Decision No. 128/2007/QD-TTg on approval of the project for development of Vietnam's capital market up to 2010 and outlook to 2020

DECISION

ON APPROVAL OF THE PROJECT FORDEVELOPMENT OF VIETNAM S CAPITALMARKETUP TO2010AND OUTLOOK TO2020

THE PRIME MINISTER

Pursuant to the Law on Organization of the Governmentdated 25 December2001; Pursuant to the Law onSecuritiesdated 12 July 2006;

Having considered theproposal of the Ministry of Finance in Submission 22-TTr-BTCdated 28March2007,

DECIDES:

Article 1.ToapprovetheprojectondevelopmentofVietnam scapitalmarketupto2010andtheoutlookto2020,with the following main particulars:

A.OBJECTIVES

1. General objectives:

TodevelopVietnam scapitalmarketinwhichthesecuritiesmarketplaysthedominantroleinafast, synchronousandsustainablemanner;tograduallyturnthecapitalmarketintoanimportantcomponent ofthefinancialmarket,thusgreatlycontributingtomobilizingcapitalfordevelopmentalinvestmentand economicreform;toensurepublicityandtransparencyandtomaintaintheorder,safetyandefficiency ofthemarketandtoenhancemanagementandsupervisionofthemarket;toprotectthelawfulrights andinterestsofinvestors;tograduallyincreasecompetitivenessandtoproactivelyintegrateintothe international financial market. Targeted by 2020, Vietnam s capital market will reach the developmentallevelof capitalmarketsin regionalcountries.

2. Specificobjectives:

To develop a diversified capital market in orderto satisfythe need for capital mobilization and investmentbyentitiesintheeconomy. Securitiesmarketcapitalizationistargetedtoreachfifty(50) per cent ofGDP by 2010 and seventy (70) per cent by 2020.

B. VIEWPOINT AND PRINCIPLES FOR DEVELOPMENT OF THE CAPITAL MARKET:

1.Toformanddevelopsynchronouslythestructureofthecapitalmarket,inwhichthesecuritiesmarket playsanimportant rolein ordertoensurethe efficient mobilization anddistribution of investmentcapital sourcesforeconomicgrowth;tocloselycombine[thecapitalmarket]withthemoneymarkettocurb inflationandmaintaincurrencystability;tosuccessfullyintegrate[thedomesticcapitalmarket]intothe international capital market;

2.Tobuildanddeveloparationallystructuredcapitalmarket;toensurethetransparencyofthemarket s operation;andtoincreasethecompetitivenessoforganizationsandindividualsinvolvedinthemarket activities;

3.Toorganizetheoperationofthecapitalmarketinasafe,efficientandsoundmanner;andtoassure nationalfinancialsecurity.

C. SOLUTIONS FOR IMPLEMENTATION

1. Long-term solutions:

(a) To develop the capital market(consisting of the stock market, bond market, derivative instruments market, exchangemarket, over-the-countermarket etc.) into a modern and completely structuredone, operating in accordance with the best international practice and connectible withinternational and regional markets;

(b) To strongly develop capital supply channels both at home and abroad for themarket; to expandthenetworkofinvestors,especiallyinstitutionalinvestors;tofullydevelopintermediary institutions;todiversifytheservicesprovided;andtoensurethepresenceofallcomponentsof adeveloped capital market inthe region;

(c) Tocloselycombinemonetarypolicieswithfiscalpolicies;toharmonizetheobjectiveofcapital mobilizationforeconomicgrowthandsustainabledevelopmentofthecapitalmarketwiththe objective of maintaining macroeconomic stability, curbing inflation andassuring national financial security;

(d) ToenhanceStateadministration;toimplementeffectivelythefunctionofchecking,inspecting and supervising compliance with law by organizations and individuals involved inmarket activities.

