Ministry outlines plan to develop bond market
HCM CITY (VNS)— The Ministry of Finance has outlined a plan that will give priority to government bonds in the bond market under Decision No. 261/2013.
Under the plan, by 2020 the domestic bond market would be developed in conformity with the scale of the economy and with other parts of the domestic financial sector, including the stock market and monetary and credit market.
The domestic bond market will also be developed in a way that would ensure its stability as well as the security of the entire financial system, while being gradually closer to international rules and standards.
If these goals are realised seriously, the market is expected to become an important, safe and effective capital-mobilisation channel for the economy. It would ensure transparency as well as protect the legitimate benefits of those involved in the market.
Based on these general objectives, the finance ministry has set special targets for the development of the domestic bond market from now to 2020.
In detail, the number of outstanding bonds will increase from 18 per cent in 2011 to 38 per cent of the Gross Domestic Product (GDP) by 2020. Outstanding government bonds will account for 22 per cent; enterprise bonds, 7 per cent; and the remaining, government-guaranteed bonds, and bonds issued by local governments (or municipal bonds).
From now to 2015, government bonds will be issued in terms of four to six years, and the term will last between six and eight years during the 2006-2020 period.
The percentage of government bonds and government-guaranteed bonds held by insurance companies, pension funds and fund-management companies will be raised from 12 per cent in 2011 to 20 per cent in 2020.
To realise all the objectives, the bond-market development plan will include several measures, one of which is to set up companies specialising in measuring prestige in the domestic market.
It would also establish and develop voluntary additional pension funds, and policies related to the management of the budget in combination with the management of debts and development of the government bond market.
In addition, authorised agencies will review policies including taxation, fees and bond-related transactions in order to make necessary adjustments to current regulations to help the bond market be more attractive to investors.
For the primary market, the finance ministry will focus on developing the system of the first level agents who will be responsible for contributing to creating the market.
It will make plans and set up timetables for issuing government bonds in line with the development of the market and investors’ demand.
The issue of government bonds will be carried out publicly every three months or every year.
The ministry will also have to improve policies and a system that will be applied to transactions of government bonds and government-guaranteed bonds in the Ha Noi Stock Market so as to ensure transparency and accurate information on interest rates.
Viet Nam’s State Treasury plans to mobilise VND150 trillion (US$7.2 billion) by issuing government bonds this year.
Of the mobilised capital, VND90 trillion will be used to compensate for overspending of the budget, and VND60 trillion for developing projects involved in construction of transport facilities and irrigation works.— VNS