How to develop the capital market?

VCN - According to experts, to develop the capital-finance market, the Government should develop the stock market as close as possible to international standards, develop the corporate bond market, and facilitate the creation of investment funds, mobilizing idle capital in society.
how to develop the capital market

Imbalance

According to many experts, the capital-finance market of Vietnam is still limited, unsustainable and does not fully play the role of a capital channel of the economy. The mobilization and allocation of medium and long-term investment capital is based mainly on the commercial banking system. The involvement of non-bank institutions in the economy has not been desirable. This is risky and volatile, especially in the context of cross-ownership, cross-investment, bad debt and restrictions on risk management of commercial banks.

In addition, the size of the stock market increased rapidly but unstably. It has not become the most important capital channel for enterprises. Bank credit has been an important and dominant role, in spite of the development of the stock market and non-bank institutions, which creates imbalances in the capital market. Because of the restrictions on capital market, the difficulty of accessing capital for enterprises is also one of the reasons leading to the use of "black credit" in business activities.

The limitations of the capital-finance market have also been emphasized by Deputy Prime Minister Vuong Dinh Hue at the recent Capital-financial Markets Forum. Accordingly, asserting that the economy is in a "thin capitalization" state, the Deputy Prime Minister said that many businesses operate mainly thanks to bank loans with high financial costs, leading to many difficulties for them. Even banks, which provide the capital for the economy, are also in the same situation.

Regarding capital channels, according to Ms. Nguyen Thi Hong, Deputy Governor of the State Bank, in recent years the stock market has had many breakthroughs, the stock market capitalization in 2017 increased over 70% of GDP. For the monetary market, in general, the Credit/GDP ratio is about 130%. However, Ms. Hong said that the size of the corporate bond market was small, only 1.25%, while the size of government bonds still dominates. These are short-term capital sources, so the demand for medium and long term loans is very high, putting pressure on credit institutions.

With the current capital, affirming that the ratio of short-term capital has improved significantly over the past five to six years, the representative of the State Bank also said that the proportion of short-term capital currently accounts for 70%. This showed that the pressure on medium and long-term lending to the economy is still high and the credit institutions face the risk of termination.

Talking about the reason, Mr. Tran Van Dung, Chairman of the State Securities Commission stated that there are three reasons: First, the market development depends on the stage of the country’s development when moving from the Subsidy period to the multi-component economy. The second reason is the social awareness. Third, there is no foundation for development, especially, plans and strategies must be suitable for each stage of development.

Ensure the investors’ rights

Proposing solutions to expand long-term capital for Vietnam, Mr. Ketut Kusuma, senior expert on capital markets (World Bank) stated that, one of the issues that needs to be addressed in the coming time is the corporate bond market of Vietnam.

This is the market owning growth potential and most of its growth is reflected in the private market. In addition, Mr. Ketut Kusuma emphasized that the problem is how to mobilize idle capital among people so that people can feel secure when investing in different channels such as stocks, bonds, bank deposits ... and "when we mobilize this capital efficiently and fully, we will ensure long-term capital and meet the loan demand of the economy".

In order to mobilize the idle capital among people, Mr. Ketut Kusuma recommended that, "It is important to strengthen the transparency of information, to continue the reform of the government bond market, to promote the private investment system, to expand the retirement fund, the social insurance fund, to issue public bonds widely, and to expand the size of the state funds, especially the social insurance fund and retirement fund.”

Regarding this issue, another expert from the World Bank, Mr. Alwaleed Fareed Alatabani, Chief Financial Officer of Vietnam, said that Vietnam still has about 60 billion USD of idle money in the population. This is a large potential for economic development that needs to be utilized and exploited in order to have more capital for long-term investment. Therefore, it is necessary to create a good investment environment, to facilitate the development of Vietnam's bond market and securities market.

