The Decree 51/2018/NĐ-CP, which will be effective from June 1 this year, will remove many hindrances in the country’s commodities exchanges, Vinh said.
More goods will be traded on Vietnam’s commodities exchanges
|
In addition, it can trade all goods, which either aren’t prohibited by the State or trade with regulated conditions. Currently, only some kinds of commodities are allowed to trade on the exchanges.
Besides, the form of the trading order will be also extended. Apart from the written request, other forms with equivalent value such as telegraph, telex, facsimile, data message and other forms as prescribed can be accepted in the commodities exchanges.
The new decree also regulates that foreign investors will be allowed to contribute capital to establish commodity exchange in Vietnam.
However, their ownership in the exchange should not exceed 49 per cent of its charter capital. Foreign investors are also permitted to trade goods on the commodity exchange as clients and can become members of the exchange (brokers or traders) without ownership restraint.
A brokerage member must have a charter capital of VND5 billion (US$220,000) or more while a trading member must have at least VND75 billion.
The decree stipulates that the commodity exchange must have a charter capital of at least VND150 billion ($6.6 million) and an IT system that meets technical requirements in processing purchase and selling orders as well as a software solution with a capacity of tracing transactions, payment and delivery for at least five years.
The Ministry of Industry and Trade will be responsible for verifying and granting the establishment license.
The decree, which was issued on April 9, amends and supplements a number of articles of the government’s Decree No. 158/2006/ND-CP, dated December 28, 2006, on the conditions for the establishment of commodity exchange.
The operation of Vietnam’s commodities exchanges has not been really exciting and commensurate with the potential of the country’s economy. Total value of contracts via the exchanges has so far reached only VND7.99 trillion, mainly from the transactions of coffee.
In 2010, the Ministry of Industry and Trade (MoIT) certified the Vietnam Commodities Exchange as the first commodities marketplace in the country. Three years later, the Info Commodities Exchange was set up but now is closed.
The Buon Ma Thuot Coffee and Commodity Exchange is another one that has not been working since it was established in 2011.
The MoIT gave two certificates to the Info Commodities Exchange in 2013 and Vietnam Commodities Exchanges (VNX) in 2010, however, only VNX still exists.
According to experts, commodities trading through the exchanges was still underdeveloped mainly due to the limitations of the legal framework, which were not suitable for practice.
Besides, most producers and investors were not used to trading commodities on the exchange, plus Vietnamese farmers and enterprises still traded directly with brokers rather than through commodities exchanges.
Local enterprises were often limited in access to lending sources so that they had to sign loan contracts with banks using their farming products as guarantees and therefore, they lacked sufficient amount of available product to conduct trade orders on the exchange.
Earlier, experts also suggested the government to improve the legal framework to allow local exchanges to link with international ones and allow foreign investors take part in the local commodities market in order to make commodities trading more efficient.
