NOTICE

ON CONCLUSIONS OF PRIME MINISTER NGUYEN TAN DUNG ON STRENGTHENING CONTROL AND SUPERVISION OF SECURITIES MARKET ACTIVITIES

On 18 January 2007 the Government Standing Committee held a meeting with the Minister of Finance, the Governor of the State Bank of Vietnam, the Chairman of the State Securities Commission and leaders of the Government Office to hear status reports and to discuss measures to strengthen control and supervision of securities market activities. At the end of the meeting, Prime Minister Nguyen Tan Dung provided the following conclusions:

Although our securities market was only formulated recently, 2006 has been a thriving year with quick development of classes and volume of securities, the numbers of investors and securities service providers and so forth, consistent with the developmental policies of the Party and the State. The total value of listed shares increased 20 times compared to the end of 2005, equivalent to 20% of GDP, and this has created an additional channel for mobilizing capital for the economy.

However the development of the securities market has also raised problems which need to be dealt with: the price of some shares constantly increasing at a high rate; the limited quality of services provided by intermediary financial institutions, and of consultancy, supervision and evaluation of shares to be listed; the quality and management of information; and insufficient and non-uniform regulations on market control and management needed to ensure sustainable development. Leadership by and co-ordination between Ministries and industries on market control and management is not good; and the capability of the State Securities Commission to manage and supervise the market remains low.

In order to facilitate stable and sustainable development of the securities market so that it will become an important channel to mobilize capital for the economy, and to protect the lawful interests of investors and to contribute to the synchronous development of the Vietnamese financial market, the Prime Minister hereby requests as follows:

1. The Law on Securities came into effect on 1 January 2007 and the Government has now promulgated a Decree regulating its implementation. Therefore the Ministry of Finance, the Ministry of Planning and Investment, and the State Bank shall, within the scope of their respective functions, duties and powers, take the initiative to promulgate or submit to the competent authority to promulgate and direct implementation of regulations on management, supervision and control of the securities market in order to ensure its stable and sustainable development.

Participation by foreign investors in the Vietnamese securities market must follow the roadmap on international commitments and the socio-economic conditions of Vietnam. For the immediate future the percentage securities ownership by foreign investors shall not be amended.

The Ministry of Finance, and the State Securities Commission directly as the body in charge of development of the securities market, must closely co-ordinate with the State Bank and other functional bodies to direct strengthening of supervision of securities market activities, primarily:

(a) Market development of official transactions, and strengthening management of public companies in accordance with the Law on Securities in order to narrow the over-the- counter (OTC) market.

(b) Supervision of activities of securities investment funds, especially foreign funds, to ensure they operate correctly in accordance with regulations on percentage shareholding, on disclosure of information and other current regulations; and at the same time detection and promptly and strictly dealing with breaches; grant of permission to establish securities investment funds only when the stipulated conditions have been satisfied; co-ordination with the State Bank to establish a regime to control cash flow with a view to supervising securities investment activities by foreign investors in Vietnam; and immediate re- registration of representative offices of securities trading organizations in accordance with the Law on Securities.

(c) Supervision of transactions on the Stock Exchange and Securities Trading Centres; control of implementation of regulations on disclosure of information by organizations and individuals operating in the securities market; and compliance with the rules on trading orders, securities depository and settlement so that these activities are conducted publicly, transparently and correctly in accordance with law.

(d) Supervision of brokerage, investment consultancy and enterprise valuation consultancy so that these services are good quality, truly reflect the situation, and securities investors can rely on them.

2. The State Bank shall take the initiative in co-ordinating with the Ministry of Finance and the State Securities Commission to promulgate, or submit to the competent authority to promulgate, regulations and directions on supervision of activities of commercial banks conducting forward transactions, and mobilizing and providing loans and pledges to invest in securities. The State Bank shall formulate and strengthen the organization and application of appropriate management tools to ensure supervision of foreign investment capital flow, in the relationship between the securities market and the monetary market, into the securities market.

- The State Bank shall research and propose amendments and additions to guidelines on the Ordinance on Foreign Exchange Control, including provisions on capital deposit and withdrawal by foreign investors. The State Bank shall direct commercial banks to carry out the regimes on auditing, corporate management and disclosure of information to strengthen supervision of these organizations in the purchase and sale of shares, investment and capital contribution, as well as assignment of shares by shareholding commercial banks in order to ensure publicity, transparency and security of the banking system.

- The State Bank shall co-ordinate with the Ministry of Finance in formulation and management of interest rate and exchange rate policies, ensuring macro-economic balancing and implementation of the role of capital market regulator via these policy instruments.

3. The Ministry of Finance shall direct the State Securities Commission to urgently implement projects modernizing securities market information technology, first of all to improve the trading, depository and clearing systems of the Stock Exchange, Securities Trading Centres and Securities Depository Centres to satisfy the requirements on control and supervision by management bodies, and the requirements to provide public and transparent information on securities investment activities.

4. The State Securities Commission shall take the initiative in formulating a plan and roadmap to quickly improve the capability of senior staff, first of all of those directly in charge of research to establish regimes and policies as well as of those supervising the market.

The Ministry of Finance shall research and promulgate, or submit to the Prime Minister to promulgate, an appropriate financial regime applicable to the State Securities Commission, the Stock Exchange, Securities Trading Centres and Securities Depository Centres to attract and encourage capable and expert senior staff to work in bodies managing and supervising the securities market.

5. The Ministry of Finance shall direct the State Securities Commission to co-ordinate with the mass media to speed up dissemination of a range of information so that people will have a good knowledge of the benefits and risks involved in market participation. This is considered to be an important long-term measure to develop the securities market in a healthy and sustainable manner.

6. The Ministry of Finance shall direct the State Securities Commission to co-ordinate with the State Bank and other functional bodies to take the initiative in researching forecasts on adverse fluctuations during the operation of the securities market and the monetary market, and to propose measures to deal with them in order to ensure financial security and socio-economic stability.

7. The Ministry of Finance shall direct the State Securities Commission to strengthen supervision of securities market activities, and to carry out a weekly briefing and report to the Prime Minister on recommended solutions in necessary cases.

8. The Ministry of Finance shall take the initiative in co-ordinating with the State Bank, the Ministry of Internal Affairs and other relevant bodies to research and submit to the Prime Minister in the first quarter of 2007 a project on establishment of an organization with the function, powers and sufficient capability to act as securities market and monetary market regulator.

The Government Office hereby provides this Notice for the information of and implementation by the Ministry of Finance, the State Securities Commission and other relevant bodies.