According to Vu Chi Dung, head of the legal and external relations department at the State Securities Commission (SSC), one of the notable points in the proposed amendments to the Investment Law is a review and reclassification of sectors subject to restricted market access for foreign investors.

“So far, the Ministry of Finance has sought opinions from relevant ministries and agencies and received feedback from nine out of 12 consulted bodies. The goal is to expand foreign ownership limits in sectors that do not require restrictions on foreign investors,” Dung told at a conference titled "Synchronized solutions for capital market development", organized by The Investor on July 23.

In addition, regulators are studying amendments to the government's Decree 155/2020/ND-CP. The current decree contains provisions related to 43 sectors where ministries and agencies have not specified foreign ownership limits, potentially creating difficulties during implementation.

The proposed revision is expected to remove foreign ownership restrictions for these sectors, thereby allowing greater room for foreign investors in the stock market. This is also one of the criteria closely monitored by MSCI during its assessment of Vietnam’s potential market upgrade.

Dung also highlighted another important factor: improving the country’s sovereign credit rating. A higher sovereign rating would benefit domestic companies by helping reduce capital mobilization costs.

S&P Global Ratings has held multiple discussions with the SSC and provided information on new policies and regulations being revised to attract foreign capital into Vietnam’s capital market. The SSC has invited S&P to join a capital market development advisory group alongside international financial institutions and investment organizations such as FTSE Russell and MSCI.

Regarding innovation and entrepreneurship, authorities are drafting a decree on innovative startups. The amended Securities Law is expected to be submitted to the government in August and presented to the National Assembly in September for approval at its October session.

For the corporate bond market, the SSC is studying the establishment of a bond payment guarantee fund, a model introduced for the first time in the draft amendments to the Securities Law.

The regulator has also reviewed resolutions issued by the Party Central Committee and the government, particularly new policy directions, to incorporate them into draft laws and guiding documents, ensuring consistency across the legal framework.

Meeting MSCI upgrade criteria

Regarding market upgrade objectives, the SSC is implementing measures to meet MSCI’s criteria before 2030. Expanding foreign ownership limits is considered a key requirement.

In addition, listed companies will be required to transparently disclose their free float ratios, while the scale of freely transferable shares needs to improve and increase compared with current levels.

Another requirement is the development of the foreign exchange market to better support the stock market, particularly through the introduction of currency hedging instruments for foreign investors.

This is important because foreign investors must convert foreign currencies into Vietnamese dong before making investments.

For foreign direct investment (FDI) companies, current regulations recognize businesses established in Vietnam as Vietnamese legal entities. However, in practice, there remain obstacles related to initial public offerings (IPOs), listings, and capital raising activities for this group of companies.

The SSC is coordinating with ministries, agencies and the FDI business community to clarify regulations from decrees and circulars to implementation guidelines. Several measures, including foreign ownership limits and reducing IPO application processing time to around 30 days, have been included in the draft law.

The next challenge is to complete guidance to ensure effective implementation. The draft law also continues to reduce administrative procedures, business conditions and processing times, creating more favorable conditions for companies to access the capital market.

Based on Indonesia’s experience and discussions with MSCI, regulators said the index provider is considering adding new criteria, including requirements that free float ratios must be publicly disclosed, transparent and sufficiently large to prevent excessive stock concentration.

This could affect different types of market participants, including exchange-traded funds (ETFs).

The issue is significant for the development of market indices and index-based investment funds. The SSC is also studying products such as depositary receipts to facilitate foreign investors’ access to Vietnam’s market without creating additional obstacles related to foreign ownership limits.

Overall, business recommendations on expanding foreign ownership limits, developing the corporate bond market, diversifying financial products, promoting green finance, green businesses and environmental, social and governance (ESG) practices have been incorporated into the capital market development strategy.

At the same time, corporate governance regulations continue to be improved to enhance transparency and the quality of listed companies. The Corporate Governance Code has been updated in line with new OECD standards.

The key challenge now is ensuring effective implementation of these standards in practice.