The National Assembly of Vietnam dramatically altered the paradigm in 1999 when it passed the  legislation on enterprises, laying the foundation for domestic corporate governance. This drastic shift aided in the expansion of the private sector, creating more job possibilities in the process.

In Asia and globally, Vietnam has been considered a competitive source of profitable revenue generation resulting from the diverse development of domestic production and private enterprise is increased.

The major four players in the promotion of Corporate Governance are: –

Capital Markets promoting corporate governance: –

The Ho Chi Minh Stock Exchange (HOSE) and the Hanoi Stock Exchange (HNX) are the two stock exchanges in Vietnam where the capitalization market for HOSE is US$53.8 billion and US$6.9 billion for HNX.

The data has been recorded for the year 2016. 7,000 firms are listed in the two-stock exchange with most being SOEs. A total of 26,785 enterprises are registered with new establishments with a capital of around US$11.98 million scored in the first quarter of 2018. The growth of the enterprise has recorded a rise of 1.2 percent whereas the registered capital growth by 2.7 percent.  

State Securities Commission (SSC) promoting corporate governance: —

It is a governmental agency in charge of organizing and regulating the security operations in the market to maintain orderly, safe, transparent, equitable, and efficient securities in the market with the importance of shareholder rights to be protected.

It serves as a non-bank listed firm with the enforcement power of suspending or removing licenses. The SSC (State Securities Commission) held the ASEAN Green Bond Standards Roundtable Meeting with an International Finance Corporation in March 2018 to promote sustainable and green capital markets.

State Bank of Vietnam promoting corporate governance: —

It is a government agency for banks and financial institutions and manages the monetary and foreign exchange at a state level so that the Vietnamese currency can be stabilized and public services can be provided for socialist orientation.

The aim of the capital market development board is to researching and designing securities projects so that the requirements can be prepared for the securities market.

The Basel II Accord is implemented by the State Bank of Vietnam. It is a set of international banking regulations aiming to promote stability and soundness in the financial sector.

The process has been implemented for issuing regulation to strengthen up the regulations and improve the corporate governance.

The SBV (State Bank of Vietnam) in 2016 also issued Circular 01/2016/TT-NHNN, providing guidelines for corporate governance in credit institutions.

A clear organizational structure has been established by the banks in the circular with separate boards of directors and management boards.

The bank also requires an internal control system, a risk management system, and a compliance function.

The SBV also issued Circular 06/2019/TT-NHNN, in 2019, providing guidelines on corporate governance for state-owned commercial banks.

The transparency, accountability, and risk management practices are improved by the circular banks. A clear separation is required between the roles of the state owner and the roles of the bank’s management.

SOEs and SCIC promoting corporate governance: —

In the nation’s economy, SOEs (State Owned Enterprises) got a dominant position and over the two decades, many joint-stock firms are a result of the transformation of many SOEs where the state holds the majority interest.

The function of SOEs in Vietnam is ownership rights exercising and regulations where finance and favorable government conditions are easily accessible with a pressure limited to develop competitiveness and thereby transparency can be enhanced.

SCIC (The State Capital Investment Corporation) was for assessing governance, promoting SOE (State Owned Enterprises) restructures and the utilization of the state capital can be increased where the portfolio for the SCIC’s consist of 133 companies with a state capital of around the US $0.82 billion.

The ownership representation rights are protected by the SCIC to enhance the efficiency of corporate governance and ensure management practices.

Sources:- Business sustainability in Asia, ssc, the asmf, sbv, the world bank, scic, investopedia,