The Capital Market Working Group has suggested making changes to therestructuring of State-owned enterprises (SOEs) to attract more foreigninvestment.
The suggestions were made at the mid-term Vietnam Business Forum which began on June 9 in Hanoi.
Aworking group representative, Nguyen Kien, said although the StateSecurities Commission had been actively building more favorableregulations to support investors, the obstacles impeding the developmentof the stock market required timely and solid action by Government.
Vietnamhas a population of 91 million people and a modest stock-marketcapitalisation of about 46 billion USD, equivalent to just 25 percent ofthe country's gross domestic product (GDP).
According to Kien,this value is much lower compared to similar figures for other ASEANcountries, such as the Philippines, which has market capitalisation of184 billion USD, or 65 percent of its GDP.
And Thailand has a market cap of 112 percent of GDP; Malaysia, 88 percent; Singapore, 135 percent; and Indonesia, 45 percent.
"This shows that the current Vietnamese stock market is not strong enough to support the country's SOE equitisation," Kien said.
Hesaid the total value of State enterprises to be equitised in the nextthree years would be about 25 billion USD. If the Government expected tosell 15 percent of these stakes, the market would need 3.75 billion USDto absorb these shares.
However, Kien said domestic funds could not afford to buy these shares and the market would need new foreign investment inflows.
Theworking group suggested to the Government two issues, obligatorylisting for equitised businesses and increasing the sales of SOEs'shares to 25-30 percent through high-status and international securitiesbrokers to boost liquidity.
Kien said Vietnam should also make abold move to remove the restrictive ownership limit of 49 percentapplicable to public companies to attract foreign inflows in the stockmarket and in newly equitised State businesses.
This would be inline with the Vietnam's commitments with the World Trade Organization(WTO) for servicing public companies, Kien said. He also suggestedopening up the entire market by allowing wholly foreign ownership incompanies operating in areas not covered by WTO commitments, except forconditional businesses including national security.
According tothe working group's report, foreign investment in the Vietnamese stockmarket this year was weak, with a net inflow of 113.3 million USD in theHCM Stock Exchange and just 5 million USD in the Hanoi's exchange fromthe year to May 19.
The Capital Market Working Group is one of the working groups under the Vietnam Business Forum.-VNA
The suggestions were made at the mid-term Vietnam Business Forum which began on June 9 in Hanoi.
Aworking group representative, Nguyen Kien, said although the StateSecurities Commission had been actively building more favorableregulations to support investors, the obstacles impeding the developmentof the stock market required timely and solid action by Government.
Vietnamhas a population of 91 million people and a modest stock-marketcapitalisation of about 46 billion USD, equivalent to just 25 percent ofthe country's gross domestic product (GDP).
According to Kien,this value is much lower compared to similar figures for other ASEANcountries, such as the Philippines, which has market capitalisation of184 billion USD, or 65 percent of its GDP.
And Thailand has a market cap of 112 percent of GDP; Malaysia, 88 percent; Singapore, 135 percent; and Indonesia, 45 percent.
"This shows that the current Vietnamese stock market is not strong enough to support the country's SOE equitisation," Kien said.
Hesaid the total value of State enterprises to be equitised in the nextthree years would be about 25 billion USD. If the Government expected tosell 15 percent of these stakes, the market would need 3.75 billion USDto absorb these shares.
However, Kien said domestic funds could not afford to buy these shares and the market would need new foreign investment inflows.
Theworking group suggested to the Government two issues, obligatorylisting for equitised businesses and increasing the sales of SOEs'shares to 25-30 percent through high-status and international securitiesbrokers to boost liquidity.
Kien said Vietnam should also make abold move to remove the restrictive ownership limit of 49 percentapplicable to public companies to attract foreign inflows in the stockmarket and in newly equitised State businesses.
This would be inline with the Vietnam's commitments with the World Trade Organization(WTO) for servicing public companies, Kien said. He also suggestedopening up the entire market by allowing wholly foreign ownership incompanies operating in areas not covered by WTO commitments, except forconditional businesses including national security.
According tothe working group's report, foreign investment in the Vietnamese stockmarket this year was weak, with a net inflow of 113.3 million USD in theHCM Stock Exchange and just 5 million USD in the Hanoi's exchange fromthe year to May 19.
The Capital Market Working Group is one of the working groups under the Vietnam Business Forum.-VNA
