In the Government Office’s document No 997 issued on February 27, Prime Minister Nguyen Tan Dung affirmed that it is not necessary to apply the urgent measures proposed by the State Bank of Vietnam to control the foreign exchange of indirect foreign investment at a meeting held on February 12 by the National Financial and Monetary Policy Advisory Council. However, Mr Dung asked the Ministry of Finance, the State Securities Commission, the State Bank of Vietnam, the Ministry of Public Security and the Government Inspectorate to launch supervisory activities aimed at ensuring organisations and individuals’ adherence to State regulations. In addition, he highlighted the importance of strictly handling law breakers, including withdrawing licenses and banning units or individuals from participating in the securities market.

Mr Dung requested the Ministry of Finance, the State Securities Commission and relevant agencies to rapidly issue documents on guiding the implementation of the Securities Law, the Foreign Exchange Ordinance and other related documents.

The National Financial and Monetary Policy Advisory Council should propose to the Government effective measures to ensure the securities market will develop rapidly and sustainably while avoiding socio-economic instability.

In fact, the development of the Vietnamese securities market is positive in two aspects: First, Vietnam has diversified forms of attracting foreign direct investment (FDI), official development assistance (ODA) funding and inflows of indirect investment capital. Second, attracting capital through the securities market is an important channel as all countries which want to develop have to expand this channel. The development of the securities market will attract inflows of both domestic and foreign capital. Several transactions after the Lunar New Year Festival (Tet) showed that many domestic and foreign individuals and organizations were rushing to invest in the securities market.

However, many experts attributed the rapid but unstable development of the Vietnamese securities market to a number of factors. First, the Vietnamese auditing system is weak and not open and transparent. The accounting system is not compatible with international standards. Second, the stronger development of other services and financial institutions is not for the good of the securities market.

Doctor Vo Tri Thanh, head of the Policy Research Department of International Economic Integration (under the Central Institute of Economic Management) said Vietnam should ensure the healthy and stable development of the securities market on a macro-level in order to avoid market fluctuations. In addition to opening the financial services market to lure more capital inflows, Vietnam should strengthen supervision of short-term capital resources in particular. Without having a good information and supervision system, the economy is likely to fall apart and even face a crisis, Mr Thanh said.