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Vietnamese stocks not quite ready for prime time   2008-11-21 - TBKTVN

Vu Bang, Chairman of the State Securities Commission (SSC), talks about the problems that prevent Vietnamese companies from listing on foreign bourses.


A lot of workshops have been organised to encourage Vietnamese companies to list on foreign bourses. Some companies have also made strong commitments to list on foreign bourses. But no company has done this so far. What would you say about this?


Vu Bang, Chairman of the State Securities Commission

After eight years of operation, Vietnam’s stock market now has 317 listed companies with the total market capitalisation value of VND234,737bil, or 20.5% of GDP.


In 2007, the total amount of capital mobilised through the stock market reached VND130tril. However, the figure was VND19,554bil in the first nine months of the year.


In the context of the Vietnam’s stock market fall, it is really very important to mobilise capital on foreign stock markets. Moreover, the companies that list on foreign bourses will have opportunities to polish their images and heighten their positions in the world’s market, and to expand export markets for themselves.


It is regrettable that no Vietnamese company has listed shares on a foreign bourse. Some enterprises have sent their shares abroad, but not to official trading floors.


Do you think that it is because of the lack of a legal framework for the listing?


We cannot say that we lack a legal framework for this. Decree No 14 guiding the implementation of the Securities Law stipulates the regulations on making IPO and listing abroad.


However, the legal framework for listing abroad should be perfected and needs guidelines. Vietnam still does not have regulations stipulating the kinds of licences, and regulations on foreign currency control and many other things.


How about other problems?


There exists a gap between international auditing standards and Vietnam’s auditing standards, though the Vietnam accounting system (VAS) is also built on the international auditing system (IAS).


The biggest difference between IAS and VAS is that with IAS, the value of an asset is recognised in accordance with its market value, while with VAS, the value is recognised in accordance with its original price.


That explains why Vietnamese enterprises, especially state-owned ones, always have recognised values lower than their market values when they are equitised.


Besides the requirements on minimum capital and profit from production and business, Vietnamese businesses now have difficulties in meeting the requirements on corporate governance, including internal auditing.


Regarding the differences in auditing schemes, there could be complicated technical problems. For example, in Vietnam, the face value of shares is VND10,000, and a company with VND100bil in chartered capital will have 10mil shares. However, in other countries, including Singapore, the face values differ. For example, when issuing shares to small and individual investors, the face value would be low, $0.2-0.5/share.


There are many Vietnamese people who live in foreign countries. Will they be allowed to purchase stocks of Vietnamese companies listed on foreign bourses? If yes, would the shares they purchase be listed as foreign-owned?


Overseas Vietnamese are considered foreign investors. Therefore, the ratios of shares they can hold depend on the current regulations. Under the current regulations, foreign investors are allowed to hold 49% of shares on listed bourses.


By the way, the State Securities Commission has been asked if 25% of shares held by foreign investors can be listed on foreign bourses. I can say that this is allowed.

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