Tran Van Dung, chairman of the State Securities Commission of Viet Nam
The stock market celebrates its 20th anniversary this month. It has already made great contributions to Viet Nam’s economic development while its future prospects look very bright due to its fundamentals.
Tran Van Dung, chairman of the State Securities Commission of Viet Nam, speaks to Viet Nam News about all this.
What is your assessment of the Vietnamese securities market over these last 20 years?
Over the last 20 years the securities market has been developing strongly and improving constantly. From having only two stocks being traded on the Ho Chi Minh Stock Exchange when it opened, we now have securities markets in HCM City and Ha Noi, a government bond market and a derivatives market.
The market capitalisation has increased strongly to account for 60-70 per cent of the country’s GDP.
It is important that Vietnamese enterprises have capitalised on the advantages offered by the stock market to raise capital for development, and a number of leading enterprises with great influence on the economy such as Vinamilk have been set up.
The Government has through the stock market effectively mobilised capital for development investment at minimal cost through bond issuance.
We also see that the securities market has contributed significantly to the equitisation of State-owned enterprises in the last 20 years.
Since 2005 equitisation of all large SOEs were done through auctions on the securities market, and was very successful. This has changed the country’s economic structure and the development of Viet Nam's securities market is the foundation for the Party and the Government to decide to change Viet Nam's economic growth model from a growth model based on State-owned enterprises to a growth model based on the dynamism of the private economy.
The transparency of the securities market is improving. Listed firms pay more attention to fully disclosing information and adopting good corporate governance practices. Therefore, the performance of Vietnamese enterprises in general has significantly improved.
How do you see the securities market’s prospects and what is its development orientation?
The securities market has been relatively successful in its initial stage over the past 20 years. In the next stage it must develop more in terms of quality to underscore its role in the nation’s economy.
There is a solid foundation for the market to grow strongly over the next 10-20 years.
Firstly, we have the new Securities Law that will take effect on January 1, 2021, which will give a boost to the development of the market.
Secondly, Prime Minister Nguyen Xuan Phuc approved the establishment of the Vietnam Stock Exchange, unifying the stock market and ensuring efficient, fair, open, and transparent operations.
Thirdly, we realise that investors participating in the Vietnamese securities market have matured a lot, and the participation of local and international investors in the market will increase.
Based on these foundations, we believe the Vietnamese securities market will grow rapidly and contribute more to the nation’s economic development.
How is the quality of listed firms on the stock exchanges and how can it be improved further?
The quality of listed firms on the exchange is reflected in the scale, profitability, transparency, and risk management of the firm.
Over the last 20 years firms have improved in all these aspects.
In terms of scale, listed companies were small earlier but are much bigger now. We have 22-23 enterprises with a market cap of over US$1 billion.
Secondly, listed companies are complying better with information disclosure requirements as they realise the importance of being transparent, and many firms have voluntarily adopted international accounting standards.
Thirdly, listed firms must be audited by approved audit companies.
In terms of corporate governance quality, Vietnamese businesses have made great strides with less than 50 per cent of listed companies not meeting international norms of corporate governance.
In general, we are not fully pleased with the quality of listed companies, but realise that the quality has improved a lot in past years.
What policies have the market regulators adopted to create more quality products on the market?
The Securities Law prescribes more stringent standards and regulations for initial public offerings, secondary offerings, registration to become a public company, listing, information disclosure, and auditing.
The Ministry of Finance is amending Decree No 71 on corporate governance of public companies to enable Vietnamese corporate governance standards to reach international standards.
It has announced a road map for adopting international accounting standards. Listed companies are expected to adopt the standards on a trial basis in 2023.
Last year the SSC together with the International Finance Corporation issued the Vietnam Corporate Governance Code of Best Practices for Public Companies.
That is a very good step in corporate governance. In the near future we will step up propagation to promote the adoption of good corporate governance practices, including mobilisation of social resources for corporate governance training.
We have to propagate corporate governance norms further and promote awards given by the stock exchanges so that companies voluntarily adopt good corporate governance practices rather than being forced to do so.
If we change that, the quality of the securities market will get better. — VNS