Experts discuss finance in digital era

HCM City (VNA) - The function of finance has developed remarkably in recent times to meet the constant changes brought about by technological evolution, heard a seminar in Ho Chi Minh on November 22.

“Finance now is not only controlling or saving expenditure but also has a very important effect on businesses strategy,” Hiroaki Endo, Asia President of the International Association of Financial Executives Institutes, said in his opening speech at the ninth annual Vietnam CFO Forum.

“There are many enterprises that have adopted new technologies including artificial intelligent (AI). But the future of finance in the digital era needs to be discussed more.”

Nguyen Xuan Thanh, lecturer in public policy, Fulbright University Vietnam, spoke about the Asian and Vietnamese economic outlook.

“This year global economic activity has been strengthened. In Asia, higher domestic demand sustains growth in China. Indian growth suffers from currency demonetisation and tax reform while strong external demand boosts growth in ASEAN.”

In Vietnam, after a slowdown in the first quarter, the economy grew strongly in third quarter, at 7.5 percent year-on-year. The economy is expected to grow by 6.7 percent this year, he said.

“However, Vietnamese economic growth is underpinned by strong FDI-led manufacturing activity and services.”

Its manufacturing Purchasing Managers’ Index (PMI) indicated strong manufacturing performance compared to other economies in the region, he said.

The economic growth is driven by both strong private consumption and exports, he said.

“Private consumption rose by 7.3 percent year-on-year in the first nine months of this year while exports went up 20 percent.”

Low inflation and the stable exchange rate are other reasons for the high economic growth, he said.

“Headline inflation rose early this year due to adjustments made to government administered prices (in health and education), while core inflation remains low at 1.3 percent.

“The exchange rate has remained stable while strong FDI flows and remittances have increased foreign exchange reserves to 45 billion USD from 39 billion USD late last year.”

But the limited fiscal space is a big problem for the economy.

“The government has been running a budget deficit of around 6 percent of GDP in the last five years, public debt as a percentage of GDP is approaching the 65 percent statutory ceiling, and some fiscal consolidation is expected in 2017 with a target for the primary deficit of 3.5 percent.

“The 6.7 percent GDP growth this year will help reduce the public debt level to 62.6 percent of GDP (down from 63.6 percent in 2016).”

To stimulate growth, the Government has an accommodative monetary policy, he said.

“The pressure on the Government to achieve the growth target with limited fiscal space means monetary policy has to be very accommodative with policy interest rate already cut by 0.25 percent and lending rate by 0.5 percent while the credit growth target has been revised up from 18 to 21 percent.”

Next year the Government hopes to achieve GDP growth of 6.5 – 6.7 percent, and could also hike taxes to compensate for the narrow fiscal space, he said.

Chun Wee Chiew, head of policy at the Association of Chartered Certified Accountants (ACCA) spoke about ethics in the digital age.

“Eighty nine percent of people who were asked [in a global survey] believed that strong ethics will become more important in the digital age.

“Ninety four percent agreed that the fundamental principles for accountants established by the International Ethics Standards Board for Accountants still apply and remain relevant in the digital age.”

These principles are integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.

Chun listed three action points required by professional accountants: acquiring knowledge of emerging technologies and digital issues, combining process control with a strategic view and evaluating mechanisms for reporting unethical behaviour.

The conference was organised by the Vietnam Chief Finance Officers Club in co-operation with the Japan Association for Chief Financial Officers (JACFO) and the ACCA, and over 300 CFOs took part.-VNA