2. Short-term solutions:

(a) Toscaleupthequantityof,andincreasethequalityof,andtodiversifyvariouskindsofgoods

inordertomeet the demands of themarket:

- ToscaleupthequantityofanddiversifybondsandmethodsofissuingGovernment bonds, municipal bonds andcorporate bonds on the capital market; to develop all kindsofconvertiblebondsofenterprisesandconstructionbondsforinvestmentinkeynationalinfrastructureprojects;

- TospeeduptheprogramonequitizationofStateownedenterprisesandcorporations, economicgroupsandStateowned commercial banks;toattachequitizationtolistingin thesecuritiesmarket;andtoexpandtheissueofnewsharestomobilizecapitalonthe market. Torequestequitizedenterprisessatisfyingthelistingconditionstobelisted; to concurrentlyreviewandcontinuethesaleofStatecapitalinenterprisesinwhichthe Stateisnotrequiredtoholdcontrollingshares.Toconvertforeigninvestedenterprises intoshareholdingcompanieswiththeirsharestobelistedandtradedinthesecurities market;

- To developthe following derivative securities: call optionsand put options, future contracts,forwardcontracts;combiningproducts(securities–insurance,securities– credit,savings–securities,etc.);andproductsobtainedfromsecuritizationofassets and liabilities, etc.

(b) TocompletegraduallythestructureofthecapitalmarkettoensureStateadministrationand supervision capacity:

- Toseparatethebondmarketfromthestockmarketinordertoformaspecializedbond market. Tograduallystudy,establishanddevelopafuturesexchangeforderivative instrumentsand a market for securitization of medium and longterm bank loans;

- Todevelopthestockmarketatvariouslevelstomeettheneedsforissuing,listingand tradingsharesofvarioustypesofenterprisesandtoensurethatStateadministration andsupervisionfollowsthedirectionofseparatingthecentralizedtradingmarketfrom the over-the-counter trading market (OTC), and the market for issuance and registration for trading by small and medium sizedenterprises;

- ToconvertSecuritiesTradingCentresintoStockExchangesoperatingascompanies inaccordance withtheLawonSecurities. StockExchangesand Securities Trading Centresshall implement the function of organizing and supervisingcentralized securities trading. To upgrade comprehensively the technical infrastructure of the market, thereby ensuring it can be connected to regional markets;

- ToorganizeandmanagetheOTCsecuritiestradingmarketviathefollowingsolutions: conducting registration and centralized securities depository of shareholding companies satisfying all conditions stipulated in theLaw onSecurities; studying the trading mechanism with respect to securities unqualified to be listed on the basis of agreementsvia securities companies; paying centralized securities transactions and transferring[suchtransactions]viatheSecuritiesDepositoryCentre;atthesametime, establishing a mechanism for overseeing information disclosures on the securities trading market in order to increase the transparency and publicity of the market; assuringStateadministrationandsupervisionofsecuritiestransactions;andnarrowing activities onthe free market.

(c) To develop intermediary institutions and market services:

- To rationally increase the numberof securities companies, fund management companies, securities investment companies etc., and to improve thequality of operationandfinancialcapabilityofsuchcompanies;todiversifyservicesprovidedon the market; to increase the professionalism and quality of services; and to ensure publicity, transparency and equality on the market;

- To expand the operational scope of the Securities Depository Centre; to apply international depository standards; and to effect interlinked payment transactions between the capital market and the money market;

- TograduallyformacreditratingmarketinVietnam. Topermitqualifiedcreditrating organizationstobeestablishedinVietnamandtopermitanumberofforeignreputable credit ratingorganizations to conduct credit ratingactivitiesin Vietnam.

(d) To develop a network of foreign and domestic investors:

- Toencourageprofessionalinvestmentinstitutions(banking,securities,insurance,etc.) to participatein investment onthe marketin accordancewith law. Tocarry out the roadmap to open up theVietnamese market for foreign institutional investors in accordance withthe undertaken roadmaps;

- To diversify investment funds;to facilitate Vietnam Social Insurance, VietnamPostal Savings andsoon tomake investments on thecapital market; tograduallydevelop and diversify superannuation funds in ordertomobilize capital from inhabitants participatingininvestment;andtoencouragetheestablishmentofforeigninvestment funds making long-term investments in theVietnamese market.

