The paradox of a pillar driving 80% of exports yet 'missing' from the capital market: A gap that spells a big opportunity?

Accounting for just 10 of nearly 1,600 listed companies, the FDI bloc is being invited to step onto Vietnam's stock exchange in a new journey.

The speakers at the event.

Contributing up to 80% of export turnover and serving as an important pillar of the economy, the presence of foreign-invested (FDI) enterprises on Vietnam's stock market nonetheless remains very modest.

It is estimated that of the roughly 1,600 companies currently listed on the stock exchange, only 10 are FDI enterprises, with charter capital of VND12,629 billion and total assets of VND44,696 billion, corresponding to a mere 0.15% and 0.48% of the entire market's scale, respectively.

Since 2017, four FDI enterprises have converted their public company registration, but no new listings have been recorded.

"Vietnam's listed companies are too concentrated in banking, real estate, and a handful of large-cap stocks. The market's next IPO wave needs to broaden opportunities for other sectors," emphasized Thomas Nguyen, Director of Foreign Markets at SSI Securities Corporation, at the event "The listing roadmap for FDI enterprises in Vietnam."

According to Thomas, FDI enterprises play a central role in Vietnam's exports, yet have almost vanished from the capital market, which is both a "gap" and an opportunity for the market.

Thomas Nguyen, Director of Foreign Markets at SSI Securities Corporation

Agreeing with this view, Hoang Van Thu, Vice Chairman of the State Securities Commission (SSC), said the participation of the FDI bloc in the stock market today does not match its role and contribution to the economy.

With the ambitious target of raising stock market capitalization to 120% of GDP by 2045 and an average capital-raising value target of about VND2 quadrillion per year, attracting capital from the FDI enterprise group is indispensable.

Promoting FDI listings is also part of the roadmap to "institutionalize" the market under Decision 3168, aiming for institutional and foreign investors to account for 30-40% of trading volume after 2030.

"By 2030, the goal is for the investment asset value of foreign investors to reach about 15% of GDP," Thu shared.

On the other hand, FDI enterprises, which have invested heavily in Vietnam over the past decades, are also closely watching this trend. With more than 5,630 projects and total registered capital exceeding USD79.4 billion, Japan is currently one of Vietnam's largest sources of foreign direct investment, with leading names such as Sumitomo, Marubeni, and Aeon.

Ito Naoki, Japanese Ambassador to Vietnam, shared that quite a few Japanese enterprises are interested in listing their business segments on Vietnam's stock market.

The objective of FDI enterprises in listing is to enhance their visibility, governance standards, and reputation in the market, while also demonstrating the enterprise's long-term commitment to Vietnam.

"The participation of the FDI bloc in the stock market can diversify investment opportunities, enhance market liquidity, and further improve market standards through rigorous corporate governance and information disclosure," Ito Naoki shared.

Untangling the "bottlenecks"

If listing brings so many benefits, then why can the number of FDI enterprises still be counted on one hand?

According to the SSC representative, the biggest "bottleneck" for FDI enterprises lies in specific commitments to the Government or local authorities in their investment certificates. Accordingly, FDI enterprises often commit to schedules for capital contribution, technology transfer, labor training, or infrastructure construction (such as roads and parks).

Hoang Van Thu, Vice Chairman of the State Securities Commission (SSC).

Under the regulator's rules, enterprises must complete or clear all these commitments before being approved for listing.

On the other hand, the complexity and ambiguity of the regulations also leave FDI enterprises still confused about the current legal framework and the specific procedures for converting from a private to a public company.

Another important factor is that capital needs are not yet truly large. Trinh Son Hong, Acting Chairman of the Board of the Ho Chi Minh City Stock Exchange (HOSE), said many FDI enterprises operating in the Vietnamese market are mainly branches of international corporations that enjoy ample capital from their parent companies, so the need to raise capital locally may not yet be truly urgent.

"In addition, the pressure of having to share control and be subject to public scrutiny is also a factor that makes them consider carefully," Hong said.

Nevertheless, most mechanisms have been changed to become more open. Tran Kim Dung, Deputy Head of the SSC's Offering Management Department, affirmed that current law no longer discriminates between domestic enterprises and foreign-invested enterprises.

In terms of procedures, the SSC has significantly improved the process of combining IPO and listing, shortening the timeline to about 30 days.

"The key point enterprises need to note is that they must review and complete the investment commitments (on capital, technology transfer, labor training, etc.) stated in their investment certificate before submitting the listing dossier," Dung said.

In addition, enterprises need to map out their business lines to ensure they still comply with the foreign ownership ratio after becoming a public company.

As the mechanism extends an invitation, the demand for listing among FDI enterprises is forecast to rise. Tsutomu Hiramatsu, Senior Manager at Daiwa Securities Group, believes Vietnam today has moved far beyond the role of a mere manufacturing base or export destination.

Instead, Vietnam is becoming a strategic market for growth, long-term investment, and domestic consumption. Therefore, it is a natural process for Japanese enterprises to consider more diverse financing options, including participating in Vietnam's capital market.

"As more and more Japanese-invested enterprises participate in Vietnam's capital market, they can contribute to increasing the depth, liquidity, and diversity of the market," Tsutomu Hiramatsu observed.

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Source: TheLeader — theleader.vn. This article is republished for the purpose of sharing knowledge with the community of founders and investors within the HCM VIF ecosystem.