Apart from restructuring the national economy, the MoF should take drastic and synchronized measures to restructure the securities sector into a thriving business centre in 2012.
State Securities Commission (SSC) must belong to the Ministry of Finance
Some people consider it in proper to see the SSC placed under the Ministry of Finance. Minister of Finance Vuong Dinh Hue has affirmed that legal status of the SSC was made clear in building the law on securities and the amended law on securities in 2006. It is right to place the SCC under the MoF.
Mr Hue explains that the banking system’s major task is to control monetary policies while the MoF is responsible for managing fiscal policies as well as capital market and securities policies. The capital market includes securities market. At the request of the Government, the NA agreed to let the SSC belong to MoF.
Mr Hue says there are two fundamental models of securities commission (SC) in some nations. First, the SC is an agency belonging to the MoF as in Vietnam. Second, it is a relatively independent in terms of management but responsible for reporting to the MoF. In both models, there is no securities agency belonging to the State Bank as monetary and capital market policies are not the same.
Regarding the role of securities in the national economy, Minister Hue emphasized that the stock market is a channel to mobilize capital, especially medium and long-term capital for the economy. In some countries like the US and UK, the stock market is the main channel which supply capital to the national economy while commercial banks play a key role in providing short-term capital.
The stock market is suitable for high-risk and venture investments even when they can make high returns. For commercial banks which face systematic risks, the best policy is to provide short-term loans for quick return. So, these two channels cannot be interrelated.
Besides, the SSC placed under the MoF is also responsible for associating the development of the stock market with SOEs equitisation and developing the bond market system.
Mr Hue warns that to keep securities companies purring along in is no easy task. The reason is that some commercial banks pour investment and provide loans through their securities companies.
Securities will take hold in the New Year
In 2011, our stock market faced a lot of difficulties due to slow production and business growth on the back of Vietnam’s macro-economic instability. Moreover, the world stock market also climbed up and down with some major economies struggling with the impact of the European debt crisis.
Experts from the Ministry of Finance argue that monetary and capital markets should be closely associated in a transparent manner to ensure the steady growth of the national economy.
As Mr Hue put it, the stock market needs a vision for the next ten and 20 years. In 2012, the MoF and SCC will continue to provide consultancy to the Government and the NA to devise a plan for the amended law on securities. The MoF and SCC also compiled and submitted to the Government a strategy for stock market growth until 2020.
Especially, the MoF also submitted to the party politburo a project to restructure the stock market, the insurance market and securities companies. The restructuring of securities companies has been implemented under Decision No 62/QD-BTC dated January 10, 2012.
The SSC will take drastic measures to implement key projects on restructuring government bonds and strengthening management of listed enterprises and public companies to ensure the quality of goods and transparency in the market.
There is a high hope that by developing e-commerce information system and upgrading infrastructure, the stock market will get a new lease of life in 2012. In the long run, Hanoi and HCM City securities transaction floors will be merged to create a favourable and attractive market for investors.