Corporate governance key to enhancing Vietnam's financial market

At a press briefing on November 29 ahead of the seventh annual Corporate Governance Forum (AF7), themed “Investing in corporate governance: Strategies for attracting responsible investors in the era of market internationalisation,” representatives from investment funds, securities firms, banks, and the business community emphasised the strategic importance of corporate governance.

Experts highlighted findings from the ASEAN Corporate Governance Scorecard (ACGS), which revealed that Vietnam’s corporate governance still faces significant challenges compared to regional peers. The primary weaknesses include board responsibilities, such as ensuring diversity, independence, protection of minority shareholders, and the establishment of specialised committees to oversee board activities.

Overview of the press briefing. Photo: Dung Minh

Ha Thu Thanh, chairwoman of the Vietnam Institute of Directors (VIOD), stressed that investing in corporate governance delivers far-reaching benefits for businesses.

“Investing in corporate governance enhances a company’s soft competitiveness, making its capabilities more visible to investors and the public. This goes beyond simple compliance–it raises the company’s overall value. Companies must not only meet requirements, but strive to exceed them. Good governance matters not only to investors and regulators but also to customers, rating agencies, communities, and employees,” Thanh said.

Ha Thu Thanh, chairwoman of the board at the Vietnam Institute of Directors (VIOD). Photo: Dung Minh

She also noted that while Vietnamese companies are integrating ESG (environmental, social, and governance) principles, their focus often skews towards environmental factors, such as reducing greenhouse gas emissions or allocating budgets for social activities.

“Corporate governance is a core element of ESG. When integrated with a governance-focused culture, ESG leads to sustainable development. Companies should recognise that ESG is not just about compliance but a strategic part of their long-term growth,” she added.

Nguyen Minh Hien, director of VIOD, pointed out that despite recent improvements, Vietnam’s corporate governance remains below average compared to ASEAN countries.

“The weakest areas are the role of the board of directors, fair treatment of shareholders, and sustainable development practices. For example, many Southeast Asian countries have adopted hybrid shareholder meetings with e-voting to ensure minority shareholders can participate. This is still uncommon in Vietnam, limiting engagement for remote shareholders,” Hien said.

IFC expert Nguyen Thien Huong. Photo: Dung Minh

Phan Le Thanh Long, CEO of VIOD, shared that while Vietnam has participated in seven rounds of ACGS evaluations, the country consistently scores low.

“In the 2021 evaluation, Vietnam could only include 87 companies due to limited English disclosures and subpar reporting. By 2024, this number dropped to 69. Bridging the gap in governance and transparency between companies is critical. Raising corporate governance standards must be treated as a strategic priority,” Long emphasised.

Nguyen Thi Bich Ngoc, head of Investor Relations at VPBank, highlighted the importance of corporate governance in securing green funding.

“Beyond legal compliance, obtaining green capital to support our customers is essential. Since 2020, VPBank has partnered with major institutions, securing over $2 billion in green funding from the IFC, Asian Development Bank, and others,” she said.

An expert from the International Finance Corporation (IFC), Nguyen Thien Huong, noted the importance of meeting governance thresholds to access international funding.

“Some businesses assume green financing comes with low interest rates, but this is a misconception. IFC integrates its funds with external capital to offer competitive rates while ensuring lower costs for enterprises,” Huong said.

Nguyen Minh Hien, director of the VIOD. Photo: Dung Minh

Speakers at the event reiterated the need for stronger corporate governance to attract responsible investors as Vietnam’s market becomes increasingly internationalised. Recommendations included enhancing board diversity, promoting fair shareholder treatment, and improving transparency through better reporting practices, particularly in English.

Phan Le Thanh Long, CEO of VIOD. Photo: Dung Minh

As Vietnam aims for its stock market upgrade and greater integration into the global financial system, corporate governance will play a pivotal role in ensuring sustainable growth and competitiveness.

Nguyen Thi Bich Ngoc, head of Investor Relations at VPBank. Photo: Dung Minh

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