Vietnam to set up its first stock market

Vietnam to set up its first stock market

HANOI (Reuter): Communist Vietnam will soon launch a capital
markets authority, set up a pilot stock market and issue bonds
abroad as it strives to attract foreign capital, State Bank
governor Cao Si Kiem said yesterday.

But he admitted it had a way to go before it caught up with
its future partners in the Association of Southeast Asian Nations
(ASEAN).

In an interview with Reuters, Kiem said the government was
focusing on modernization and reform of the financial and banking
system to fit in internationally and meet economic goals set by
the National Assembly.

"We are trying our best to integrate partially with regional
countries," he said. However, he added, in technology, human
resources and legal framework, "we are still left behind by
regional countries."

The main targets this year are annual economic growth of nine
to 10 percent, after 8.8. percent in 1994, while reining back
inflation -- 14.4 percent last year -- to single figures.

Vietnam is seeking US$40 to 50 billion in funds by 2000, half
of it in foreign investment, aid and loans and the rest from
domestic sources, Kiem said.

Vietnam is due to join ASEAN, grouping Brunei, Indonesia,
Malaysia, the Philippines, Singapore and Thailand, next July and
the State Bank will join its central banks' caucus.

"It will be a difficult task...," Kiem admitted, saying staff
training was the key. But Vietnam had already taken steps to
align itself with the ASEAN body "by upgrading our regulations
and instruments."

Kiem disclosed that Vietnam's capital markets regulatory body,
the National Securities Board, would be set up in the first half
of this year.

Equitization

The board would establish the country's first stock market,
and preliminary transactions were expected in late 1995 or early
next year, in shares of companies designated by the government
and those going private through "equitization".

Only three state-owned companies have so far been equitized by
selling off shares, mostly to workers.

Equitization would continue, Kiem said, adding: "I think this
is a most important condition for creation of a market."

Kiem said Vietnam's fledgling short-term markets, launched
last year, "have obtained initial successes". They include an
inter-bank foreign exchange market and domestic inter-bank market
in the national currency, the dong.

As an example of modernization, he said Vietnam's five big
state-owned commercial banks, which account for 85 percent of
business, would be allowed next month to join SWIFT, the
international banking transactions system.

He said Hanoi's first international bond issue -- $100 million
in bonds issued by the Finance Ministry -- was expected next
June, targeting Asian markets first, and the State Bank planned a
$50 million issue.

He said there was still room for more foreign banks in
Vietnam, and the first two Japanese banks to seek licenses to
open branches might get them this year.

There had been speculation that the government may call a halt
to foreign branch licenses after issuing 18 in the last three
years.