(dd) To complete the legal framework and improvethe effectiveness and efficiency of State administrationandsupervision:

- Toperfectaconsistentandsynchronouslegalsystemsatisfyingthemanagementand supervision requirements and the needs for integration into the international and regional capital market;

- Tosupplementremediestostrictlydealwithcivilandcriminalcasesinordertoprevent and deal with breacheson thecapitalmarket and the securitiesmarket;

- To research andperfectpoliciesontaxes,feesandcharges applicable to securities activities,andtopromotelong-terminvestmentandrestrictshort-terminvestment;to moderateprofitobtainedfromsecuritiesbusiness,andconcurrently,viathepayment oftaxes,feesandcharges,tocontributetooverseeingtheactivitiesofthesecurities marketandeachentityormemberjoiningthemarket(includingforeignanddomestic investors);

- Toapplymarketsupervisionstandardsinaccordancewiththeinternationalpractice;to intensifythechecking,inspectionandsupervisionofcompliancewithlawbymembers joiningthemarket;tocheckandmonitormarketedgoods,andtoensurepublicityand transparency; to strengthen the supervisionand enforcement capacity of market regulatory bodies;

- ToreinforcetheStateapparatus,improveStateadministrationandsupervisionofthe capitalmarket;tograduallyseparatethefunctionofadministrationfromthefunctionof supervisionofmarketactivities;tostudyas soonaspracticaltheestablishmentofa nationalfinancialsupervisionbodytoassistthePrimeMinisterinco-ordinatingpolicies and warning systems and inmanaging and supervising financial andmonetary activities at a macro level.

(e) To proactively open themarket and integrate intothe international and regional markets:

- Stepbystep,toopenthecapitalmarketforforeigninvestorsinaccordancewiththe undertakenintegrationroadmapandconcurrently,toensurecontrolofcapitalinflows andcapitaloutflows;toexpandinternationalco-operativeactivities intermsofpolicy consultancy, legal consultancy and market development;

- Tospeeduptrainingworkandtodevelophumanresourcesforthecapitalmarket;to intensifydisseminationofknowledgeaboutthecapitalmarketandsecuritiesmarketto the public, to enterprisesand economic organizations.

(g) To assurenationalfinancial security by carrying out thefollowing actions: to efficiently supervisecapitaltransactions;totakemeasurestocloselycontrolcapitalflows;innecessary cases to apply appropriate solutions to reduce the exchange rate and preclude market deformityandcrisisrisksonthemarket. Suchsolutionsshallbestatedinlegalinstruments andnotifiedtoinvestorsandmaybeappliedwhensecurityofthefinancialsystemislikelyto beaffected. Toapplyaspecialmechanismofsupervisionofweakintermediaryinstitutionsin order to minimise negative chain-reaction impacts on the entiresystem.

Article 2.Implementing organization

The Ministry of Finance shall preside over the co-ordination with ministries, ministerialequivalent bodies, Government bodies and People s Committees of provincesand cities under central authority to organize implementation of thisDecision.

Article 3

This Decisionshallbeoffullforce andeffectfifteen (15) days fromthe dateofits publicationin theOfficial GazetteandshallreplaceDecision163-2003-QD-TTgofthePrimeMinisterdated5August2003onapproval of the strategy fordevelopment of the Vietnamese securities market upto 2010.

Article 4

Ministers, Heads of ministerialequivalent bodies, Heads of Government bodies, Chairmen of People s CommitteesofprovincesandcitiesundercentralauthorityandHeadsofrelevantbodiesshallberesponsible for implementation of this Decision.