PM sees bourse as integral part of the economy

Last week’s long-awaited meeting was attended by officials from the Ministries of Finance, Planning and Investment, the central bank and the central board for state-owned enterprise reform and management.
The prime minister asked the SSC and other concerned ministries to devise measures to mobilise capital via the bourse.
“To increase market capitalisation and liven up investor sentiment, the market should accommodate more attractive commodities and more investment tools,” he said.
He said the government would create favourable conditions to encourage big companies in the telecom, electric engineering and banking sectors, and foreign-invested enterprises to join the stock market.
Stock investors, brokers and bankers applauded the prime minister’s comments, but said the government must embrace bold solutions if the ailing bourse was to develop.
“It’s high time the government paid attention to developing the stock market so the burden on banks supplying long-term capital to the economy can be eased, as this led to an interest rate war,” the director of the State Bank’s Ho Chi Minh City branch Tran Ngoc Minh told Vietnam Investment Review.
Minh warned there had been a startling increase in outstanding loans at city banks over the past six months.
He said outstanding loans at city banks had reached VND87.82 trillion ($5.7 billion) in that period, rising 18 per cent on early this year and 38 per cent compared to last year.
A broker from ACB Securities Company said changes should be made to tax, accounting and auditing policies to make conditions more favourable for stock trading and to increase market transparency.
“The government should give more tax incentives to listed companies, securities firms and stock investors, especially institutional concerns, to encourage more players to enter the fray in order to enlarge the scale of the market,” he said.
Listed firms should be given a five-year tax break to improve their business outlook and attract more investors, he said, adding that securities investments should be placed on the A list of companies that enjoy preferences under domestic investment law.
Established in July 2000, the capitalisation of the Vietnamese stock market is VND8.7 billion ($564 million) while investment in securities represents a mere 1.6 per cent of the GDP.
Twenty-one companies list on the market.
SSC chairman Nguyen Duc Quang said although the country’s stock market had not developed as desired, it had so far “run smoothly, causing no shocks or negative impacts on the economy”.
But a new decree, submitted to the government and to be released soon, would be more realistic, reflecting the actual situation on the ground, he said.
Among the decree’s various new provisions is a bigger role for foreign investors. The government has also endorsed a proposal to raise the limit of foreigners’ holdings in listed companies and securities firms.