Recomemdations to enhance international payment by lc in sai gon – ha noi joint stock commercial bank, thai ha sub branch

--- ***---NGUYEN THI KIEN RECOMEMDATIONS TO ENHANCE INTERNATIONAL PAYMENT BY L/C IN SAI GON – HA NOI JOINT STOCK COMMERCIAL BANK, THAI HA SUB-BRANCH Hanoi, May, 2011... --- ***---NGUYEN

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*** -NGUYEN THI KIEN

RECOMEMDATIONS TO ENHANCE INTERNATIONAL PAYMENT BY L/C IN SAI GON – HA NOI JOINT STOCK COMMERCIAL BANK, THAI HA SUB-BRANCH

Hanoi, May, 2011

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*** -NGUYEN THI KIEN

RECOMEMDATIONS TO ENHANCE INTERNATIONAL MENT BY L/C IN SAI GON - HA NOI JOINT STOCK COMMER-

PAY-CIAL BANK, THAI HA SUB-BRANCH

Field : English for Business Studies

Code : 701

Supervisor: Nguyen Thi Hong Hanh, M.A

Hanoi, May, 2011

After a period of studying theoretical framework and researching real status in SHB

Thai Ha sub-branch, I have finished my report: “Recommendations to enhance international payment by L/C in Sai Gon Ha Noi joint stock commercial bank, Thai Ha sub-branch” To fulfill this research, I have received great help and

encouragement from many people

Foremost, I would like to thank the teachers and supervisors of Faculty of ForeignLanguages, National Economics University for highly valuable knowledge imparted

to us for the past 4 years It is the important foundation supplying me with sufficientknowledge to carry out this research

Next, I would like to express my deep thanks to Ms Nguyen Thi Hong Hanh, mydirect supervisor, who gave us precious advice and sound orientation during thecourse of my internship report Thanks to her whole-hearted instruction, I canimplement and finish the research properly

My great gratitude goes to all officers in SHB Thai Ha sub-branch, especially mysupervisor Bui Thi Lan Ngoc for giving me opportunity to apply my theoreticalknowledge on practical banking operations, and helping me with collection ofuseful documents

Last but not least, I am very grateful to my parents and my friends for all invaluableencouragement and support during my lifetime They are always by my side and themotivation for me to never give up and complete my research as best as possible.With all my heart, I wish all of them will be healthy, happy and successful in wholelife

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TABLE OF CONTENTS

ACKNOWLEGEMENT….……… i

TABLE OF CONTENTS ……… ……… ii

LISTS OF ABBREVIATION……… …….….iv

EXECUTIVE SUMMARY……… …v

INTRODUCTION……… vi

Introduction of the research topic………vi

Rationales………vi

Research Questions………vii

Scope of the research……… ………… vii

Methodology……… …vii

CHAPTER I: Introduction of SHB and SHB Thai Ha sub-branch………1

1.1 SHB and Thai Ha sub- branch overview………1

1.1.1 SHB overview……….………1

1.1.2 SHB Thai Ha sub-branch overview……… 2

1.2 Background of International payment by L/C in Thai Ha sub – branch.2 1.3 Key term definitions……… … 3

CHAPTER II: Overview of Letter of Credit……… 5

2.1 Definition:……… 5

2.2 Types of L/C……… 6

2.3 The Process of L/C……….7

2.4 Advantages and Disadvantages to parties……… 9

2.5 Criteria to evaluate L/C payment of a bank……… 10

2.6 Factors affecting the efficiency of L/C payment in the bank…… ……12

CHAPTER III: Reality and evaluation of international payment by L/C in Thai Ha sub branch 15

3.1 Reality of L/C payment in SHB Thai Ha sub-branch……….15

3.1.1 The process of L/C transaction………15

3.1.2 Products of L/C payment in SHB………15

3.1.3 The scale of L/C payment……….16

3.1.4 Satisfaction of customers……… 20

3.2 Evaluation of international payment by L/C in Thai Ha sub – branch 20

3.2.1 Achievements……….….21

3.2.2 Limitations……….….21

3.2.3 Reasons of limitations……… ….…….23

CHAPTER IV: Recommendations to enhance international payment by L/C in Thai Ha sub-branch……….……… 26

4.1 Orientations of Thai Ha sub- branch in 2011……… … 26

4.2 Recommendations……….……… 27

4.2.1 Improving human resources quality……….…… 27

4.2.2 Investing and making use of modern technology………28

4.2.3 Enhancing the quality and diversifying L/Cs products…… 28

4.2.4 Boosting marketing activities………… ……….…….…… 29

4.2.5 Expanding correspondent banks….……… 31

4.2.6 Increasing foreign currency sources using in L/C payment…31 CONCLUSION………

33 REFERENCES……….… 34

LISTS OF ABBREVIATION

 ABA: Asian Banker Association

 SHB: Saigon - Hanoi Joint Stock Commercial Bank

 L/C: Letter of Credit

 ICC: International Chamber of Commerce.

