REVIEW
of
FINANCE -
Apr. 2018
15
DEVELOPING CAPITALMARKETS
INAMODERNAND INTEGRATED ECONOMY INVIETNAM
HOANG XUAN HOA, PhD., NGUYEN QUANG HUY, PhD.
– Central Economic Committee *
Over the past more than 30 years of reform and renovation, the capital market of Vietnam (securities
market, banking credit market and insurance market) has made remarkable achievements, contributing
positively to the innovation and economic development. However, beside the achievements, the
development of the capital market has revealed some limitations, leading to the unsustainability of the
market development and to the fact that the capital market has not fully played its role as the capital
channel of the economy... How to develop Vietnam’s capital market in the context of integration is the
issue set out in the article.
Keywords:
Capital market, securities market, banking credit market, insurance market
Received: January 2
nd
, 2018
Revised: January 22
nd
, 2018
Accepted for publication: January 27
th
, 2018
Situation of Vietnam’s capital market
development
After over than 30 years of reform and
renovation, the capital market of Vietnam has
made remarkable achievements, contributing
positively to the innovation and economic
development as below:
Firstly,
it has met the demand for the main
capital for the economy in recent years. In 2000,
most of the capital of enterprises was borrowed
fromthe banking system, inwhich the outstanding
debt was 40% of GDP and the market value of
the securities market was 0.28% of GDP. By 2017,
the outstanding debt was over 130% of GDP and
the value of the securities market was over 70%
of GDP. In addition, the total outstanding debt of
the bond market in 2017 reached 37.45% of GDP,
of which the outstanding debt of government
bonds reached 27.4% of GDP.
Secondly,
the number and type of participants
in the market is increasing, which not only ensures
the diversification of investment but meets the
growing demand for capital of the economy as
well.
- Bank credit market:
Commercial banks in
Vietnam have diversified in terms of both quantity
and form of ownership. In 1990-1991, the banking
system had only four state-owned commercial
banks, four joint stock commercial banks and a few
credit cooperatives, no foreign bank branches nor
foreign banks. By 2017, our commercial banking
system has developed strongly, consisting of
four state-owned commercial banks, 31 joint-
stock commercial banks and especially eight fully
foreign owned banks. The quality of commercial
banks has also been improved through the
implementation of the project “Restructuring
the system of Credit Institutions in the period
of 2011-2015” and the project “Restructuring the
system of Credit Institutions associated with bad
debt resolutions in the period of 2016-2020”.
- The stock market (securities market):
The system
of securities and securities-related businesses has
rapidly developed in terms of quantity, scale of
capital, operations and technology. When the
market was firstly put into operation in 2000,
there were only seven securities companies and no
fund management company until 2017. By 2017,
the market of total chartered capital of VND3,785
billion had about 76 securities companies active in
the market and 46 fund management companies.
In addition, there has been remarkable
achievements in replacing the OTC (Decentralized
Market) by the Unlisted Public Company Market
(UPCOM) market. Accordingly, the shares are
deposited centrally in the depository center,
meaning that the companyno longer had toupdate
the register of shareholders before listing on the
Hanoi Stock Exchange or Ho Chi Minh City Stock
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