REVIEW
of
FINANCE -
Feb. 2018
21
Vietnamese insurance market and companies
such as: the domestic reinsurance market in the
country still heavily depends on the support of
foreign reinsurance enterprises, Reinsurance
businesses will face stronger competition from
foreign reinsurers; the monitoring system is
still incomprehensible and no early warning
mechanism has been established.
-Thestockmarket:ThefactthatVietnamofficially
joined the WTO and the central resolution 4 (Xth
Legislature) came into being emphasized the need
for international economic integration in 2007. A
lot of bilateral and multilateral commitments have
contributed to the development of the Vietnamese
stock market in a positive way, mobilizing and
allocating medium and long-term capital for social
economic development. The market capitalization
of the stock market in 2017 has reached over 70%
of GDP which is the highest level since the market
started to operate.
The domestic stock market has benefited from
international experience and practices of prior
countries in the process of building and developing
markets. In addition, foreign capital inflows have
also increased the size and liquidity of the stock
market. The legal framework has been improved
in accordance with international standards and
practices in order to meet practical requirements
and attract foreign investors. Thereby, maximum
capital is raised for the state budget, for investment
development, production expansion and business
activities of various enterprises. However, in
addition to positive impacts, there are also certain
negative impacts on the domestic stock market
because fundamental factors are insufficient for
sustainable development.
investment incentives granted for the production
of exports issued prior to WTO accession.
- Charge and Fee Policy: Vietnam committed
to impose fees and charges on services related to
import and export activities in accordance with
WTO rules; however, there are some adjustments
related to customs fees. At the same time, some
members suggested that the cost of using basic
infrastructure in Vietnam was higher than that
of other countries in the region and thus fees had
been reduced before WTO accession (Decision No.
88/2004/QD-BTC dated 12/11/2004).
Impacts after 10 years of WTO accession
Impacts on financial markets
Being a member of the WTO has brought about
many opportunities and challenges for Vietnam’s
financial market as follows:
- Insurance market: Since WTO commitments
were implemented, Vietnamese insurance market
has been gradually improved and many positive
results have been achieved. From 2007 up to
now, the legal system on insurance business
has been reviewed and amended in order to
implement Vietnam’s international commitments
on insurance business (in the process of
participating in Free Trade Agreements in general
and WTO in particular). Insurance Business
Law was amended and supplemented in 2010
to meet the commitments in the US-Vietnam
Bilateral Trade Agreement, WTO commitments
and other relevant laws. The size of insurance
companies and the insurance market have
increased as well. However, WTO accession has
also poses a lot of difficulties and challenges for
0
1.000.000
2.000.000
3.000.000
4.000.000
5.000.000
6.000.000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
FIGURE 1: VIETNAM’S ANNUAL GDP IN 2007 - 2017 AT
CURRENT VALUE (BILLION VND)
Source: General Statistic Office
0
20.000
40.000
60.000
80.000
100.000
120.000
140.000
160.000
180.000
200.000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
FIGURE 2: VALUE OF VIETNAM’S EXPORTS IN THE 2007 - 2017
PERIOD (MILLION USD)
Source: General Statistic Office
