Decision No. 128/2007/QD-TTg of August 02, 2007, on approval of the project for development of Vietnam's capital market up to 2010 and outlook to 2020.

DECISION

ON APPROVAL OF THE PROJECT FOR DEVELOPMENT OF VIETNAM'S CAPITAL MARKET UP TO 2010 AND OUTLOOK TO 2020

THE PRIME MINISTER

Pursuant to the Law on Organization of the Governmentdated 25 December 2001; Pursuant to the Law onSecuritiesdated 12 July 2006;

Having considered theproposal of the Ministry of Finance in Submission 22-TTr-BTCdated 28March2007,

DECIDES:

Article 1. To approve the project on development of Vietnam's capital market up to 2010 and the outlook to 2020, with the following main particulars:

A. OBJECTIVES

1. General objectives:

To develop Vietnam's capital market in which the securities market plays the dominant role in a fast, synchronous and sustainable manner; to gradually turn the capital market into an important component of the financial market, thus greatly contributing to mobilizing capital for developmental investment and economic reform; to ensure publicity and transparency and to maintain the order, safety and efficiency of the market and to enhance management and supervision of the market; to protect the lawful rights and interests of investors; to gradually increase competitiveness and to proactively integrate into the international financial market. Targeted by 2020, Vietnam's capital market will reach the developmental level of capital markets in regional countries.

2. Specificobjectives:

To develop a diversified capital market in order to satisfy the need for capital mobilization and investment by entities in the economy. Securities market capitalization is targeted to reach fifty (50) per cent of GDP by 2010 and seventy (70) per cent by 2020.

B. VIEWPOINT AND PRINCIPLES FOR DEVELOPMENT OF THE CAPITAL MARKET:

1. To form and develop synchronously the structure of the capital market, in which the securities market plays an important role in order to ensure the efficient mobilization and distribution of investment capital sources for economic growth; to closely combine [the capital market] with the money market to curb inflation and maintain currency stability; to successfully integrate [the domestic capital market] into the international capital market;

2. To build and develop a rationally structured capital market; to ensure the transparency of the market's operation; and to increase the competitiveness of organizations and individuals involved in the market activities;

3. To organize the operation of the capital market in a safe, efficient and sound manner; and to assure national financial security.

C. SOLUTIONS FOR IMPLEMENTATION

1. Long-term solutions:

(a) To develop the capital market (consisting of the stock market, bond market, derivative instruments market, exchange market, over-the-counter market etc.) into a modern and completely structured one, operating in accordance with the best international practice and connectible with international and regional markets;

(b) To strongly develop capital supply channels both at home and abroad for the market; to expand the network of investors, especially institutional investors; to fully develop intermediary institutions; to diversify the services provided; and to ensure the presence of all components of a developed capital market in the region;

(c) To closely combine monetary policies with fiscal policies; to harmonize the objective of capital mobilization for economic growth and sustainable development of the capital market with the objective of maintaining macroeconomic stability, curbing inflation and assuring national financial security;

(d) To enhance State administration; to implement effectively the function of checking, inspecting and supervising compliance with law by organizations and individuals involved in market activities.

2. Short-term solutions:

(a) To scale up the quantity of, and increase the quality of, and to diversify various kinds of goods

in order to meet the demands of the market:

- To scale up the quantity of and diversify bonds and methods of issuing Government bonds, municipal bonds and corporate bonds on the capital market; to develop all kinds of convertible bonds of enterprises and construction bonds for investment in key national infrastructure projects;

- To speed up the program on equitization of State owned enterprises and corporations, economic groups and State owned commercial banks; to attach equitization to listing in the securities market; and to expand the issue of new shares to mobilize capital on the market. To request equitized enterprises satisfying the listing conditions to be listed; to concurrently review and continue the sale of State capital in enterprises in which the State is not required to hold controlling shares. To convert foreign invested enterprises into shareholding companies with their shares to be listed and traded in the securities market;

- To develop the following derivative securities: call options and put options, future contracts, forward contracts; combining products (securities – insurance, securities – credit, savings – securities, etc.); and products obtained from securitization of assets and liabilities, etc.

