There have been various workshops designed to encourage Vietnamese businesses to list abroad. Many businesses are also eager to list abroad. How are the listings abroad going on?

After over eight-years of operations, Vietnam's stock market has 317 listed companies with total capitalisation of 234.737 trillion dong, accounting for 20.5% of GDP in 2007.

In 2007, total capital raised from the official stock market was some 130 trillion dong. However, total capitalisation in the first nine months in 2008 in the official market reached only 19.554 trillion dong.

While Vietnam's stock market is on a downward trend, raising capital via foreign stock exchanges is very important. If the world's stock market goes down, Vietnamese businesses will also meet difficulties due to a sharp fall in securities demand and share prices. However companies list abroad not only to raise capital but also to promote their image and expand export markets for themselves.

Furthermore, listing abroad also promotes transparency, corporate management, corporate accounting standards of Vietnamese businesses whereby helping them to confirm to international standards.

Unfortunately, no Vietnamese business has listed abroad. Though, some businesses have listed on unofficial floors, in foreign countries.

Listing abroad will bring various benefits to Vietnamese businesses. However, there has not yet been any Vietnamese business officially listing shares on foreign stock exchanges. Is it true that Vietnam still lacks the legal framework for foreign listings?

We cannot say that we lack legal framework for foreign listings because Decree 14/ND-CP has listed regulations and securities law for IPO and foreign listings.

However, the legal framework for foreign listings should be revised with specific instructions. Vietnam does not have legal documents and standards for foreign listings, regulations on different kinds of licenses, policies on forex management and foreign currency remittance when shares are issued or dividends are paid, regulations on ownership rates of foreign investors etc.

In addition to the above restrictions, are there any more restrictions needed?

What is difficult now is the difference between international accounting standards (IAS) and Vietnam's accounting standards (VAS) although VAS is also based on IAS.

However the biggest difference is that according to IAS, asset value is appraised based on the market price while VAS assets value is appraised based on principal prices. Thus, the corporate value of Vietnamese businesses especially SOEs are often appraised lower than the market value when the equitisation relating to land ownership and using rights of the state is conducted.

Vietnamese businesses also find it difficult to satisfy requirements on company management including internal control.

Furthermore, auditing mechanisms between two different countries may also lead to complicated technical problems.

Currently, in the foreign market, foreign investors will be allowed to hold 49% of Vietnamese businesses' stake which is the same in the local market. In future, the foreign ownership ratio will depend on specific business sectors.

Will 25% of stake held by foreign shareholders be allowed to be listed abroad?

Yes, under the securities law and Decree 14.

Thoi Bao Kinh Te Vietnam - November 22, 2008