 UCP: The Uniform Customs and Practice for Documentary Credits

 SWIFT: Society for Worldwide Interbank Financial

1 Issuance of a Letter of Credit

2 Payment under Letter of Credit

3 The reality of Import & Export L/C in SHB

4 The total revenue from L/C payment in SHB

5 The proportion of revenue in Thai Ha sub-branch

EXECUTIVE SUMMARY

For many decades, Letter of Credit (L/C) is used as an effective tool to boosteconomic exchange and to facilitate a variety of financial transactions, either as amethod of payment or as a credit enhancement, within as well as across the borders

of countries in the world Not only in Vietnam, but also in Vietnam, Letter of Creditquickly becomes popular in import-export activities This report mainly focuses onthe reality and how to improve the effectiveness of L/C payment in SHB Thai Hasub-branch

Apart from Introduction and Conclusion, my report is divided into 4 chapters

In the first chapter, the reader is oriented forwards background of SHB and Thai Hasub-branch as well as the international payment activities of Thai Ha sub-branch.The second chapter, providing theoretical framework about Letter of creditincluding process, criteria of assessment and factors affecting on L/C payment isconsidered as the premise for next part The next chapter about the findings andanalysis collected during my internship is also the centre of this study The authorwill show readers the reality of L/C payment and give deep assessment on L/Cpayment’ efficiency of Thai Ha sub-branch Finally, in the last chapter, somerecommendations to enhance international payment by L/C in Thai Ha sub-branchwill be presented

This report is carried out with the aim to find out really effective and practicalway to boost L/C payment in Thai Ha sub-branch The author hopes that thisresearch will be useful not only with SHB but also in other banks in Vietnam

Introduction of the research topic

Nowadays, trading overseas has opened great opportunities and issued outstandingchallenges for not only enterprises but also banks worldwide Therefore, selectingthe most appropriate payment method and ensuring accuracy in dealings, can makethe difference to enterprise’s success – minimizing the risks to business whilemaintaining the goodwill of customers The method chosen will depend on thereliability degree between the parties, credit capacity, local export-importregulations and the nature of the goods

Among methods of international settlement, L/C is appreciated by its convenienceand safety for all parties This method has been a time-tested instrument and hasproved its preeminence in international trade Hence, L/C plays a critical role inboosting trading overseas in the economic integration of Vietnam Finding answerfor the question: “How to improve L/C payment?” becomes a pressing task in any

bank This motivates me to choose “Recommendations to enhance international payment by L/C in Sai Gon Ha Noi joint stock commercial bank, Thai Ha sub- branch” as the topic of my research This research will supply reader findings and

analysis to have a deep sight on reality of L/C payment and suggest some usefulsolutions to improve L/C settlement in Thai Ha sub-branch

Figures in this report are collected by combining two methods: observing, talkingfor primary data and gathering based information from books, magazine as well asbooks for secondary data

Rationales

For a long time, international trade has become an essential part in the worldeconomics in general and Vietnam in particular Especially when Vietnam joinedthe World Trade Organization, the door of foreign trade has open for banks andfinancial organizations of Vietnam Sai Gon–Ha Noi bank (SHB) also has providedmany international payment methods: advanced payment, open account, letter ofcredit to meet the demands of customers However, being a new comer ininternational payment services, SHB had to face and overcome many difficultiesdue to limitation of technology, knowledge of staff, and reduction of risks…

This study is not only derived from the author’s interest but more important is fromthe necessity of L/C payment’s improvement in Vietnam Findings andrecommendations are given to improve L/C transactions in SHB as well as otherbanks After observation, collection and assessment, some effective solutions will

be presented to improve L/C payment as well as international payment of Vietnam

Research Questions

During the time of internship in SHB Thai Ha sub – branch, I have observed,collected and analyzed to find the answer for these questions:

