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Official Gazette

Saturday, September 26, 2020

Regulations in the making (Vol. 17 - No 198 February 2011)

Updated: 09:55’ - 10/06/2011

* The National Assembly Standing Committee has recently summarized and reported on proposals of ministries and sectors on the development, passage or modification of 58 laws concerning operations of the market economy during 2011-16, including those on supports for small- and medium-sized enterprises, foreign trade management, management of treasuries, business registration, real estate registration, property auction services, management of prices (in replacement of the ordinance on prices), agriculture, deposit insurance, use of state capital for business purposes, etc. 

* Director of Tax Policy Department Vu Van Truong has recently told the press that the Ministry of Finance plans to make in 2011 an import duty cut of 1-6 per cent for 924 commodity items, first of all farm and fishery products, construction materials, home electronic appliances. Most of these products will enjoy an import duty rate reduction of 2-3 per cent.

The import tariff cut is made in compliance with Vietnam’s WTO accession commitments.

*The “next generation” of securities regulations: As announced by the State Securities Commission (SSC) on February 17, it plans to finalize and promulgate new regulations to promote some new operations and commodities in the securities market in 2011, including a circular guiding financial prudent ratios; a circular providing for the opening of many accounts by a single trader, purchase and sale of a type of securities on the same trading day, mechanism for account proxy, margin trading and purchase of odd lots of stocks; and new or tighter financial regulations on merger or consolidation of securities trading institutions, and on open-end funds, real estate funds and exchange-traded funds.

Exchange-traded funds (ETFs) constitute an increasingly popular tool for foreigners investing in the Vietnamese stock market and came to public attention when the VN-index of Ho Chi Minh City Stock Market (HoSE) was strongly supported by only a handful of blue-chip stocks despite a general downward trend. However, to date there has been no official report on ETFs that track VN-index. 

The SSC requires securities companies to concentrate efforts on concentrating their risk management systems and enhancing the internal control in their operations.

The SSC will also set out higher benchmarks and conditions for listing on the stock exchanges in the direction of increasing the minimum charter capital for listing (VND 120 and 30 billion on HoSE and Hanoi Stock Exchange (HNX), respectively, against current VND 80 and 10 billion), publicity, healthy finance criteria and information disclosure responsibility of public companies.

It will this year consider the establishment of a fourth market in addition to HoSE, HNX and UPCoM, and improve the securities depository registration system and the depository center will monitor traders’ accounts and deal with any abuse of their accounts. 

* The Information and Communications Ministry plans to gather suggestions of enterprises, agencies and organizations to amend Decree No. 97/2010/ND-CP on management of Internet services in 2011. 

At the same time, it will propose to the Government five groups of long-term measures to enhance the state management of Internet service providers, especially those involved in the commercial provision of games online, promote the development of telecommunications infrastructure, meet requirements of the control of information contents, ensure information safety and security and limit negative impacts on the Internet on society and the youth.

* Under Government Resolution No. 60/NQ-CP of December 17, 2010, on administrative procedure reforms in the banking sector, a great number of administrative procedures for licensing the establishment and operation, own capital and voluntary termination of operation of branches of domestic commercial banks will be pruned or simplified.

Many administrative procedures related to operations of Vietnam-based foreign and joint-venture credit institutions, including extension of the operation duration of Vietnam-based representative offices of foreign credit institutions, transfer of contributed capital portions among parties to joint-venture banks or capital contributors to wholly foreign-owned banks or to new partners outside their banks, will also be trimmed.       

* At a recent seminar on derivative products jointly organized by the State Bank and HSBC Vietnam, financial experts opined that though derivative financial tools (financial contracts closely related or derived from such financial tools as stocks, bonds, securities indexes, interest or exchange rates) have been legally permitted by the State Bank for use by commercial banks and enterprises to shield against market-induced financial risks, regulations facilitating the access to and application of these tools, especially by small- and medium-sized enterprises, remain insufficient and inappropriate to practical developments of the domestic monetary market.     

They also stressed the necessity to develop the monetary market and banking standards and governmental bond yield curve for monetary market participants to operate on an equal footing and uniform principles, and to conduct intensive communication to raise the business community’s awareness about market elements and benefits of derivative tools.

* Despite possible inconsistency between Vietnamese law and laws of countries hosting Vietnamese investment projects funded by the Vietnamese State, the prime requirement on amendments to Decree No. 78/2006/ND-CP, dated August 9, 2006, on offshore direct investment, is always that these projects should be stricter managed to guarantee the use efficiency of state capital.

Investors argued that the proposed amendment to Decree No. 78 to obtain this target that Vietnamese law on bidding for procurements, consultancy and construction for these projects will be applied might be impossible if foreign joint-venture parties to these projects are not convinced.

Drafters therefore proposed the addition of a chapter laying down a principle that all overseas direct investment projects funded by the Vietnamese state budget must comply with Vietnamese laws on management, investment and use of state capital.

There will be also new provisions on powers and responsibilities of agencies approving investment projects in the direction of creating favorable conditions for investors and concurrently facilitating supervision and control of efficiency of invested state capital by Vietnamese state authorities.  

* In a recent interview with the Vietnam Economic Times, former Planning and Investment Minister Tran Xuan Gia proposed five measures to improve operational effectiveness of state economic groups, including: (i) to establish and empower a sole authority to uniformly manage large state enterprises, including specialized economic groups, which may be a ministry powerful enough to manage and supervise state ownership at enterprises; (ii) to re-determine strategic objectives and “mission” of economic groups for the next 5-10 years, so that each group will become a globally competitive enterprise and rank among 20 leading enterprises in the region in the relevant industry or sector in terms of technology, capital, asset value, modern production process, product competitiveness, international market share and business administration; and not to assign these groups to perform public-utility and market regulation tasks which may affect the efficient use of their resources; (iii) to revaluate accurately both tangible and intangible assets of enterprises and to restructure them in all aspects towards proper performance of key tasks; (iv) to establish a transparent administration information system and an effective surveillance system from production and business units to executive boards, boards of directors and authorities representing the state ownership; and to develop an effective internal control system to control finance and business operations and to control and manage risks according to internationally accredited good management practices; and (v) to make public and transparent information at least according to standards presently applied to listing companies on the security market, and to request state corporations and economic groups to annually make consolidated financial statements and reports on assessment of the achievement of strategic objectives, and have them audited according to international standards before submitting to the National Assembly and publicizing them.-


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