HCMC – A new draft law reopens the corporate bond market to professional individual investors, reversing an earlier proposal that would have excluded them.
Deputy Prime Minister and Minister of Finance Ho Duc Phoc presented the revised draft law to the National Assembly (NA) today, October 29, which includes updates to seven finance-related laws covering securities, accounting, independent auditing, state budget, public asset management, tax management, and national reserves.
Under the proposed changes to the Securities Law, individual investors will be allowed to trade corporate bonds via private placement if the issuing company holds a credit rating and has asset-backed securities or secures guarantees from a bank.
The draft law also introduces amendments aimed at curbing stock market manipulation. These measures would prohibit insider trading activities, such as failing to disclose planned transactions involving shares or public fund certificates prior to execution.
The NA’s Economic Committee has expressed support for classifying foreign institutional and individual investors as professional investors, a move expected to boost foreign participation in Vietnam’s stock market, promote growth, and expand indirect foreign investment.
Deputy Finance Minister Nguyen Duc Chi said at a press briefing on October 28 that the proposed amendments aim to improve market quality, mitigate risks, and protect individual investors. To enhance transparency, the Finance Ministry recommended that companies issuing bonds through private placement maintain credit ratings and secure their bonds with either assets or payment guarantees.
Chi added that the ministry is also advocating for reforms to streamline the approval process for public bond issuance, allowing eligible companies to access capital more efficiently. Public bonds, unlike those sold via private placement, will continue to be open to all investors, regardless of professional status.
Since the Securities Law’s enactment in 2019, Vietnam’s corporate and private bond markets have faced challenges, with some entities exploiting legal loopholes to commit fraud.
A notable case involved Tan Hoang Minh Group, which engaged in a bond fraud scheme from 2021 to 2022. Faced with financial difficulties due to a stagnant real estate market, tightened bank credits, and the Covid-19 pandemic, the group’s chairman, Do Anh Dung, directed his team to stage fake business activities and issue corporate bonds through private placement, amassing over VND8.6 trillion. This incident significantly eroded investor confidence in the Vietnamese market.
Another major case is the case of Van Thinh Phat Group, where former chairwoman Truong My Lan and her accomplices were accused of issuing 25 fraudulent bond packages, with a combined value of nearly VND30.87 trillion.
In response, the Government issued Decree 65 in 2022 to boost transparency in the corporate bond market. The decree requires professional individual investors to hold an investment portfolio worth at least VND2 billion for 180 days or longer, and mandates debt-issuing organizations to report on their credit ratings.
Since the Tan Hoang Minh and Van Thinh Phat fraud cases emerged, corporate bond sales have seen a marked decline. According to data from the Ministry of Finance, corporate bond issue volumes in 2023 plummeted by 27% over 2022 to VND245.9 trillion.
The new draft law strengthens the criteria for individual professional investors, requiring a minimum portfolio value of VND2 billion or a taxable income of at least VND1 billion in the previous year, with additional conditions for investment duration and trading frequency. Foreign investors are also now recognized as professional investors.
