Overview

Investors used to be afraid to put their money in Vietnam. Why? Fear that company management would misuse funds for personal benefit. The previous laws lacked clear rules for transparency and directors’ obligations. And the regulatory system governing companies was fragmented and opaque. Vietnam also lacked clear legislation regulating the securities market, with the result that the informal stock exchange was much bigger than the official Ho Chi Min Stock Exchange. These shortcomings spurred reform—a new law on securities and an updated law on enterprises. This case study follows the timeline of the reforms and looks at challenges ahead for implementation.

Main Findings

• Congress adopted a resolution to initiate the reform process in January 2004. The Law on Enterprises and the Law on Securities were adopted in 2005 and 2006, respectively, and then entered into force in 2006 and 2007, respectively.
• The securities and enterprise reforms improved Vietnam’s Doing Business protecting investors indicator ranking from 170 to 165 and its overall ease of Doing Business ranking from 104 to 91.