Hanoi (VNA) – Officials and experts talkedchallenges and solutions to expand the capital – financial market of Vietnam ata forum in Hanoi on August 21.

Addressing the event, part of the VietnamEconomic Forum, Deputy Prime Minister Vuong Dinh Hue said it is necessary tolook into the imbalance between the credit market and the capital market,between credit and other added services in banks’ credit activities, and betweenthe short-term and long-term markets, particularly the bond market.

He cited the figure of 53 percent of businessesoperating unprofitably as of the end of 2016, saying that one of the reasonsfor this is the lack of capital.

Many companies depend on bank loans to operate, so theirfinancial expense is very high, plus other high expenses like market access andlogistics costs, which hampered their business performance, the Deputy PM said.

Deputy Governor of the State Bank of VietnamNguyen Thi Hong said over the past years, the financial market hasn’t developedas expected, but the stock and money markets have grown strongly and become themain sources of capital for the economy.

The stock market has recorded many breakthroughsin recent years with total market capitalisation surpassing 70 percent of thecountry’s GDP in 2017. In the money market, the credit-to-GDP ratio is about130 percent. Government bonds (G-bonds) still dominate the bond market, while corporatebonds account for only 1.25 percent.

All of them are short-term capital sourceswhilst the demand for medium- and long-term loans is big, thus putting pressureon credit institutions, Hong said.

Tran Van Dung, Chairman of the State SecuritiesCommission of Vietnam, said Vietnam’s capital – financial market aims to ensurethe balance among the banking market, the stock market and the bond market.

The country now has a very developed G-bondmarket and will boost the corporate bond market in the time ahead, he added.

At the forum, other speakers called forsolutions to existing flaws of the domestic capital – financial market such asthe shortage of medium- and long-term capital sources.

Ketut Kusuma, a senior specialist at the WorldBank, said the structure of Vietnam’s long-term capital market has shown manypositive signs. To expand the long-term market, the country should increasedata and information transparency, modernise the legal framework and themarket’s infrastructure, and improve its monitoring capacity.

For the stock market, it needs to integrate theequitisation of State-owned enterprises into the market development strategy.Meanwhile, the G-bond market should continue to be reformed to join globalemerging market indexes, he added.-VNA