London pledges local support

Pleased with the P’s: London Lord Mayor Michael Savory (standing, right) witnesses the signing of the HCM-London public private partnership (PPP)

“We will strive to assist Vietnam in speeding up its reform in the financial and banking systems, develop the stock market and issue bonds on international markets to raise funds for further development,” said Savory during a four-day visit to Vietnam last week.
“Vietnam is in dire need of capital for further development. We know its plans to issue bonds abroad and we’re strongly supportive of the plan,” he said.
Savory also emphasised that the City of London was an ideal place for Vietnam to sell bonds and raise capital.
He reiterated the city’s support at a meeting with Dr Tran Dac Sinh, director of Ho Chi Minh City Securities Trading Centre.
During the meeting, he said that Sinh and a delegation should visit the London Stock Exchange in order to learn more about it.
“Our Hong Kong and Shanghai Banking Corporation (HSBC) and Standard Chartered Bank are willing to accompany you on a visit to our stock exchange,” he said.
The mayor was also optimistic about the future of Vietnam’s financial market, recommending changes and a direction in which the sector should follow.
“The capital markets in Vietnam have quite a long way to go. There need to be further legal changes, but you need the involvement of international investors in order to do that,” he said.
“I think you need to encourage more European financial businesses to come and set up activities here. We already have leading banks like HSBC, but we need to encourage more investment banking activity,” he said.
The mayor praised the Vietnamese government’s policies on opening up financial services, but warned them that a change in approach was necessary.
“Vietnam needs to allow international investors to have greater control of companies and banks,” he said.
“There is currently a 30 per cent limit on foreign ownership here, if that could be raised to 100 per cent then Vietnam would encourage more inward investment,” he said.
One of the key elements in raising economic activities in Vietnam is to gain a stronger financial services sector, said the lord mayor.
“My message has been to allow more international organisations of the banks into Vietnam and to encourage more reform of public banking activities by becoming more efficient and by interchanging with international investors as well,” he said.
One problem associated with Vietnamese financial services is that all of its lending is short-term based.
The lord mayor believes that by encouraging savings and the development of the bond market, Vietnamese industry will be provided with a long-term capital source.
Savings in Vietnam are growing, but many Vietnamese choose to save by purchasing property, resulting in an escalating cost to the housing market that makes its difficult for low income earners to break into.
Encouragement was also offered to municipal authorities like Hanoi and Ho Chi Minh City to raise capital via the issuing of municipal bonds.
“If I could take a message away with me from Vietnam back to London, it would be, ‘Come to Vietnam, this is a good place to do business’,” he added.