On April 22, 2022, in his concluding speech at the Conference on Developing the Capital Market toward Safety, Transparency, Effectiveness and Sustainability to maintain the macroeconomic stability and ensure the macro balances of the economy, Prime Minister Pham Minh Chinh emphasized that the Government is highly determined to conduct measures for the enhancement of the capital market’s soundness, strictly handling with any violations, while not criminalizing economic relations, and most importantly protecting legitimate investors. The Government would also focus on implementing urgent and necessary measures to raise the ranking of Vietnam's stock market.
Prime Minister Pham Minh Chinh delivers the concluding speech at the Conference
The capital market and the money market have been developing strongly
During the recent years, the capital market and the money market have been developing strongly in all terms of size, financial capacity, governance, technology, etc., contributing significantly to the mobilization of resources for the development of the country. In this regard, the legal frameworks for the capital market and the money market have been constantly improved and updated to be in line with the market developments and the international standards. The Prime Minister made high evaluation for the harmonized and effective coordination between the fiscal policy and the monetary policy in order to create a stable macro environment, ensuring the macro balances of the economy.
Although the COVID-19 pandemic has negatively affected all aspects of the socio-economic life in Vietnam, the economy has recently shown signs of recovery with a lot of positive results. The Gross Domestic Product (GDP) in the first quarter of 2022 was estimated to increase by 5.03% as compared to that of the same period last year, higher than the growth rate of the first quarter of 2021 (4.72%); the macro balances have been ensured; the macro-economy has been stable, and the inflation is under control.
These figures demonstrate the positive signs of the economic recovery, the increase in the mobilization and ultilization of the investment capital to contribute to the economic growth in 2022 and the following years.
Overview of the Conference
Limitations of the financial market
According to the Prime Minister, the financial market currently has the following limitations:
Firstly, the biggest limitation is that the money market mainly mobilizes short-term capital, but provides medium and long-term credit. Meanwhile, the capital market (the stock market, including the bond market), mainly provides medium and long-term capital, but has not yet developed sustainably. The supply of medium and long-term capital is relying mainly on the banking system. This creates pressure and risks for the credit institutions, which should in principle provide mainly short-term capital, and this can cause risks to the economy.
Secondly, for the bond market, the lack of information transparency, the misuse of mobilized capital, the rating criteria of the issuing agencies and the supervision, inspection of the supervisory bodies have not been strict and effective enough, etc.. Many individual investors do not fully understand the laws regulating the investment in and transaction of corporate bonds.
Thirdly, for the stock market, the Prime Minister stated clearly that during the recent years, the stock market has been developing strongly, and has become an important channel for the mobilization of medium and long-term capital, but the size is still small, uncapable of meeting the needs of the economy. The market has also revealed several limitations, causing annoyances for investors in the last few months.
Fourthly, for the money market, it is assessed to be stable, contributing to maintaining the macroeconomic stability and is the main capital source for the economy. The management of the monetary policy has been conducted in harmonized coordination with other macro policies, contributing to controlling the inflation, maintaining the macroeconomic stability, supporting growth, etc.
Determined to develop a healthy and sustainable market, meeting the capital needs of the economy
The Prime Minister requested the relevant Ministries and government agencies to focus on the following key tasks:
Firstly, the Government must instruct the Ministry of Finance, other relevant Ministries and agencies to formulate and improve the legal frameworks to be submitted to the competent authorities in order to protect the investors in the securities market, especially the bond market.
Secondly, for the bond market, the Prime Minister assigned the Ministry of Finance to coordinate with the relevant Ministries to review the existing mechanisms and policies, focusing on amending the legal frameworks such as the Law on Securities and the Law on Enterprises; urgently revising Decree No.153 and Decree No.155 to raise the standards and conditions for the issuance of corporate bonds, contributing to promote the heath and soundness of the market.
Moreover, the inspection and supervision of the processes of issuing, distributing, depositing, investing in and trading of corporate bonds should be further enhanced.
Thirdly, for the stock market, the Prime Minister requested the Ministry of Finance to urgently review and amend the current inadequacies, especially the regulations related to the transparency of business information, the rights and responsibilities of the management entities in the market, such as State management agencies, the businesses, the securities companies, the investors; strengthening the solutions to strictly tackle with any violations in the stock market; urgently implementing the necessary measures to raise the ranking of Vietnam's stock market from a marginal market to an emerging market in order to attract more investment, especially from foreign investors.
Fourthly, for the money market, the SBV must continue to review, strengthen and improve the legal frameworks to accelerate the process of restructuring the credit institutions in association with handling with bad debts; enhancing the quality and the effectiveness of the banking inspection and supervision; continuing to strictly control credit in the potentially risky areas; promoting the digital transformation in the banking industry, and applying new technologies to banking products and services; strengthening the market management to maintain the stability of the common interest rates and the exchange rates; directing the credit institutions to cut down their costs in order to reduce their lending interest rates.
Fifthly, the Prime Minister stressed that it is necessary to develop effective and strict management and supervision tools, together with science-based, accurate and objective credit rating companies for the overall development and the national interest, as well as for the benefits of the investors, businesses and the people in general.
Sixthly, on handling with the violations, the Prime Minister assigned the Ministry of Public Security and the Government Inspectorate to coordinate with the relevant Ministries and agencies to promptly detect and strictly handle with any violations in the bond, stock and money markets, with the highest determination to ensure the soundness of the markets, protecting the legitimate rights and interests of the investors. Those who intentionally violate the laws must be handled strictly, without criminalizing civil and economic relations.
Seventhly, about the communication, the Prime Minister assessed that the provided information was, in some cases, did not match the actual developments. Therefore, the fundamental requirement is to prevent any communication crises.
The Ministry of Information and Communications is requested to direct the media agencies to provide accurate and timely information related to the capital market; coordinate with the Ministry of Public Security to strictly handle with any acts of providing misleading and inaccurate information affecting the market.
The Government has also assigned the Ministry of Finance to take lead and coordinate with other relevant Ministries and agencies to finalize the draft and submit to the Government for promulgation of an appropriate legal document on the sustainable development of the capital market.
The Prime Minister also agreed with the proposal for an annual national forum on the capital market, as well as the proposal for a national forum on the real estate market to be organized in May 2022.
Le Hang