World Bank report:Vietnam Laws Still Investor Unfriendly

For the cautious investors,it’s quite important to read this brief article from World Bank Report. The report on corporate governance was released in Hanoi and is based on the principles set out by the Organization for Economic Cooperation and Development (OECD),a grouping of more than 40 rich countries.

The salient points stated are:

• Vietnam’s business environment has improved considerably but there are still shortcomings that put investors at risk;
• the report had found that Vietnam did not comply with 18 of the 32 OECD principles;
• These relate mostly to protection of legal rights,information,decision on corporate activities,and incentives for shareholders and investors.
• The report said many recent actions by state-owned Vietnam Airlines – like granting scholarships to officials’ relatives for studying abroad and defending a law suit in a Rome because its executives did not fulfill their duties – were evidence that the company flouted corporate governance principles.
• OECD principles regulate that shareholders have the right to know important company information and disapprove wrongdoings by board of directors. However,violations occurred routinely at Vietnam Airlines for long without being disclosed,causing losses to its investor and the state;
• Vietnam has yet to pay attention to the rights of stakeholders and
• lacked standardized accounting and auditing systems which hampered stakeholders’ right to information. For instance,there was no unified model of corporate reports across sectors,and corporate reports were usually truncated,particularly about non-financial information.
• This was a result of inadequate laws on disclosure of information on conflicts of interest between investment companies,banks,stock intermediaries,and securities rating agencies.

Dr. Pham Duy Nghia of the National University of Hanoi said it was hard to ensure equal treatment to stakeholders in Vietnam because the country had some categories of shareholders not found anywhere else.

(Source:Thanhiennews.com)

• Deutsche Bank In its Maiden Foray Into Vietnam
• Vietnam bank in line for first foreign IPO-sources
• What Is In An Annual Report?
• Gamuda Made Its Maiden Foray Into Vietnam
• Vietnam:An Investment Opportunity
• Vietnam’s Global Competition Ranking Falls
• Major Vietnam construction firm plans IPO