Vietnam – Building better Investor Protection Framework – What you must know:


  1. Vietnam stock exchange already gained significant milestones in developments, but why it still does 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. But latest in mid-2017 Vietnam is obliged to adopt these rules.

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.

  1. What benefits for companies if they list on Singapore or Hong Kong? But 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.

  1. But at the moment, we don’t see any Vietnam firms listed successfully abroad. May be the procedure is a huge obstacle for them to move abroad? What do Vietnam companies need to do for completing listing on 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 structure of 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 advice of 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 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 !



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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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