VietNamNet Bridge - To fulfill the dream of listing shares on foreign bourses, businesses have to overcome many barriers.

In October 2008, Vinamilk, the nation's leading dairy producer, received a letter of approval from the Singapore Stock Exchange (SGX-ST) to list 8,763,784 Vinamilk shares on the bourse. However, the listing plan was canceled. 

Analysts commented that Vinamilk could not fulfill the listing plan because of vague regulations on the issue. 

The requirement on applying IFRS (International Financial Reporting Standards) instead of the Vietnam Accounting System (VAS) would discourage businesses because it is costly and complicated to shift from VAS to IFRS.

Meanwhile, the enterprises which now plan to list shares on foreign bourses won’t meet such problems because new legal documents have been released. SSC believes that the legal framework for Vietnamese businesses to issue and list securities on foreign bourses is sufficient.

However, some experts don’t think so. They still see a lot of problems in the payment, transaction, reporting and information exposure policies. Under decree 58, businesses can only list shares they issue overseas on foreign bourses, while the capital mobilized in Vietnam must still comply with domestic legal regulations.

According to Nguyen Duy Phuong, a securities analyst from a foreign fund in Vietnam, once a Vietnamese business lists shares overseas, the transactions must be carried out in foreign currencies. 

This will violate current regulations on forex management which requires permission to take foreign currencies out of Vietnamese territory. Also under current law, businesses must obtain licenses from the State Bank of Vietnam (SBV) for making outward investments.

To make transactions, Vietnamese investors have to open accounts overseas. But Vietnam doesn’t allow people to open accounts overseas, including deposit accounts. He also wonders how shareholders can transfer money from selling shares to Vietnam.

In general, it is very difficult for both individuals and institutions to transfer foreign currencies abroad because of Vietnam’s strict regulations on forex management.

Nguyen Khac Phuc, a securities expert, said under the current law, Vietnamese securities issuers are required to open a foreign account at licensed credit institutions operating in Vietnam to receive money in foreign currencies. 

The laws do not stipulate that they have to open accounts in foreign countries where they list shares. As a result, foreign investors who buy securities cannot transfer money into the issuers’ accounts if the banks that serve the institutions don’t have branches in listing countries.

Meanwhile, Nguyen Vu Hai, an auditing expert, warned that the requirement on applying IFRS (International Financial Reporting Standards) instead of the Vietnam Accounting System (VAS) would discourage businesses because it is costly and complicated to shift from VAS to IFRS.

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