1 What’s the reality of L/C transactions of Thai Ha sub –branch?

2 What are the reasons of limitations of SHB in L/C transactions?

3 What should SHB do to enhance international payment by L/C?

Scope of the research

In the scope of the research, I focus on the real status of Thai Ha sub-branch in L/Cpayment activities and also give some evaluation on achievements and limitations

of this activity in the period from 2007 - 2010 In the last part of research Irecommend some solutions to boost L/C payment in Thai Ha sub-branch as well aswhole SHB in Vietnam

CHAPTER I INTRODUCTION OF SHB AND SHB THAI HA SUB – BRANCH

1.1 SHB and Thai Ha sub- branch overview

1.1.1 SHB overview

Saigon - Hanoi Joint Stock Commercial Bank (SHB) was established in 1993 withheadquarter at Can Tho city Starting from a rural commercial bank, SHB hasdeveloped constantly and achieved many valuable awards from high-renown

organizations: “Best bank in Vietnam in 2010”, “National famous branch 2010”

“Top 20 biggest banks in Vietnam” With proper competitive strategy, modern

technology and professional working style, SHB has taken leading position inVietnam banking and provide customers with superior banking services

At present, SHB has more than 100 branches and sub- branches in many big citiesand provinces of Vietnam with high growth speed The SHB customers includethousands of small & medium enterprises, households & individuals, statedgroups…The main banking operations of SHB are: mobilizing capital, giving short–medium-long terms loan, dealing international payment, discounting commercialdocumentaries, dealing foreign exchange…In future, SHB aims to become one ofthe ten best retail banks in Vietnam and a strong financial holdings group to meetthe requirement of world economic integration

Being successful as today, SHB has overcome many challenges and followedprinciple in core values

The core values:

▪ Customers: SHB pledges to supply various, safe, secure, friendly &

prompt products/ services because “The customer’s satisfaction is the

SHB’s success”

▪ Shareholders: SHB ensures to grow constantly and maximize return to

shareholders

▪ Staff: SHB creates dynamic, professional working environment and bring

developing opportunities for every staff

▪ Business principle: SHB improves the transparency and integrity in every

activities of bank

▪ Innovation: SHB encourages research and innovative approach to develop

new products & services and make differentiation

▪ Brand value: SHB becomes modern and reputed retail bank with slogan

“Solid partner, Flexible solutions”.

1.1.2 SHB Thai Ha sub-branch overview

According to Decision 49/ NHNN – HAN7 of Sai Gon – Ha Noi Joint StockCommercial bank, Thai Ha sub-branch was established on January 15th, 2007 Thisbranch is located on 17 Thai Ha Street, Dong Da District, Ha Noi and is the firstsub-branch of SHB in Ha Noi capital Thai Ha sub-branch mainly performsactivities relating to capital mobilization, loan project and international payment Inaddition, the sub-branch also hold training courses, recruit new staff and researchproducts development to support for headquarter With the positive performance inconsecutive years, SHB Thai Ha has remarkable contribution to the developmentand reputation of SHB Thai Ha sub-branch is also considered as one of the mosteffective sub-branch in the sub-branch system of SHB in Ha Noi In coming years,the sub-branch has intended to expand customer network, increase itscompetitiveness and enhance activities to become the best sub-branch of SHB

1.2 Background of International payment by L/C in Thai Ha sub-branch

Before 2008, all international payment transactions of SHB had to be carried outthrough other banks (Military Bank, Vietcombank) However, SHB has beenofficially allowed to perform international payment services directly after the StateBank passed through the SHB’s requirement of implementing international paymenttransactions in 2008 Although SHB has just entered international trade directly foronly 3 years, the bank has received positive recognition from famous organization:

“Bank has excellent international payment service” by Wachovia Bank in June

2009, “Best Trade finance Banks and Providers of Vietnam” by Global Finance…

SHB’s international payment system now applies three methods of payment:

Remittance, Collection of payment and Documentary Credit Among thesemethods, Documentary credit or Letter of Credit cover a large percentage because

of its advantages in processing and reducing risks

As a later comer in financing and banking market in Ha Noi, SHB Thai Ha mainlyfocuses on capital mobilization and credit projects Therefore, L/C paymentoperation has not been attached pertinent importance and the revenue from L/Cpayment makes up a modest part in total revenue of sub-branch Theseshortcomings have shown the inappropriate strategies of SHB Thai Ha ininternational payment operation