Many opinions suggest that to develop Vietnam's capital market, external force is important but internal force is decisive. Therefore, the mobilization of resources from domestic private investors plays a very important role. Mr. Tran Van Dung, Chairman of the State Securities Commission, said that in the past, Vietnam's economy was heavily dependent on ODA and FDI. However, in recent years, the role of internal resources has been increasingly manifested, especially in the context of reducing ODA in the coming time. The capital market needs policies to balance the credit market, stock market and bond market. In addition, the issue that is rarely mentioned but equally important is the development of individual investors. To develop them, Vietnam must develop all kinds of funds, while ensuring the interests of the investors.

By Hoai Anh/ Ha Thanh

Related News

Prioritize resources and promptly supplement capital for policy credit

Prioritize resources and promptly supplement capital for policy credit

VCN- In the near future, to further promote the effectiveness of policy credit, the Ministry of Finance will continue to preside over and coordinate with relevant ministries, branches and the Vietnam Bank for Social Policies (VBSP) to implement many key solutions.
Vietnam

Vietnam's cashew industry facing fluctuations in raw material prices

VCN - Although exports recorded double-digit growth in the first half of 2024, Vietnam's cashew industry is facing fluctuations in raw material prices.
Building the Vietnamese brand associated with green and sustainable development

Building the Vietnamese brand associated with green and sustainable development

VCN - According to experts, in the current context, branding becomes even more urgent, helping to increase endogenous resources for businesses, helping businesses move towards strong development, gradually reaching further in the domestic and world markets.
Export of denim fabrics quickly recovers

Export of denim fabrics quickly recovers

VCN - The export market for Vietnam's denim products (the fabric used to make jeans) has experienced a swift recovery and positive growth potential. To anticipate this trend, businesses are actively investing in and expanding their factories to enhance production capacity and meet market demands.

Latest News

Vietnam needs comprehensive regulatory framework to attract green financing

Vietnam needs comprehensive regulatory framework to attract green financing

Vietnam needs a clear regulatory framework and solutions to promote the green finance market and encourage private capital flows into green fields, experts have said.
2025 budget estimation must be practical, accurate and efficient

2025 budget estimation must be practical, accurate and efficient

VCN - Directing the 2025 state budget estimation, Minister of Finance Ho Duc Phoc emphasized that units must ensure that the 2025 budget estimation must be practical, accurate, efficient, and meet the requirements for performing professional and political tasks assigned to central and local agencies.
The corporate bond market will be more vibrant in the second half of the year

The corporate bond market will be more vibrant in the second half of the year

VCN - In the first half of 2024, with bond maturity pressure continuing to increase, corporate bond issuance has shown many positive signs compared to the previous year. According to forecasts, businesses' need to borrow and issue corporate bonds will accelerate in the second half of 2024.
Measures suggested to boost startups’ access to capital

Measures suggested to boost startups’ access to capital

The recent vigorous growth of startups in Vietnam has attracted domestic and foreign investors, but insiders recommended more efforts be made to facilitate startups’ access to funding from investors so that they can live up to potential.

More News

Inflationary pressure seen from monetary policy

Inflationary pressure seen from monetary policy

VCN - The economy went through the first half of the year, inflation is still under control and forecast to reach the target set by the National Assembly and the Government. However, variables from the currency market such as exchange rates, interest rates, credit..., even gold prices, are issues that need to be paid attention.
Banks with the problem of promoting credit growth

Banks with the problem of promoting credit growth

VCN - It is estimated that by the end of June 2024, the economy's credit growth will reach nearly 4.5%. This number is still far from the yearly credit growth target of 14-15%.
Proposal to increase Special Consumption Tax on tobacco products

Proposal to increase Special Consumption Tax on tobacco products

VCN - At the workshop Special Consumption Tax on cigarettes held by Vietnam Tax Consulting Association and the Institute of Financial Strategy and Policy on July 16, experts and businesses clarified the goals and content of amended the special consumption tax policy on tobacco products. According to experts, there cannot be a solution that fully ensures the benefits of both consumers, the state and businesses, but it is necessary to choose the most optimal option to achieve the initially set goals.
Savings of individual customers at banks hit record high