(b) To complete gradually the structure of the capital market to ensure State administration and supervision capacity:

- To separate the bond market from the stock market in order to form a specialized bond market. To gradually study, establish and develop a futures exchange for derivative instruments and a market for securitization of medium and long term bank loans;

- To develop the stock market at various levels to meet the needs for issuing, listing and trading shares of various types of enterprises and to ensure that State administration and supervision follows the direction of separating the centralized trading market from the over-the-counter trading market (OTC), and the market for issuance and registration for trading by small and medium sized enterprises;

- To convert Securities Trading Centres into Stock Exchanges operating as companies in accordance with the LawonSecurities. Stock Exchanges and Securities Trading Centres shall implement the function of organizing and supervising centralized securities trading. To upgrade comprehensively the technical infrastructure of the market, thereby ensuring it can be connected to regional markets;

- To organize and manage the OTC securities trading market via the following solutions: conducting registration and centralized securities depository of shareholding companies satisfying all conditions stipulated in the Law on Securities; studying the trading mechanism with respect to securities unqualified to be listed on the basis of agreements via securities companies; paying centralized securities transactions and transferring [such transactions] via the Securities Depository Centre; at the same time, establishing a mechanism for overseeing information disclosures on the securities trading market in order to increase the transparency and publicity of the market; assuring State administration and supervision of securities transactions; and narrowing activities on the free market.

(c) To develop intermediary institutions and market services:

- To rationally increase the number of securities companies, fund management companies, securities investment companies etc., and to improve the quality of operation and financial capability of such companies; to diversify services provided on the market; to increase the professionalism and quality of services; and to ensure publicity, transparency and equality on the market;

- To expand the operational scope of the Securities Depository Centre; to apply international depository standards; and to effect interlinked payment transactions between the capital market and the money market;

- To gradually form a credit rating market in Vietnam. To permit qualified credit rating organizations to be established in Vietnam and to permit a number of foreign reputable credit rating organizations to conduct credit rating activities in Vietnam.

(d) To develop a network of foreign and domestic investors:

- To encourage professional investment institutions (banking, securities, insurance, etc.) to participate in investment on the market in accordance with law. To carry out the roadmap to open up the Vietnamese market for foreign institutional investors in accordance with the undertaken roadmaps;

- To diversify investment funds; to facilitate Vietnam Social Insurance, Vietnam Postal Savings and so on to make investments on the capital market; to gradually develop and diversify superannuation funds in order to mobilize capital from inhabitants participating in investment; and to encourage the establishment of foreign investment funds making long-term investments in the Vietnamese market.

(dd) To complete the legal framework and improve the effectiveness and efficiency of State administration and supervision:

- To perfect a consistent and synchronous legal system satisfying the management and supervision requirements and the needs for integration into the international and regional capital market;

- To supplement remedies to strictly deal with civil and criminal cases in order to prevent and deal with breaches on the capital market and the securities market;

- To research and perfect policies on taxes, fees and charges applicable to securities activities, and to promote long-term investment and restrict short-term investment; to moderate profit obtained from securities business, and concurrently, via the payment of taxes, fees and charges, to contribute to overseeing the activities of the securities market and each entity or member joining the market (including foreign and domestic investors);

- To apply market supervision standards in accordance with the international practice; to intensify the checking, inspection and supervision of compliance with law by members joining the market; to check and monitor marketed goods, and to ensure publicity and transparency; to strengthen the supervision and enforcement capacity of market regulatory bodies;

- To reinforce the State apparatus, improve State administration and supervision of the capital market; to gradually separate the function of administration from the function of supervision of market activities; to study as soon as practical the establishment of a national financial supervision body to assist the Prime Minister in co-ordinating policies and warning systems and in managing and supervising financial and monetary activities at a macro level.

(e) To proactively open the market and integrate into the international and regional markets:

- Step by step, to open the capital market for foreign investors in accordance with the undertaken integration roadmap and concurrently, to ensure control of capital inflows and capital outflows; to expand international co-operative activities in terms of policy consultancy, legal consultancy and market development;

- To speed up training work and to develop human resources for the capital market; to intensify dissemination of knowledge about the capital market and securities market to the public, to enterprises and economic organizations.

(g) To assure national financial security by carrying out the following actions: to efficiently supervise capital transactions; to take measures to closely control capital flows; in necessary cases to apply appropriate solutions to reduce the exchange rate and preclude market deformity and crisis risks on the market. Such solutions shall be stated in legal instruments and notified to investors and may be applied when security of the financial system is likely to be affected. To apply a special mechanism of supervision of weak intermediary institutions in order to minimise negative chain-reaction impacts on the entire system.

Article 2.Implementing organization

The Ministry of Finance shall preside over the co-ordination with ministries, ministerial equivalent bodies, Government bodies and People's Committees of provinces and cities under central authority to organize implementation of this Decision.

Article 3

This Decision shall be of full force and effect fifteen (15) days from the date of its publication in the Official Gazette and shall replace Decision 163-2003-QD-TTg of the Prime Minister dated 5 August 2003 on approval of the strategy for development of the Vietnamese securities market up to 2010.

Article 4

Ministers, Heads of ministerial equivalent bodies, Heads of Government bodies, Chairmen of People's Committees of provinces and cities under central authority and Heads of relevant bodies shall be responsible for implementation of this Decision.