According to the SHB’s regulation about international payment, Thai Ha branch is only responsible for verifying and transferring documents to theInternational Payment Department Although SHB Thai Ha only participates in thefirst steps during L/C payment process, SHB Thai Ha has an essential part in thewhole development of L/C payment operation

sub-During my time of internship in SHB Thai Ha, I decided to choose

“Recommendations to enhancing L/C in international payment in SHB Thai

Ha sub-branch “as my topic with the aim to recommend some effective solutions

to improve and expand L/C payment in Thai Ha sub-branch & in SHB in general

1.3 Key term definitions

Advising bank means the bank that advises the credit at the request of the issuing

bank (ICC, 2007 UCP 600)

Applicant means the party on whose request the credit is issued (ICC, 2007 UCP

600)

Banking day means a day on which a bank is regularly open at the place at which

an act subject to these rules is to be performed (ICC, 2007 UCP 600)

Beneficiary means the party in whose favor a credit is issued (ICC, 2007 UCP

600)

Complying presentation means a presentation that is in accordance with the terms

and conditions of the credit the applicable provisions of these rules and international

standard banking practice (ICC, 2007 UCP 600,)

Confirmation means a definite undertaking of the confirming bank, in addition to

that of the issuing bank, to honor or negotiate a complying presentation (ICC,

2007 UCP 600)

Confirming bank means the bank that adds its confirmation to a credit upon the

issuing bank’s authorization or request (ICC, 2007 UCP 600)

Issuing bank means the bank that issues a credit at the request of an applicant or on

its own behalf (ICC, 2007 UCP 600)

ICC: means International Chamber of Commerce - The body which published the

Uniform Customs and Practice for Documentary Credits, the Uniform Rules forCollections, the Uniform Rules for Reimbursements, Incoterms 2000 and otherworks commonly used in international trade

UCP 600: means The Uniform Customs and Practice for Documentary Credits,

2007 Revision, ICC Publication no 600

CHAPTER II OVERVIEW OF LETTER OF CREDIT

2.1 Definition of Letter of Credit

Letter of Credit is a popular international payment method in the world, so thatvariety of definitions is supplied by many researchers In the scope of this research Iwould like to give some most popular definitions

According to “Uniform Customs and Practice for Documentary Credits” (UCP),published by International Chamber of Commerce, L/C is known as Credit:

“Credit means any arrangement, however named or described, that is

irrevocable and thereby constitutes a definite undertaking of the issuing

bank to honor a complying presentation

Honor means:

a To pay at sight if the credit is available by sight payment

b To incur a deferred payment undertaking and pay at maturity if

the credit is available by deferred payment

c To accept a bill of exchange (“draft”) drawn by the beneficiary

and pay at maturity if the credit is available by acceptance”

(ICC, 2007, UCP 600: Article 2)

In the book “Multinational business finance” of Eiteman, Letter of credit is defined

as following:

“ A Letter of Credit, abbreviated L/C, is a bank’s conditional promise to pay issued by a bank at the request of an Importer (Applicant / Buyer) in which the bank promise to pay an Exporter (Beneficiary) upon presentation of documents specified in the L/C”

(Eiteman, Moffett and Stonehil, 2003: 719)

From these definitions, letter of credit can be understood as a bank–to-bankcommitment of payment in favor of exporter, guaranteeing that payment will bemade against certain documents that are in compliance with terms set by thebuyer It means that bank act as an intermediary, ensuring benefit of both parties:exporter will receive payment and importer will take goods However, a keyprinciple underlying L/C is that banks deal only in documents but not in goodsand they are not responsible for quality of goods

2.2 Types of L/C

Growth of international payment and diversification of goods require different types

of L/Cs to maximize profit and minimize the risks At present, banks in over theworld have introduced and applied many types of L/Cs to meet the high demand ofcustomers In this report, I would like to give the most popular L/Cs in Vietnam

banking The definition of these types of L/C is retrieved from the book “A short

course in International payments” of Edward G.Hikelman.

