1. The Vietnam stock exchange already gained significant
milestones in developments, but why does it still not attract big
domestic companies to list so far?
Tightened monetary policies leading to limited capital inflow to
the securities market, its low liquidity and significant decrease
in stock price partly contribute to the low attractiveness of
Vietnam's stock exchange. In addition, although Decree No. 60
loosens foreign ownership in public companies, detailed foreign
ownership applicable for conditional business sectors has not been
issued. This makes Decree No. 60, which is said to be rather
promising to the market, invalid in whole or in part.
Another reason is Vietnam's stock exchange lacks good
stocks. In other words, the number of listed state owned
enterprises seems to outweigh private entities. It is the fact
state owned enterprises still do not attract foreign / private
investment due to their history of bad performance. Meanwhile,
successful private entities have not been listed. It seems like a
vicious circle, when not many companies want to be listed due to
low attractiveness of the securities market and unlikely increase
in price of stocks after being listed.
Finally, investors and owners are held back to list at the Stock
Exchange in Vietnam as Vietnam has not adopted international
Corporate Governance Standard and effective means of implementation
and enforcement of those. By mid-2017 Vietnam is obliged to adopt
Vietnam is currently working with the IFC/World Bank on
establishing Corporate Governance standards for investors
interests. Thus we believe the situation will improve within the
next year once Vietnam has fulfilled this task.
2. What benefits are there for companies if they list on
Singapore or Hong Kong? How high is the cost they would endure to
comply with stricter regulations?
Singapore and Hong Kong are large capital markets where
companies in Vietnam could find it much easier to call for capital.
Investors in these countries already have certain knowledge about
investment in Vietnam and the companies themselves, so if
successfully listed, these companies will become more attractive to
the investors there.
However, the cost to comply with very strict listing
requirements is relatively high, especially when the Vietnam's
companies have never implemented similar requirements in Vietnam.
The barriers are, among others, international standard audited
financial statements, detailed foreign ownership, proven record of
corporate management and complex tax rules. Considering that the
cost could be as high as up to USD 1 million, it is recommended
that only big companies with high financial capacity list their
stocks on Singapore or Hong Kong stock exchange.
3. But at the moment, we don't see any Vietnam firms listed
successfully abroad. Maybe the procedure is a huge obstacle for
them to move abroad? What do Vietnam companies need to do for
completing listing on the Singapore stock exchange?
Procedure and strict requirements as mentioned in Point 2 are
huge obstacles for companies who want to list abroad. The first and
foremost condition is Vietnam companies must understand very well
the structure of the Singapore stock exchange. Next, be prepared
for complying with requirements on financial capacity, assets,
corporate management, number of shareholders, etc. It is highly
advisable that Vietnam companies seek the advice of an
international lawyer, with good local legal knowledge, so that
Vietnam companies could implement their plans successfully.
Please do not hesitate to contact Oliver Massmann under
email@example.com if you have any questions or want to
know more details on the above. Oliver Massmann is the General
Director of Duane Morris Vietnam LLC. THANK YOU !
Disclaimer:This Alert has been
prepared and published for informational purposes only and is not
offered, nor should be construed, as legal advice. For more
information, please see the firm's
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