Vu Bang, Chairman, State Securities Commission (SSC): Interview

Interview: Vu Bang

How would you rate the progress in the development of the country’s capital markets?

VU BANG: Vietnam has gradually integrated international standards. Nearly 10 years after the global financial crisis of 2008-09, which affected both the global economy and Vietnam, we have managed to upgrade our financial system by restructuring our capital markets. After 2008, the government passed the rule to apply Basel II standards for book reform, and also passed decision 1826 to restructure the whole capital markets and issuance industry focusing on four priorities: to increase the supply side, to diversify products in the market, to improve the quality of those products and, on the demand side, to diversify the investor base and thus increase the number of institutional investors.

In addition to accelerating the restructuring of securities firms, we are merging the stock exchanges – the Hanoi Stock Exchange and Ho Chi Minh City Stock Exchange – while keeping the bond and equity markets and also introducing the derivatives market. This merger should not cause any structural changes. The most important objective at this point is enhancing the competitiveness and the efficiency of our stock exchange.

In what ways can enterprise trading and capitalisation be further expanded?

BANG: In 2015, when the law on enterprises was passed, the government’s biggest concern was reforming state-owned enterprises (SOEs) through equitisation and subsequent initial public offerings (IPOs), which aimed to improve the productivity and efficiency of the SOEs. The private sector is not big enough, which is why we needed to focus on carrying out IPOs for financially sound SOEs and get them equitised in order to develop our capital markets. On the one hand, we pushed the SOEs to increase their capital, and on the other we familiarised them with corporate governance and information disclosure to make them more efficient. Right now we allow issuance of equity based on a merit review: if a company can prove their profitability, or operates as a joint-stock company, they may issue equity to the public. The most popular practice used in Vietnam is the merit review, but the full disclosure of information is what is commonly used worldwide. By 2020 we expect that all companies will be able to raise money from more liberalised capital markets.

What role is SSC playing in efforts to increase connectivity among ASEAN capital markets?

BANG: In the process of integrating our capital market into the region, the SCC has been working closely with state agencies from various ASEAN countries. We have been collaborating in terms of information and experience exchange, information management, and the monitoring and support of businesses and individuals. The SCC signed several memoranda of understanding with regulators from Thailand and Singapore (2006), Malaysia (2007) and Laos (2011), and will soon sign with Cambodia.

We have also participated in activities under the ASEAN Capital Market Forum (ACMF). The ACMF, which includes all of the securities regulators in the region, is designed to drive capital market integration as part of implementation of the ASEAN Economic Community. Vietnam has contributed to the establishment of the ASEAN Corporate Governance Scorecard, took part in developing the ASEAN Trading Link and has been closely involved in other ACMF activities, including ASEAN collective investment schemes, the Streamlined Review Framework for the ASEAN Common Prospectus, and dispute resolution and enforcement mechanisms, as well as other activities in alignment with local laws and other agreements that Vietnam has signed.