 Irrevocable - A L/C that cannot be amended or cancelled without prior mutual

consent of all parties to the credit This is the most popular form of letter ofcredit

 Revocable – A L/C that may be amended or canceled by issuing bank without

prior notice to the exporter (beneficiary)

 Confirmed Irrevocable: An irrevocable L/C opened by an issuing bank whose

authenticity has been confirmed by the advising bank and where the advisingbank has added its confirmation to the credit

 Unconfirmed Irrevocable: An irrevocable L/C opened by an issuing bank in

which the advising bank does not add its confirmation to the credit

 Transferable - A L/C that can be redirected at the seller’s request These are

used when an export broker is involved Once all conditions on the letter ofcredit are met, the broker's bank receives the payment, takes out hiscommission, and completes the transaction as negotiated

 Back-to-back: A L/C that is issued on the strength of another L/C

 Revolving: An agreement in which the buyer is allowed to replenish the credit

after it is drawn down by buyer

 Standby: A Letter of Credit under which payment is made available to the

Beneficiary against presentation of a draft, simple statement, or otherdocuments

Among types of L/C above, SHB’s customers mainly use irrevocable L/C,confirmed irrevocable L/C and revolving L/C because these L/C have low level ofrisks and they are also suitable with the business features of Vietnamese enterprises

2.3 The Process of L/C

In general, a typical L/C transaction involves four parties and two periods Theparticipants includes: the buyer (Applicant), the issuing bank, the advising bank andthe seller (Beneficiary) Two periods including 9 small steps: Issuance of a L/C andPayment under L/C The following is a step-by-step description of a typical L/Ctransaction, which is retrieved from “A guide to Letter of credit”

 Issuance of a Letter of Credit

Chart 1: The Issuance of a Letter of Credit

(Source: The TD Bank, 2007:5)

1 Buyer and seller agree to terms including means of transport, period of creditoffered (if any), and latest date of shipment acceptable

2 Buyer applies to bank for issue of letter of credit Bank will evaluate buyer'scredit standing, and may require cash cover and/or reduction of other lendinglimits

3 The Issuing bank issues L/C, sending it to the Advising bank by airmail orelectronic means such as telex or SWIFT

4 The Advising bank will verify the letter of credit for authenticity, then informsseller (beneficiary)

(3)

 Payment under Letter of Credit

Chart 2: Payment under Letter of Credit

(Source: The TD Bank, 2007: 6)

5 Seller should now check that LC matches commercial agreement and that all itsterms and conditions can be satisfied

6 Seller ships the goods, then assembles the documents called for in the LC(invoice, transport document, etc.) and makes demand under the L/C bypresenting the documents within the stated period and before the expiry date tothe “ available with” bank ( Advising bank/ Confirming bank.)

7 The Advising bank checks the documents against the LC If the documents arecompliant, the bank pays the seller and forwards the documents to the Issuingbank

8 The Issuing bank now examines the documents to ensure they comply with theL/C terms and conditions If they are in order, it reimburses the seller's bankimmediately

9 The Issuing bank debits the buyer and releases the documents (includingtransport document), so the buyer can claim the goods from the carrier

Documents

Documents

Payment

(7) (6)

Payment

(7) (8)

Documents

2.4 Advantages and Disadvantages of L/C to parties

The letter of credit is one of the oldest forms of trade finance still in existence.Because of the protection and benefits it accords to both exporter and importer, it is

a critical component of many international trade transactions However, L/Cpayment also includes risks, especially for importer

• The importer can seek to minimize the risks of not receiving the goodsordered by requirement of compliant documents The Importer may alsoimpose conditions on the manner and dates in which the goods are to beshipped

• The importer is able to negotiate more favorable trade terms with theexporter when payment by L/C is offered

Nevertheless, the importer has to bear considerable risks due to incorrect goods orthe lack of credit facilities

• A L/C assures correct documents but not necessarily correct goods It meansthat L/C does not offer protection to the importer against the exportershipping inferior quality goods and/or a lesser quantity of goods

• The Importer must have a line of credit with a bank before the bank is able toissue a L/C The amount outstanding under each Letter of Credit issued isapplied against this line of credit from the date of issuance until finalpayment

2.4.2 For Exporter

In comparison to Importer, Exporter seems to have more advantages:

• The exporter will receive payment under the L/C provided that he meets allterms and conditions of the L/C

• The exporter can reduce the risk that payment might be delayed or otherwisejeopardized by political or foreign exchange problems in the Importer’scountry

• The exporter is not obligated to ship against a L/C if the L/C is not issued asagreed (no matter what all requirements for payment under L/C are accepted

in advance by exporter)

