-
 I
would say that the government does not have a clear strategy in
developing Vietnam's stock market. The stock market should be a
place for large corporations that have ability to buffer market
volatility better than small firms and can offer investors a
better return on investment than banks' savings rates, as these
are the two main expectations held by stock market investors. At
present, all listed firms are small, and the stock market just a
playing field for a few small and medium enterprises. If the
Vietnamese stock market were to collapse, there would be no real
effect on the economy, but it would be a very heavy blow to
investor confidence. Maintaining investor confidence is key to
economic stability, and its very hard to regain once its been
lost.
SOEs in Vietnam continue to submit investment plans to the
government for funding from the state budget, or to seek
long-term loans from state-owned commercial banks. However, it
is very clear that the commercial banking system cannot, and
should not, be the main source of medium and long-term loans. As
long as the government continues to provide low-risk, subsidized
loans, SOEs will have no reason to seek capital through either
stock or bond issuance. The government could learn some lessons
from the experience of China in developing its stock market;
over 80% of listed firms in China are large SOEs. Their stock
market isn't seen just as the place to list equitized companies;
rather, it is used by both SOEs and private companies to
actively raise funds for new investments or expansions. As a
result, China's stock market has developed quite quickly in
terms of size, and at present, is quite stable.
Dr. Le Xuan Nghia -
Director, Banking Strategy Development Department,
State Bank of Vietnam (SBV)
-
 The
Vietnamese financial market is segmented and not properly
coordinated. The money market is under the supervision of the
State Bank, the insurance market is under the Ministry of
Finance, equitization is under the National Committee for SOE
Reform, the securities market is under the SSC, etc. We believe
that there should be one agency at the national level that
regulates and supervises all financial market activity. The
government has asked the Ministry of Planning and Investment to
create a master plan for the development of the financial
markets in Vietnam, which aims to centralize supervision of
financial markets at the macro level and foster better
coordination between relevant line ministries as they do their
own planning. We believe this is important and necessary, and
hope that the SSC will be given an opportunity to play a large
role in this process.
Mr. Tran Van Dung -
Deputy Director, Office of the State Securities Commission (SSC)
-
The State still
unnecessarily holds major stakes in equitized companies, and
this disappoints many investors. The equitization of Vinamilk
[Vietnam's largest dairy] is an example. The initial plan was to
sell 49% of shares to outside investors, which attracted
attention from many institutional investors. However, the
government subsequently approved only 20% of shares to be sold
to outside investors, which means that the company is
effectively still owned by the State. The government needs to be
much more flexible in the amount of shares it retains in
equitized SOEs in order to draw more institutional investors
into the market. The stock market needs new momentum, and the
government can help create this new momentum by allowing large
SOEs to be equitized and listed on the stock market without
retaining too much ownership of them.
Mr. Nguyen Hong Tuan - Deputy Director, Bao Viet Investment
Center
-
Decree 48 [which
governs stock market activity in Vietnam] contains many
stipulations that are no longer appropriate and thus need prompt
revision. For example, under the decree, investors cannot pledge
shares of listed firms as collateral to borrow money from banks;
however, savings accounts or other products (such as bonds and
bills) can be pledged as collateral for a bank loan. This
clearly does not encourage investors to buy stock in companies.
Mr. Vu Duong Hien -
Chairman and General Director,
Hai phong Paper Joint Stock Company (HAPACO)
-
The Ministry of
Finance allows foreign investors to open investment or deposit
accounts at any securities firm or commercial bank, while the
State Bank has foreign exchange control regulations for
securities transactions on the STC which only allow foreign
investors to open accounts at three designated custody banks for
foreign investors [HSBC, Deustche Bank and Standard Chartered
Bank]. These inconsistent regulations adversely affect investor
confidence to some extent.
Mr. Ly Xuan Hai -
Director, Asia Commercial Joint Stock Bank Securities Company
(ACBS)
-
 The
government's equitization strategy is appropriate, but the
implementation measures seem inappropriate…and it may be 10 or
15 years before we see the negative effects. SOEs are currently
being split into smaller pieces for equitization, which is
resulting in the creation of tiny companies that do not have a
core business. If we keep doing it this way, I don't see how we
will ever be able to equitize large SOEs such as Petrolimex or
the Vietnam Steel Corporation. We should learn lessons from how
other countries have conducted equitizations; when England
privatized BP Oil Corporation, for example, rather than
splitting it into smaller pieces, the entire corporation was
privatized by gradually increasing the amount of shares sold to
private investors.
To have a "real" stock market, the government needs to stop
setting up new SOEs, equitize SOEs through the stock market, and
set up new joint-stock companies through IPOs on the stock
market.
Mr. Tran Nghia Vinh
- General Director,
Petrolimex Insurance Joint Stock Company (PJICO)
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