Many changes would be made to financial laws this year to make them more effective and create close linkages between industry and the monetary and financial systems, they said, explaining these are meant to enable enterprises to raise capital from both overseas and domestic sources.

Management and supervision of authorised agencies would be improved in ways that ensure the safety of the securities market and ensure national financial security, they said.

For the insurance market, they said the ministry would unveil policies to encourage companies to enter the agriculture, forestry and fishing sectors, and reach out to rural and remote areas that have a large number of low income earners.

The markets for bonds, shares and financial derivatives would be restructured to ensure they operate in line with international regulations and global and regional markets, they said.

The ministry also plans to pay more attention to developing capital supply channels and expand the list of investors, particularly financial institutions.

The Government bond market will be developed with the objective of making interest on the bonds a benchmark for interest rates in the capital, financial and monetary markets.

The ministry will ask financial market administrators to improve the transparency of policies and provide sufficient and timely information to investors.

The expectations are that these steps will improve the liquidity of the products and services available in the markets.

The ministry will direct and monitor the financial market through the legal system and indirect tools, and its financial management agencies have the task of establishing warning systems to ensure the security and effectiveness of financial and monetary markets as well as the insurance and real estate sectors.

Viet Nam's financial and monetary markets have grown considerably over the years but the growth has not been stable, according to analysts.

Ngo Van Tuan, director of the ministry's Department of Banking and Financial Institutions, said many limitations have become apparent in these markets over the years, rendering them vulnerable to fluctuations in outside markets.

He cited 2009 when the country's economy was hit by the global economic recession and its financial market was influenced significantly.

According to the ministry, VND200 trillion (US$10 billion) worth of bonds were needed last year but the bond market could supply only VND20 trillion and $470 million.

The securities markets was capitalised at VND669 trillion, three times higher than the 2008 figure. However, only around VND17.7 trillion was mobilised through the local securities market, VND2 trillion lower than the 2008 figure.

One of the financial market's biggest problems is its inability to raise or distribute capital efficiently.

Many of the Government's important plans to restructure the economy did not get enough funds to be executed on schedule, Tuan said.

The securities market was also unstable because of a lack of orientation, experts said, pointing out that most individual investors blindly followed the herd without doing proper research and planning.

Capital mobilisation channels like the real estate and gold markets were not well managed due to poor co-ordination between relevant agencies, they said.

Companies supplying financial services were not very competitive because their products were of low quality and lacked variety, they added.

Source: VietNamNet/Viet Nam News