• The exporters can rely on a bank’s creditworthiness rather than an unknownimporter The exporter is more confident when it has a bank’s commitment

to pay upon presentation of complying documents

However, Exporter still has difficulties in preparing documents or meets risks inpolitical situation & foreign exchange

• Documents must be prepared in strict compliance with the requirementsstipulated in the L/C Non-compliance leaves exporter exposed to risk ofnon-payment

• Some importers may not be able to open L/C due to the lack of creditfacilities with their bank which consequently inhibits export growth

• The exporter assumes any political and foreign exchange risk affecting theissuing bank’s obligation

2.5 Criteria to evaluate L/C payment of a bank

There are many ways to evaluate L/C payment of a bank, in this report I present themain criteria, which are widespread in many famous organizations Assessment will

be carried out through two sides participating in L/C payment transaction: banksand customers

1.1.1 Evaluation through banks

 The scale of L/C payment operation

The scale of L/C payment operation is expressed through the growth of: quantity oftransactions, value of transaction and the proportion of L/C payment in totaloperation of the bank These indicators for assessment of L/C payment are visible tomeasure because the three factors are characterized by specific figures Thereby, it

is easy way to assess the effectiveness of L/C payment by comparing figurebetween financial periods In some cases, the increase of three factors above is notequal For example, the quantity of L/C transactions reduces but the revenueincreases and vice versa Therefore, in specific cases depending on the importance

of criteria, we can give the correct conclusion Among indicators, the scale of L/Cpayment operation is shown mainly by value of L/C.

 The degree of risk minimization in L/C payment operation

International trade transactions carry inherently more risks than domestic tradetransactions because of differences in culture, business processes, laws andregulations It is important for traders to ensure that payment is received for goodsdispatched and the goods received must comply with the contract of sale AlthoughL/C is used to reduce financial risk for exporters, there are distinct risks that must

be considered by all parties These risks can be divided into 4 types: technical risks,political risks, economic risks, fraud

The assessment of L/C payment operation is not carried out only by the quantityand the turnover, but one factor is very important is risk management of the bank If

a bank cannot do this task well, it can cause considerable losses for both bank andtheir customer In conclusion, bank should pay attention to risk limitation in L/Cpayment that can create trust from customer and partners From that, bank canexpand their activities in international payment and make more profit

1.1.2 Evaluation through customers

 The fee

In the process of L/C payment, customer must pay following certain charges:notification fee, opening fee, discount fee, amendment fee…Companies alwayswant to maximize the profit as well as minimize the risks by both reducing cost andensuring safety Therefore, companies pay attention to the cost to answer questions:whether the fee is high or low, it is reasonable to the complex level of transaction

If customer find the service quality they receive is worthy of the money they paid,they will choose the bank

2

In the current economic context, the international payment transactions need be

"quickly and accurately." Due to the difference of distance as well as information,transactions sometimes are carried out at wrong deadlines and cause significantlosses for clients If the bank and their staff can perform transaction accurately, itwill help customers save time, money and feel safe

Customers and staff must pay attention to some special dates: Expiry Date, LatestDate for Presentation, Latest Shipping Date…to operate transactions accurately and

timely

 The convenience in L/C payment

The transaction office is near or far from customer’s company? Transaction time issuitable with company’s working time? Facilities are enough modern and good?The attitude of the staff is good? These are normal questions when customersdecide to choose their suppliers If bank can meet demand of customer about place,time, reputation, and attitude of staff and their service is convenient with theactivities of customer, the bank will be chosen

2.6 Factors affecting the efficiency of L/C payment in the bank

There are many factors influencing on the effectiveness of L/C payment, we candivide into 2 main groups: external factors and internal factors

2.6.1 External factor

 Economic and political situation in the world

L/C settlement operation is intensively affected by economic and political situation

of partner’s countries Any economic or political changes also have impact onpayment capacity and willingness of both parties For example, economic crisis andwars will influence negatively on free trade trend, production & businessperformance and international payment activities Therefore, if the economic andpolitical status is stable, L/C payment activities will be speeded up

 Macroeconomic policy of government

Macroeconomic policy of government is very important factor, which has directimpact on activities performance of import-export enterprises and banks Thesepolicies include: forex-management policy, tax policy and foreign policy Firstly,international payment activities relate to currency circulation, so it is under control

of government’s forex policy Secondly, through high or low tax rate on products,government will show encouragement or restriction on particular products Finally,

if government applies free – trade motivation policy, import-export activities will bepromoted