements for building a successful foundation for cross-border information exchange, including legal and data bases; exchanges and discussions with respect to drafting cooperation agreement documents and data dictionary.

State, business and people all benefit
Vietnam has established diplomatic relations with more than 170 countries in the world, expanded trade and exported goods to over 230 markets in other countries and territories, signed more than 90 bilateral trade agreements, and nearly 60 agreements on investment encouragement and protection.

According to the Foreign Investment Agency under the Ministry of Planning and Investment, as of the end of the first quarter of 2017, Vietnam had 23,071 effective foreign direct investment (FDI) projects with a total registered capital of over US$300 billion. FDI benefits are very huge but it also exposes unmanageable problems like shell companies, financially weak companies, environment-polluting companies, or companies committed investment fraudulence and money laundering.

One of reasons for this is the lack of information to make assessments before forming investment cooperation. When investing overseas, Vietnamese enterprises also face a similar situation.

On the other hand, international economic integration has led to a wave of labour mobility between Vietnam and other countries in the world. Hence, there is a rising need for access to finance and use of financial services.

The successful establishment of cross-border credit information exchange mechanism will be a powerful boost to economic cooperation among APEC member economies and with other countries. For organisations, enterprises and individuals, the mechanism will facilitate them to evaluate and study business partners, investment cooperation, risk prevention and mitigation, and removal of barriers to accessing financial services abroad.

Nguyen Thanh