Savings of individual customers at banks hit record high

In spite of low interest rates, figures from the State Bank of Vietnam (SBV) released this week show deposits of individual customers increased by more than VNĐ39.7 trillion in April, to reach more than VNĐ6.7 quadrillion.
Managing fiscal policy has achieved many positive and comprehensive results

Managing fiscal policy has achieved many positive and comprehensive results

VCN - On July 15, the Ministry of Finance held an online conference to summarize state budget financial work in the first 6 months of the year, implementing tasks in the last 6 months of 2024. Minister of Finance Ho Duc Phoc attended and directed the conference. Also attending the Conference were Deputy Ministers of Finance, leaders of units under the Ministry of Finance.
Determine tools, policy for inflation control

Determine tools, policy for inflation control

VCN - According to economic expert Associate Professor, PhD. Ngo Tri Long (photo), former Director of the Price Market Research Institute (Ministry of Finance), inflation is an issue that needs special attention, especially related to the management of monetary policy, interest rates, increasing prices of goods and services...
The impact of wage increases on inflation will not be too significant

The impact of wage increases on inflation will not be too significant

VCN - Addressing concerns related to wage and price increases, Dr. Nguyen Duc Do, Vice Director of the Institute of Economics - Finance (Finance Academy), believes there are not many factors causing sudden price surges in the last 6 months of 2024. Therefore, it can be expected that the rate of price increases in the last 6 months will be comparable to that in the first 6 months of 2024.
Imposing and raising special consumption tax contributing to change consumption behavior

Imposing and raising special consumption tax contributing to change consumption behavior

VCN - At the Workshop on Comments on Completing the Revised Law on Special Consumption Tax (SCT) organized by the Vietnam Confederation of Commerce and Industry (VCCI) on July 11, many experts and businesses contributed their opinions to clarify the importance and impact of the revised special consumption tax law, which emphasizes the addition of taxable areas or tax increases to change society's consumption behavior.
The local Finance sector is flexible and strict in managing budget revenues and expenditures

The local Finance sector is flexible and strict in managing budget revenues and expenditures

VCN - Although the forecast for the last 6 months of the year will still have many difficulties and challenges, the Finance sector in all localities expressed their determination to strive to achieve and exceed estimates, while strengthening the prevention of revenue loss and handling tax debt recovery, etc.
Read More

Your care

Latest Most read
Vietnam needs comprehensive regulatory framework to attract green financing

Vietnam needs comprehensive regulatory framework to attract green financing

Vietnam needs a clear regulatory framework and solutions to promote the green finance market and encourage private capital flows into green fields, experts have said.
2025 budget estimation must be practical, accurate and efficient

2025 budget estimation must be practical, accurate and efficient

VCN - Directing the 2025 state budget estimation, Minister of Finance Ho Duc Phoc emphasized that units must ensure that the 2025 budget estimation must be practical, accurate, efficient, and meet the requirements for performing professional and political
The corporate bond market will be more vibrant in the second half of the year

The corporate bond market will be more vibrant in the second half of the year

VCN - In the first half of 2024, with bond maturity pressure continuing to increase, corporate bond issuance has shown many positive signs compared to the previous year. According to forecasts, businesses' need to borrow and issue corporate bonds will acc
Prioritize resources and promptly supplement capital for policy credit

Prioritize resources and promptly supplement capital for policy credit

VCN - According to the VBSP, by the end of June, total policy credit capital rose 7.6% year-on-year to VND 372,723 billion, including entrusted capital from the local budget at VND46,929 billion, an increase of VND7,755 billion, accounting for 12.6%.
Measures suggested to boost startups’ access to capital

Measures suggested to boost startups’ access to capital

The recent vigorous growth of startups in Vietnam has attracted domestic and foreign investors, but insiders recommended more efforts be made to facilitate startups’ access to funding from investors so that they can live up to potential.
Mobile Version