Private Sector Moves Up the Ladder in Vietnam’s Business Environment

Diep Nguyen

11:04 23/07/2019

BizLIVE -

Stricter corporate governance regulations aligned with OECD best practices and tighter regulations to prevent related party transactions and collusion are likely to be introduced as part of the revised Securities Law.

Private Sector Moves Up the Ladder in Vietnam’s Business Environment
Vietnam is committed to private sector-led growth and is emphasizing the state’s enabling function over public production: regulatory quality and the ease of doing business have improved; and the SOE legal framework was revamped with the creation of an independent State Capital Management Committee (SCMC), which oversees large SOEs and improves accountability and efficiency while leaving management and regulation with line ministries and regulatory bodies. 
International trade agreements, including the CP-TPP (effective January 2019) are also driving institutional reforms, including in criminal court, property rights, labor courts and insurance laws.
Additional priorities are: Modernizing institutions of macroeconomic management: modernize the monetary framework; Strengthen macro-fiscal analysis, accounting and reporting and modernizing the treasury and public debt management.
Banking: strengthen risk-based supervision, manage SOCBs at arm’s length, and broaden the application of international accounting and auditing standards.
SOEs: require them to disclose timely financial statements based on improved accounting standards; conduct independent external audits in line with International Standards on Auditing; allow 100 percent foreign ownership in areas not critical to national security.
Regulation: While the regulatory burden has lightened, implementation challenges remain. Barriers to private sector ownership should be further reduced. Regulatory entities must operate at arms-length.
Land: ownership and leasing should aim to reduce its concentration in state hands and competitive land auctions should become the norm. A land use market should be developed, with greater clarity and simplification of regulations.
Data: strengthen data provision for surveillance (including data on official international reserves, the International Investment Position, EBFs, and SOEs), seek closer alignment with international standards, and modernize data publication (e-GDDS) as a first step towards eventual subscription of the SDDS. Improve data quality on bank loan classification, disaggregated credit and banking sector and corporate exposures, and real estate markets.
The government began tackling grand corruption in 2016 and significant sentences have been handed down in several high-level cases. The revamped 2018 anti-corruption law clarifies and enhances the legislative framework for combating corruption, by strengthening the declaration of income and wealth in government and SOEs, including public access to declarations. The linking (by end-2019) of databases on taxation, anti-money laundering, customs, and land transactions should facilitate asset verification. 
Stricter corporate governance regulations aligned with OECD best practices and tighter regulations to prevent related party transactions and collusion are likely to be introduced as part of the revised Securities Law to improve transparency and disclosure for listed enterprises.
The above information was taken from the IMF report released in July. 

DIEP NGUYEN

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