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.