Pham Phan Dung, Director of the Department for Banks and Financial Institutions under the Ministry of Finance, talked about bond issuance to raise funds on the domestic and international markets.

Do you think that Vietnam’s WTO membership will create favourable conditions for Vietnamese enterprises in issuing bonds?

Yes, I do. The opportunities to raise funds on the domestic and international markets are open for enterprises. However, I still have to remind you that enterprises should pay appropriate attention to raising funds from domestic sources, especially as the Government, in Decree 52, has legalised raising funds by issuing corporate bonds.

Within only six months after Decree 52 came into effect, enterprises have been able to raise the total capital of VND6tril, including the Electricity of Vietnam (VND5tril), the Vietnam Shipbuilding Industry (VND800bil), and the Song Da Corporation (VND260bil). The total capital raised since the beginning of 2006 has reached VND8tril.

What difficulties are Vietnamese enterprises facing when issuing international bonds?

The biggest difficulty is that Vietnamese enterprises cannot show foreign investors their capability and business efficiency. They have to prove their capability to use the capital effectively and pay debts. They also have to show the transparency of their financial situation, so that investors can know for sure that their capital will be used in the most effective way.

As far as I know, to date, only big corporations have issued corporate bonds. What should we do to make this channel of raising funds more popular?

Decree 52 is the highest-level legal document guiding the bond issuance of enterprises. We have talked much about how to help enterprises raise funds, while not paying appropriate attention to ensuring the safety of investors. Meanwhile, investors are only interested in the bonds of big and profitable corporations, which have healthy financial reports, and they only inject money in the best enterprises.

Therefore, what I suggest is that enterprises should focus on making their financial reports transparent, which will attract investors’ capital.

What other legal documents does Vietnam have, besides Decree 52, to help enterprises to issue bonds?

The Securities Law. The Ministry of Finance is going to promulgate several documents guiding the implementation of the Securities Law, which came into effect on January 1, 2007.

I recommend that enterprises consider thoroughly before deciding to choose one of the four types of bond issuance: guaranteed issuance, through bidding, through agents, and direct retail. In terms of market, we now have the Hanoi and HCM City Securities Trading Centres.

Source: TBKTVN