REVIEW
of
FINANCE -
November, 2018
23
repayment plans and they also need to mobilize
capital to carry out investment activities. Many
large scale businesses that operate effectively,
but there are other payables, although very
small compared to the size of enterprises, for an
objective reasons having been not paid, leading
to the recognition of an outstanding debt; or
some companies operating under the parent-
subsidiary model, the the financial statements
of the parent company are fully accepted, but
the consolidated statements has the exception or
vice versa. Meanwhile, there are exceptions in
the audit reports that do not seriously affect the
nature of business as well as business operations
of the company.
The assessment shows that although the initial
results are achieved, the size of the market of small
capitals is still small compared to the potential of
the economy, the market size of other countries in
the region and the demand for capital mobilization
of businesses. By the end of 2016, the outstanding
debt of the bond market was equal to 5.27% of
GDP, while the size of the bank credit channel
was equal to 116% of GDP. Outstanding debt in
Vietnam’s securities market is much lower than the
average of about 22% of GDP of other countries in
the region, of which 99% of the volume has been
issued in individual form. The size of the market
is small, due to macroeconomic instability; the
financial system and capital mobilization channel
are mainly bank credit channel; the awareness of
bond capital mobilization is limited; investor base
is weak; the legal framework for issuing corporate
bond issuance is limited.
Regarding the issuance of government bonds:
By June 30
th
, 2018, 30.9% of the plan has been
issued, focusing on long terms of 10 years or more.
No 3-year government bonds were issued.
The direction for the development of corporate
bond market
In order to create confidence for investors to
buy bonds, state management agencies should
continue to have regulations to improve the
quality of bonds as well as the transparency of
information, ensuring the assessment to the full
and accurate information for the investors who,
then can use to assess the true nature of the
business, forecast the company’s ability to pay
interest and repay principal. To do this, specific
provisions on the competent financial statement
audit organization, the early establishment of
enterprise credit rating agency are needed; the
provisions on the agents managing securities
assets for bonds, representatives of bondholders
should be instituted, the market makers for
corporate bonds should be formed.
In addition, it is necessary to supplement
regulations in the direction of unifying the basis
of determination of interest of corporate bonds in
accordance with international practice, similar to
the regulations of bond interest calculation method
of the government, facilitating investors in trading
and valuing corporate bonds. At the same time, in
order to create more favorable conditions for good
companies to issue bonds, relevant authorities
should consider the conditions of issuance. It is
necessary to clarify the provisions of the due debt
without payment within three years; give specific
guidance on the regime and contents of information
reports which enterprises issue bonds must meet.
In order to remove the difficulties and support
the positive development of the market, in the
coming time, the drafting agency has made many
progressive and positive solutions. Accordingly,
in relation to the conditions for issuance of bonds,
receiving opinions of ministries and branches in
the process of collecting opinions on the proposal
for development of the Decree, the draft decree
basically upholds the regulations on conditions
of distribution to issue bonds in Decree No.
90/2011/ND-CP. At the same time, on the basis
of reviewing the current regulations on capital
mobilization conditions of enterprises, the draft
decree supplemented and amended a number of
provisions on conditions for issuance of bonds.
Specifically, with the issuance of bonds divided
into several issuance, to create conditions for
enterprises to mobilize capital into many waves,
in accordance with the progress of disbursement
and investment projects, the draft decree added
to the regulations that enterprises that wish to
issue bonds must meet the following conditions:
there is a need to mobilize capital in several
batches in line with the purpose of issuing bonds
already approved by competent authorities, the
bond issuance plans with the number of issuance
drives, expected volumes, issuance time and
