JICA helps Vietnam improve efficiency, transparency of stock market

The Japan International Cooperation Agency (JICA) and the State Securities Commission of Vietnam (SSC) have launched a project to further improve the efficiency and transparency of the Vietnamese stock market.

The technical cooperation project, “Capacity building on promoting efficiency of Vietnamese equity market,” aims to improve the capacity of SSC and three stock exchanges in Hanoi and Ho Chi Minh City through various activities such as close consultancy and capacity building on various related matters.

The project focuses on securities market surveillance and inspection, supervision of market intermediaries, listing and public offerings in line with international standards, and raising awareness on investor protection among listed companies.

This project follows the JICA's "Project for capacity building on improving fairness and transparency of Vietnamese equity market" implemented from 2019 to 2023. It will stretch from April 2024 to March 2027.

Entering a new phase, in the context of the implementation of the "Strategy for the development of Vietnam's securities market to 2030", the Japanese government continues to support the efforts of the Vietnamese government for further enhancement of the capacity of the relevant authorities and upgrade the level of the equity market conducive for sustained socio-economic development of the economy.

The new project also enables the Vietnamese stock market to integrate into the ASEAN and international markets.

At a seminar to mark the launch of the project in Hanoi on Monday, SSC chairperson Vu Thi Chan Phuong recognized the Japanese government’s efforts to support the sustainable, just, and transparent development of the Vietnamese stock market.

The new JICA project holds special importance when the Vietnamese government is pursuing a status upgrade for the local stock market from a frontier to an emerging market, noted Phuong.

As of end-August, Vietnam’s stock market was capitalized at $280 billion, up 19.1% from end-2023 and equivalent to 69.2% of the country’s 2023 GDP. The average daily transaction value has risen 31.3% year-on-year in the year to date, to nearly $1 billion.

Foreign investors now hold some $50 billion worth of publicly traded Vietnamese equities, or 17% of the total market cap, Phuong informed.

Satoru Kawasaki, deputy commissioner of the Japan Financial Services Agency (JFSA), presented “Japan's securities market development: experience and lessons,” offering lessons for Vietnamese stakeholders.

He said that Japan experienced an economic bubble burst in the 1990s and spent 15 years on handling bad debts and dealing with economic crises. After 30 years, the country has totally got out of deflation and entered a new growth cycle.

“With its lessons, Japan stands ready to support Vietnam in mapping out correctly its economic development path in general and developing its stock market in a sustainable, secure, and transparent manner,” stated Satoru Kawasaki.

Kojima Kazunobu, a JICA consultant, told reporters that it would be great if the SSC-JICA projects could contribute to upgrading the Vietnamese market to an "emerging market" status and its integration into the international capital market.

The Vietnamese authorities are actively implementing measures, such as repealing pre-funding rules for foreign investors, with the aim of upgrading by 2025, and is engaging in dialogues with MSCI and FTSE as well as campaigning in Singapore and Japan.

“I hope that the Vietnamese authorities will continue to implement measures to address the issues raised through dialogues with MSCI and FTSE, and that an upgrade to the government's rating in 2025 will be realized,” said the expert.