To achieve the GDP target set for 2010 (double that of 2000), the average annual growth rate must be 7.5 per cent and investment capital 38.5-40 per cent of GDP. The Ministry of Finance has developed policies and mechanisms to promote the financial market.
Issuing bonds
To mobilise the resources for 2001-2005 State plan, the government has applied several solutions to develop financial market and services such as reforming the financial and banking system, developing insurance and stock markets, and upgrading accounting and auditing services. For its part, the Ministry of Finance has prepared the legal framework for the financial market as well as the guidance for its implementation.
According to Vice-Minister of Finance, Ms Le Thi Bang Tam, the capital mobilisation by means of bonds is an important channel to meet the demand for socio-economic development and supplement to the State budget. In 2001-2005 period, the total mobilisation by government bonds was nearly VND60,000 billion (excluding Treasury bonds issued by State Bank) of which over VND50,000 billion by the State Treasury and over VND8,000 billion by Development Assistance Fund. In late 2003, the government started issuing Government bonds to invest in major public works to upgrade the network of roads and water conservancy.
Recently, the Finance Ministry has also launched the first government bonds to the international capital market, successfully mobilising US$750 million. Meanwhile, three cities have issued local government bonds, mobilising nearly VND7,000 billion including VND5,300 by Ho Chi Minh city, over VND1,000 billion by Hanoi and VND243 billion by Dong Nai.
In general, the market of enterprise bonds remains undeveloped, except some credit organisations of State commercial banks issuing bonds to mobilise medium and long-term capital. By November 2005, the total value of enterprise bonds stood at over VND2,000 billion and mainly by State-owned enterprises : Petro Vietnam VND300 billion, Song Da Construction Corporation VND200 billion, Energy of Vietnam (EVN) VND200 billion, Vietnam Shipbuilding Corporation VND1,000 billion.
However, according to Ms Tam, the financial market and service are still limited. The legal framework is still incomplete. The application of management principles and international standards on transparency, accounting and auditing remain inadequate. The co-ordination between channels and markets failed to concentrate resources for vital objectives and the economic restructuring.
Bonds issued by stock market
Speaking at a meeting of the financial sector in Hanoi, Ms Tam said that the goal of 2006-2010 period is to mobilise sufficient investment capital for socio-economic development from local and foreign resources. The bond market will be improved issuing bonds by means of stock market, auction and collateral. The network of agents will be expanded to facilitate their transaction and transfer.
Also according to Ms Tam, the Finance Ministry will regulate the interest rate equal to the interest rate of governments bonds in the whole country, and the government interest rate will play a dominating role and reference for others. Local authorities are also encouraged to issue their bonds to mobilise capital in compliance with the State Budget Law. In particular, evaluation criteria based on government bonds will direct the market and help investors in their analysis and decision for investment.
Mai Anh
Vietnamese
