REVIEW
of
FINANCE -
Apr. 2018
27
Securitization’s application, its regulatory
body, reducing its risks while maximizing its
benefits, and making it become an effective
transmission channel for financial market,
are always the difficult tasks for financial
policymakers around the world.
When the debt converted into secularization,
the bank will easily find new investors, or debt
repurchase partners, with proper rate, based
on their demand. After that, they can get access
to and restructure the business. Currently, in
Vietnam, non-performing loans ratio in recent
years has decreased, but still not significant.
According to the National Financial Supervisory
Commission, the non-performing loans ratio of
the banking sector in 2017 is 9.5%, a relatively
high figure compared to the “below 3%” need of
the State Bank of Vietnam (SBV). Currently, in
Vietnam, there are 3 key stakeholders applying
these kind of securitization, such as DATC of the
Ministry of Finance, VAMC of the SBV and debt
trading companies (AMCs) of the commercial
banks, but because the debt trading market is still
underdeveloped, therefore the effectiveness of
these companies is somehow limited. In addition,
the model of these companies is not considered
a formal securities model because the purpose
of these companies focuses on non-performing
loans and not a real SPV organization.
Fourthly,
Vietnamstockmarket needs anewtool
to increase the inter-market transmission, thereby
helping the whole market run more effectively
and synchronously. Vietnam’s economic growth
rate has gradually increased from 88% of GDP
in 2006 to over 200% of GDP by the end of
2017; However, it is still low compared to other
countries in the region such as Malaysia (360% of
GDP); Singapore (462% of GDP). In addition, the
level of development of the markets constituting
the Vietnam stock market is less developed, and
the level of system stability is low. According to
the International Monetary Fund (IMF), Vietnam’s
economic development index (0.103) was only
higher than that of Laos and Cambodia and
lower than the rest of the region such as Indonesia
(0.259); Philippines (0.381); Malaysia (0.617);
Thailand (0.612); Singapore (0.695); China (0.747).
Market Accessibility, Depth and Effectiveness
The Vietnam stock market is also low, ranking
at 71/183 and 51/183 in the world and lower
than some countries in the region (Malaysia,
Thailand, Philippines, Indonesia, Singapore,
China). Securitization supposed to be a financial
tool that creates a new transmission channel,
which makes some market’s components such
as securities, insurance, real estate, etc. become
more closely interlinked. Finally, secularization is
one of the best solutions to enhance the depth and
effectiveness of Vietnam stock market.
Assessing the status
of securitization’s application in Vietnam
Although applying securitization is very
necessary, the characteristics and utility of
securitization are very clear, there are some
obstacles for this financial instrument, such
as the legal system, information transparency
requirements, and especially, the companies
operating with similar models to SPV in Vietnam
do not do very well.
Firstly,
there is no specific legal system for
securitization for both enterprises and banks in
Vietnam. In addition, the Vietnamese government
has not set out any policy or action program
to carry out commitments to develop the
secularization market within ASEAN. In practice,
Vietnam’s legal framework for setting up a SPV
and other related organizations in the process of
forming securitized products has not existed yet.
Secondly,
Vietnam still has the long way to meet
the requirements for auditing and transparency
of information for securitization applications.
After the lessons of the 2008-2009 global financial
crisis that securitization was one of the serious
complications of the crisis, the International
Accounting Standards (IFRS), the former The
Basics in US Accounting Reporting (GAAP),
and more specifically the Basel IV standards for
securitization, are constantly updated to decrease
its risks. However, in Vietnam, the application
of international accounting reporting standards
(IFRS) or Basel is very limited, so it is not possible
to secure activities related to securitization.
Currently, only a few companies listed on
the HOSE - mainly companies dealing with
international partners, use the IFRS. According to
