The Ministry of Finance of Vietnam is pooling ideas to draft a decree to set up and operate a credit rating agency (CRA). This type of high-level financial services plays a very important role in the development of the bond market and attracts great attention from many domestic and foreign investors.
According to Mr Nguyen Hoang Hai, General Secretary of the Vietnam Association of Financial Investors (VAFI), the Drafting Committee has made many efforts to study these new high level services for Vietnam’s financial market. However, Vietnam cannot set up a CRA which can meet the credibility of the community of investors under the spirit of the Draft; that means the Draft needs to be formulated towards basic changes.
According to his analysis, the current Enterprise Law, Investment Law and other legal documents on financial securities do not prohibit the establishment and operation of CRAs and credit rating services. However, some credit rating activities by a credit information centre of the State Bank of Vietnam or of some companies are very simple and not trustworthy enough for investors, some are even causing harm to financial markets or creating misunderstanding among small investors and the public. Therefore, to assess the financial capacity of the organisation, evaluators must be well qualified, independent and have international experience, they never compromise with businesses from which they are hired and paid for evaluation.
According to international experiences, there should not be too many CRAs as this would lead to unfair competition and unqualified services. The Vietnamese financial markets only need two domestic CRAs, along with the participation of the global CRAs.
Since 2004, the group of experts of VAFI, IFC and Nomura Securities Institute has recommended that the Ministry of Finance should establish two CRAs. One is a domestic CRA, which is established under the Law on Enterprises and has high reputation to the small and medium enterprises, and another is internationally operated under a parent CRA or 100 percent FDI. “However, this mentioned criteria is a necessary condition for a new start of a credit rating service in the territory of Vietnam and under this criteria, it is hard to ensure when Vietnam could have a creditable CRA”, Mr Hai said.
According to international experience, the financial market in Vietnam is too small to attract investors to make investment because the output is too small and Vietnamese businesses do not like the credit norm; therefore, it is necessary to create an environment for CRA activities before launching and operating a CRA in Vietnam. In Thailand, the government regulated that the businesses must have credit rating if issuing the corporate bonds. In the Philippines and countries of Latin America, the government requested the credit and insurance institutions to assess their credit rating annually. Thus, to attract selective strategic investors with high reputation, the government must build a legal framework to establish the operating environment for the CRA.
“To have more experience in formulating policies and calling strategic partners and participants for establishing the CRA, the Ministry of Finance should cooperate with the International Financial Company (IFC) and Nomura Securities Institute. IFC has helped many governments establish the CRAs and also become the founding shareholders of many CRAs”, Mr Hai said.
Anh Mai
Đăng ký: VietNam News
