Although some improvements have taken place, after 20 years of development the Vietnam stock market still faces many limitations, especially in the possibility of capital funding on the market. Currently, three major capital mobilization channels of entrepreneurs include credit funding from banks, shares, and bonds from stock market. However, raising capital among these channels is unbalanced because enterprises mainly aim at loans from commercial banks, with the stock market providing only approximately 37% in total capital.
The absence of major investors and the poverty of financial products are the results of a small-scale market and low liquidity. This is the consequence of 1) An investment policy which is not really open to foreign investors and has not diversified the types of funds (such as voluntary pension funds) in order to create long-term funding channels and to stabilize the economy; 2) A lack of risk assessment organizations that enable enterprises to standardize financial statements as well as publicize information announcement; 3) Private enterprises which are not actively involved in raising funds aside from the credit channels of Banks; 4) The types of investment products which are unsatisfactory in terms of quantity and quality.
To free the capital flow into stock market and re-stabilize the capital market, public authorities need to: 1) Support mechanisms to remove barriers to Vietnam market entry for some industries with specific characteristics; 2) Accelerate the process of equitization of the state enterprises sector on the basis of specific laws.
In addition, to increase the liquidity of bonds on the market, we need to standardize the activities of risk assessment, support the establishment of independent credit rating agencies to help assess jeopardy of entrepreneurs; Standardize the bond market, create a better pricing mechanism (frame rate, maturity); Support the development of financial products; and Build a trade promotion organization with the guarantee and intermediates of the government which will help private enterprises to find the right investors and increase the capability of capital mobilization.
With the support of the government and public officials, every private company needs to improve their competitiveness and capability through better business plans, capital utilization and capacity to be skilful at risk management and information transparency. Besides strengthening the relationship with investors (IR), companies must strongly cooperate with major financial institutions to reap the benefits of improved coordination.
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