DECISION

APPROVING THE STRATEGY ON DEVELOPMENT OF VIETNAM'S SECURITIES MARKET TILL 2010

THE PRIME MINISTER

Pursuant to the Law on Organization of the Government of December 25, 2001;
Pursuant to the Government's Decree No. 48/1998/ND-CP of July 11, 1998 on securities and securities markets;
At the proposal of the State Securities Commission in its Report No. 06/TTr-UBCK of May 30, 2003,

DECIDES:

Article 1.- To approve the strategy on development of Vietnam's securities market till 2010 with the following major contents:

A. Objectives

To develop the securities market in both operation scope and quality, aiming to create a channel for mobilization of medium- and long-term capital for development investment, contribute to the development of Vietnam's financial market; to maintain order and safety, expand scope and raise the efficacy in the market management and supervision with a view to protecting the legitimate rights and interests of investors; to step by step raise the competitiveness and take initiative in integrating into the international financial market.

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1. To develop the securities market in compatibility with the country's practical conditions and socio-economic development orientations, as well as with international standards and practices, step by step integrating into regional and international financial markets.

2. To build an uniform securities market nationwide, which operates safely and efficiently, contributing to mobilizing capital for investment development and boosting the process of equitization of State enterprises.

3. The State shall manage by law and create conditions for the securities market to operate and develop; ensure the legitimate rights and interests of different subjects and adopt policies to encourage them to participate in the securities market.

4. To ensure the uniformity of the financial market on the national scale, link the development of the securities market to the development of the capital market, monetary market and insurance market.

C. Orientations for the development of Vietnam's securities market till 2010

1. To expand the scope of the concentrated securities market, strive to achieve the total market value of 2-3% of GDP by 2005 and 10-15% of GDP by 2010.

a/ To concentrate on the development of the bond market, first of all for Government bonds, in order to mobilize capital for the State budget and for development investment.

b/ To increase the categories of shares listed in the concentrated securities market in order to increase capital amounts for enterprises and raise the production and business efficiency of listing companies.

2. To build and develop the Securities Trading Centers, Stock Exchanges and Securities Custody Centers in order to provide the services of securities trading, registration, custody and payment along the direction of modernization.

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b/ To build up a share-trading market for medium- and small-sized enterprises in Hanoi; prepare conditions to transform it into an over-the-counter (OTC) market after 2010.

c/ To set up independent custody centers to provide the services of securities registration, custody and payment for securities trading activities of the Stock Exchanges and Securities Trading Centers; to expand the custody scope for securities not yet listed.

3. To develop intermediate financial institutions for Vietnam's securities market.

a/ To broad the scope and scale of business and service activities of securities firms. To develop securities firms in the two forms of multi-operation securities firm or specialized securities firm in order to raise the quality of service provision and the capability of professional operation specialization.

b/ To encourage and create conditions for eligible organizations of all economic sectors to set up securities firms, and encourage securities firms to set up their branches, transaction bureaus, and order-receiving agencies in big provinces and cities as well as populous areas throughout the country.

c/ To develop securities investment fund-managing companies in both operation scope and quality. To diversify the forms of ownership of securities investment fund-managing companies. To encourage securities firms to perform the operation of managing investment lists.

d/ To set up several credibility-rating companies in order to evaluate and classify risks of assorted types of listed securities and credibility of Vietnamese enterprises.

4. To develop organized investors and individual investors

a/ To set up the system of organized investors including commercial banks, securities firms, financial companies, insurance companies, insurance funds, investment funds.., and create conditions for these organizations to participate in the market acting as professional securities investors and performing the functions of market formers.

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D. Implementation solutions

1. To perfect the legal framework for the securities market

To issue a synchronous system of legal documents governing the operation of the securities market along the direction of comprehensiveness and compatibility with the practical market situation. To elaborate a securities bill for submission to the National Assembly for enactment by 2005.

2. To increase the supply of securities to the market in terms of quantity, quality and category.

a/ To reform the mode of issuing Government bonds, enhance the issuance by modes of Government bond bidding and issuance underwriting; to diversify the terms of Government bonds in order to create a standard interest curve for the capital market; elaborate and implement the issuance plans as scheduled in order to supply a steady volume of bonds for the securities market.

b/ To link the equitization of State enterprises to the issuance of their shares to the public as well as their listing in the securities market.

c/ To select big enterprises and commercial banks eligible to issue additional shares and participate in the concentrated securities market.

d/ To expand the transformation of foreign-invested enterprises into joint-stock companies and adopt policies to encourage enterprises to list their shares in the concentrated market.

e/ To encourage and create conditions for the listing of and trading in assorted types of project bonds and urban bonds in the concentrated securities market.

