Vietnam Unveils Tax Breaks and Fee Reductions to Attract Overseas Investors
In a strategic move to invite more overseas investors to its burgeoning stock market, Vietnamese authorities are formulating a series of reforms designed to boost capital inflows into South-East Asia’s most rapidly expanding economy. These measures are aimed at enhancing the attractiveness of Vietnam’s financial market to foreign stakeholders.
The State Securities Commission of Vietnam is actively considering the introduction of tax breaks and fee incentives for fund management companies as a part of this platform. The objective is to encourage increased international participation in the stock market. According to Vice Chairman Bui Hoang Hai, who offered insights during an interview in Hanoi, these reforms are slated as a top priority for regulatory bodies by the year 2025.
“Addressing bottlenecks to ensure a more enticing market for foreign investors is crucial,” Hai stated. “The Vietnamese stock market is already a significant player in the region, but there remains vast potential for further growth.”
To augment Vietnam’s appeal to foreign capital, additional regulatory measures are planned. These include streamlining the procedures for opening accounts connected to indirect investment capital and enforcing a regulation that mandates corporate disclosures to be made available in English. The nation’s principal stock exchanges in both Hanoi and Ho Chi Minh City have been instructed to accelerate the deployment of a new trading system designed to speed up transaction settlements.
In recent years, Vietnam has launched multiple initiatives aimed at enhancing the attraction of its equity market to global investors. Among these efforts is the pursuit of reclassification as an emerging market by FTSE Russell indexes. Notably, a significant step was taken in November, when the country eliminated a requirement obligating overseas investors to fully prefund equity trades, thereby removing a long-standing barrier that hindered its potential market upgrade.
However, deterrents do exist which could potentially limit foreign investors’ engagement. One of the primary challenges involves restrictions on overseas ownership in lucrative industries like banking, transport, and retail. Furthermore, global economic shifts stemming from fluctuating United States policies may cause international investors to exhibit caution towards the Vietnamese market.
Despite these challenges, the potential elevation of Vietnam’s stock market to emerging-market status carries immense promise. Achieving such a status could facilitate a substantial inflow of capital, estimated between $5 billion to $6 billion, derived from both passive and active investment funds.
Overall, Vietnam’s concerted efforts to optimize its stock market environment mark a pivotal advancement in securing its position as a formidable entity in the regional economic landscape. Through targeted reforms and strategic incentives, the country is progressively aligning its financial infrastructure to meet the expectations of a global investor base.
