World Finance: Vietnam may be the biggest
winner from the TPP trade deal, but necessary
reforms of its state-owned enterprises have
been, to be diplomatic, gradual.
Joining me is Đỗ Huy Hoài from one of
Vietnam's oldest securities firms, BIDV Securities.
Mr Hoài – explain to me the history of
Vietnam's state-owned enterprises
and what still need to be achieved.
Đỗ Huy Hoài: Firstly, as to how it developed, until 1986, Vietnam had been a centrally-planned economy.
Therefore, all Vietnamese enterprises were
state-owned.
From 1986 on, because this model exhibited
a number of limitations, the Vietnamese government
decided to transition to a market-orientated
economy.
In this transformation, 6,000 state-owned
enterprises have undergone equitisation and
been transformed into joint-stock companies.
Up to now, 4,500 out of 6,000 such enterprises
have completed their equitisation processes.
Equitisation needs to be sped up and implemented
continuously.
In addition, while some state-owned enterprises
which are successful in certain industries
attract the market’s attention, others investing
in undeveloped industries fail to do so.
Moreover, in spite of the government’s decision,
state-owned enterprises are not mentally ready for equitisation.
This reluctance is an obstacle to adopting
equitisation.
World Finance: What barriers or challenges
are there for international investors?
I understand there is some dissatisfaction
with customs and tax authorities for example.
Đỗ Huy Hoài: Before 2015, customs duties
and taxes were a problem;
however, the Vietnamese government recognised this problem and implemented administrative
reforms of customs duties and taxes.
Following the reformation, Vietnamese procedures
relating to customs duties and taxes started
to comply with the common practices of ASEAN
Six, and Vietnam is striving to bring customs
and taxes into line with ASEAN Four in the
near future.
We believe that with all of these achievements
and with the progress yet to come, customs
and tax procedures in Vietnam
will be transformed from barriers
into favourable conditions for promoting investment.
World Finance: What areas of the economy are
seeing the most FDI activity?
Đỗ Huy Hoài: We have identified two trends
during our activities.
Regarding short-term investment, consumer
goods and the retail industry are currently
among the most attractive industries in the
market.
With regard to long-term investment, however,
industries such as hi-tech, finance, banking,
and post-harvest technology
demonstrate tremendous potential.
Recently, two 'Silicon Valleys' have been
established in Ho Chi Minh City and Hanoi.
In Ho Chi Minh City, Intel has also been making
investments in Vietnam for a number of years.
In Hanoi, Samsung and Ricoh have also invested in large-scale projects and moved production to Vietnam.
World Finance: Finally, what changes can we
expect to see in Vietnam's markets in the coming year?
Đỗ Huy Hoài: The first change will relate
to market structure;
financial institutions will be founded.
Vietnam must have financial institutions suitable
for the modern economy,
such as investment banks
and refinance mortgage companies.
Secondly, in terms of market products, derivative
products and bond markets must be put into practice.
Thirdly, with regard to the market's legal
framework,
to come into line with the TPP and FTP agreements,
Vietnam will have to make appropriate adjustments
to its laws and regulations.
We expect that when the law on investment
banking is enacted,
it will promote the development of the stock market.
We also hope that BSC will be one of the first
companies to shift to this model under the
law on investment banking in Vietnam.
World Finance: Đỗ Huy Hoài, thank you.
Thanks for watching. You can find out more
about Vietnam’s reforms at www.worldfinance.com.
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