Draft bill sets clear parameters for portfolio investment

Foreign investors must conduct all stock transactions through a single dong account opened with a licensed bank, according to a Ministry of Finance plan submitted to the government for approval last week.

Under the plan, foreign investors can carry out transactions directly or authorize investment fund management firms to do so on their behalf.

These foreign investors must register with the State Securities Commission (SSC) or the Vietnam Securities Depository, the draft bill states.

Investors must also place their orders through an authorized securities company, according to the proposed regulation.

The bill also states that while individual investors must conduct stock market transactions in dong, foreign financial institutions’ representative offices in Vietnam may conduct transactions via foreign currency accounts opened at licensed banks.

All investors must report to the SSC every month, quarter and year, according to the draft.

The new regulation is expected to be approved in the second quarter this year.

Foreign investors who have already been granted a stock transaction code must then go through any additional procedures dictated by the new rules.

Representative offices can only invest for their mother companies and cannot conduct transactions for individuals.

Individuals must invest for themselves and cannot do so for others.

Therefore, investors who have previously authorized other individuals or representative offices to act on their behalf must terminate the authorization and report to the SSC.

Representative offices authorized by mother companies to place stock orders must begin reporting to the SSC once the bill passes.

Better late than never

The National Financial Supervisory Committee’s newly-appointed chairman Le Duc Thuy said the country should have developed a framework to manage, supervise and analyze its capital flows a year ago when Vietnam joined the WTO.

Since then, foreign portfolio investment has flooded the country rapidly.

In the first two months of this year only, indirect foreign investment reached US$760 million, slightly lower than the $970 million in foreign direct investment and $1.5 billion in overseas Vietnamese capital inflows.

As of February, foreign investment in the stock market topped $8 billion with around 10,000 accounts, 640 of which were opened by foreign institutions.

A considerable number of these institutions’ accounts are offshore investment.

A total of 60 foreign investment funds are investing in the local stock market in addition to dozens of hedge funds.

The lack of a comprehensive legal framework to regulate foreign stock investment has prompted many tofear what would happen if foreign investors withdraw from the exchange.

Now that the government is developing new rules to govern capital inflows, experts say more needs to be done to increase portfolio foreign investment.

Compared to direct foreign investment, indirect investment accounts for just 2-3 percent of Vietnam’s GDP, which experts say is still modest.

The SSC’s chairman Vu Bang said that other than technical solutions such as increasing taxes or imposing fees on foreign investors, the country needs a comprehensive strategy to foster healthy economic growth because stock investors often cut and run when the economy stumbles.

Director of the SSC’s Stock Investment and Research Center Dao Le Minh said language barriers and the inaccessibility of information were hampering foreign investment in the stock market.

Minh said there are only a few stock companies that can provide investment information in much-needed foreign languages like English, French, Chinese, Japanese or Korean.

The country should also develop a system to rank the financial abilities of state-owned and joint-stock banks, he said.

Minh added that the same should be done to evaluate the abilities of major state-owned businesses currently going to public as well as companies already listed on the stock exchange.

Source: TBKTSG

Rice fever grips Vietnamese consumers

People rushed to buy rice Saturday after the price began rising in leaps and bounds. Officials, meanwhile, rushed to assure all there was no looming rice shortage.

The rice shelves at Co.opMart supermarket on Ho Chi Minh City’s Cong Quynh Street were empty last night.

Several housewives asked each other anxiously whether nearby supermarkets had any rice left.

In front of the supermarket, many people called home to report they had been unable to buy rice at this supermarket.

One hundred meters from Cong Quynh Co.opMart, the Hanoi super-market was also out of stock of rice.

An employee there said since the afternoon people had been flocking in to buy rice for some mysterious reason.

Rice gets costly

Shopper Nguyen Van Tho from Go Vap District said he didn’t buy rice Saturday because it was too expensive.

Tho said he was dazed by the surge in prices.

Saturday morning a kilogram of rice sold for VND10,000 (US$0.63) but only a few hours later the food staple was VND18,000 ($1.13) a kilogram.

Some rice distributors on District 3’s Le Van Sy Street said the price of rice had doubled within a few days.

Many distributors in the city have been turning away customers, waiting to sell when rice prices rise higher.

Their stockpiling may be contributing to the upward movement of rice prices.

The global price of rice has been rising because of shortages in some rice producing countries.

In places like Can Tho and Quy Nhon cities, rice is also reaching record prices.

Sellers at major rice outlets in Can Tho City said their suppliers have increased prices three or four times a day over the past few days.

High-quality and fragrant rice is seeing the highest hike, jumping an additional VND4,000 to VND7,000 ($0.25-0.44) per kilogram in a week.

A kilogram of fragrant Taiwanese-strain rice is now sold for a record VND18,000 ($1.13), up from VND11,000 ($0.67) last week.

Rice retailers say even low-quality rice is getting expensive, costing them around VND10,000 ($0.63) per kilogram.

The price of harvested rice plant prices are climbing.

As of Saturday, a kilogram of harvested rice plants in Can Tho’s Cai Rang District cost VND6,000 ($0.38), up from VND5,500 ($0.34) just a day earlier, and VND4,200 ($0.26) in January.

In Quy Nhon, prices of many rice varieties have increased by 60 percent in a few days with restaurant owners rushing to buy and distributors stockpiling rice to wait for higher price hikes.

Full assurance

Government officials have issued assurances the price increases are not caused by an inadequate supply.

Deputy Director of the Ministry of Agriculture and Rural Development’s Plant Cultivation Department, Phan Huy Thong, said Vietnam had enough rice to feed its people, with total production in the spring crop expected to reach 17.2 million tons, an increase of 200,000 tons from last season.

The Mekong Delta has enjoyed a bumper spring crop, harvesting 9.4 million tons, a 300,000 ton increase compared to the same period last year.

Rice farmers in the southern central and central highland regions are also starting to harvest, with production in the central highlands expected to equal last year’s figure of 400,000 tons.

Due to bad weather, production in the southern central coast may slide down to 900,000 tons, an 80,000 ton decline compared to last spring.

In the north, despite cold weather, rice plants are thriving and production may reach last year’s level of 6.5 million tons.

Thong said not only did the country have enough rice for domestic consumption, there was likely to be some left to export.

According to the Vietnam Food Association, the country will cap its export at 3.5 million tons this year to ensure food security.

So far, local rice exporters have signed contracts to export 2.4 million tons.

But even in provinces that have been suffering from poor crops like Quang Nam, Quang Ngai and Phu Yen, local authorities are confident people will have enough rice to eat.

Deputy Director of the Ministry of Agriculture and Rural Development’s Planning Department, Bui Tat Tiep, said rice shortages in other parts of the world and resulting high rice prices worldwide might be making locals worried.

But Tiep said Vietnam’s main rice concern was not a shortage but how much to export to ensure an adequate supply for local consumption.

Reported by Thanh Nien staff