The Ministry of Finance announced at the beginning of this year that draft regulations had been completed, but for some reason, the document, that should have been enacted mid-year, has yet to be ratified.

According to Chairman of the State Securities Commission (SSC), his organization submitted the draft regulations to the Ministry of Finance for approval. However, finalization has been delayed for an indefinite period of time, while the ministry waits for the Government’s decision on whether Vietnam will allow the establishment of 100% foreign owned investment fund management companies earlier than the WTO commitment deadline.

Mr Bang said the drafters consulted with financial institutions when developing the regulations to ensure they would not hinder financial institutions’ operations and foreign investment customer base.

He stressed that the regulations aim to control investments effectively, not to tighten the inflow and outflow of capital, as some investors fear. This has been applauded by foreign financial groups, with whom the draft was discussed.

Part of the new regulations includes easier administrative procedures which aim to create the best possible conditions for foreign investors to enter Vietnam’s stock market.

Under current law, foreign representative offices only have the function of promoting the business activities of parent companies in Vietnam, while they are not allowed to do any actual investment business. However, according to the new regulations, the functions of representative offices will be expanded: they can place securities trading orders through securities companies or authorize fund management companies in Vietnam to make investments.

Also, Vietnam plans to allow fund management companies to set up 100% foreign owned branches or 100% foreign owned entities.

Securities companies everywhere!

At the Vietnam Business Forum, foreign investors also expressed their concern over the high number of new securities companies.

Mr. Bang also acknowledged that the overly high number of securities companies may have a bad impact on the market’s operation, saying that the SSC is going to amend regulations on licensing securities companies. He implied that the SSC would set strict requirements in order to limit the number of securities companies.

Prior to that, Deputy Chairman of the SSC Nguyen Doan Hung, in a discussion with the press, also revealed the SSC would set higher capital, technology and corporate governance capability standards for securities companies.

Phan Minh Tuan, Director and Chief Representative of Dragon Capital in Hanoi, warned the establishment of too many securities companies would lead to an employee shortage and, particularly, stretch an already limited experienced management pool far too thin.

Source: Lao dong.