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g/ To supervise and support the listing companies in the implementation of best company administration practices; to comply with accounting and auditing regimes as prescribed by law. To enhance the management and supervision of listing companies in the fulfillment of their information disclosure obligation as well as obligations towards investors.

3. To implement policies to encourage organizations and individuals to participate in the securities market.

a/ To implement tax incentive policies towards investors.

b/ To encourage and create conditions for credit institutions as well as foreign organizations and individuals to participate in the securities market.

c/ To expand the limits of securities investment for foreign investors in Vietnam's securities markets; to permit foreign securities-trading organizations to contribute capital, buy shares or set up join-venture securities firms with domestic legal persons; to permit foreign securities investment funds to participate in Vietnam's securities market.

4. To raise the operational quality of the Securities Trading Centers, Stock Exchanges and Securities Custody Centers

a/ To put the modern automatic trading system in Ho Chi Minh City Securities Trading Center into operation. To connect the wide area network between the trading system of Securities Trading Centers and member securities firms. To set up an automatic supervision system connected with the systems of trading, information disclosure, custody and payment.

b/ To ensure the availability of an information-disclosure system which can transmit information widely and easily be accessed by subjects participating in the market, especially investors. To expand the scope of information to be disclosed on the basis of formulating an adequate information database.

c/ To automate the system of securities custody and clearing. To provide the custody service for securities not yet listed. To reduce the time of securities trading payment in order to raise the liquidity for the market. To link the computer network of custody members to those of Securities Trading Centers so as to provide accurate and timely information on securities owners.

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a/ To apply measures to coerce the implementation of regulations on company administration according to international practices by listing companies, securities firms, investment fund-managing companies, as well as the information-disclosure regime prescribed by law.

b/ To increase the number and raise the quality of the staff performing securities business operations; securities firms must abide by professional ethics.

c/ To expand the security custody service-provision network throughout the country; to pay attention to the licensing of securities custody activities for eligible commercial banks.

d/ To raise the quality of auditing of financial reports of organizations engaged in securities issuance, listing and trading.

6. To raise the capability of State management over the securities market

a/ To raise the State management capability, ensuring the flexible and sensible management of the securities market. The State shall adjust and regulate the market through econo-financial-monetary tools such as policies on taxes, interest rates and investment and other financial instruments.

b/ To effect the close coordination between the State Securities Commission and concerned agencies in perfecting the legal framework, training and fostering human resource to meet the requirements of securities market management.

c/ To elaborate and apply criteria on the supervision of securities market operations; to develop proper supervisory skills in order to detect abnormal transactions; to improve the skills of intensive investigation into insider trading and price manipulation.

d/ To combine supervision with examination and inspection of the observance of law by market members and strictly apply civil as well as penal measures against acts of violating the legislation on securities and securities market.

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8. To enhance international cooperation

To effect international cooperation on the formulation of policies on market development and management; the elaboration of a legal framework for the securities market; the training of a contingent of administrators; step by step opening doors and integrating into the world's securities markets according to committed roadmap.

9. To enhance the work of training, research and information propagation

a/ To build and develop the Center for Training and Fostering of Securities Operations and Securities Market into a unit eligible and capable of researching into the securities market; to provide training and fostering in the operation of securities market management, coordinate with domestic as well as foreign universities and research institutions in the activities of research, basic training and raising of knowledge on the capital market.

b/ To diversify the forms of professional training and fostering in order to meet the demands of subjects as well as for dissemination and propagation of information and knowledge on securities market among the public.

10. Funding and technical and material foundations for the securities market

The State ensures technical and material foundations and funding for the operation of Securities Trading Centers, Stock Exchanges and Custody Centers. At the same time, it encourages the mobilization of domestic sources, foreign donations and sources of organizations and individuals participating in the market so as to develop organizations providing services in support of for securities issuance and trading.

Article 2.- Implementation organization

1. Based on the objectives, basic contents and orientations on the development of Vietnam's securities market, the State Securities Commission shall assume the prime responsibility and coordinate with the ministries, ministerial-level agencies, agencies attached to the Government and provincial/municipal People's Committees in organizing the implementation of this Decision.

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Article 3.- This Decision takes effect 15 days after its publication in the Official Gazette.

Article 4.- The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government, the presidents of the provincial/municipal People's Committees and the heads of the concerned organizations shall have to implement this Decision.

PRIME MINISTER




Phan Van Khai