APPROVING THE SCHEME FOR INVESTOR RESTRUCTURING AND DEVELOPMENT OF SECURITIES INVESTMENT FUND INDUSTRY

In adherence to the viewpoints, goals, objectives and solutions for development of the capital market and the securities market in documents and resolutions of the Communist Party of Vietnam (CPV), resolutions of the National Assembly of Vietnam, the Government’s Resolution No. 86/NQ-CP dated July 11, 2022 on safe, transparent, efficient and sustainable development of the capital market in order to achieve macroeconomic stability, mobilize resources for socio-economic development; In compliance with the 10-year Strategy for Socio-economic Development 2021 – 2030, Financial Strategy by 2030 approved by the Prime Minister in Decision No. 368/QD-TTg dated March 21, 2022, the Strategy for Development of the securities market by 2030 approved by the Prime Minister in Decision No. 1726/QD-TTg dated December 29, 2023.

2.1. Overall goals

Implement the Strategy for Development of the securities market by 2030 promulgated together with the Prime Minister’s Decision No. 1726/QD-TTg dated December 29, 2023 by ensuring a reasonable structure of individual investors, institutional investors and foreign investors; improving the quality of individual investors; encouraging individual investors to invest via securities investment fund; increase the proportion of domestic institutional investors and foreign investors in the securities market to improve investment efficiency, stabilize the market and increase the market depth. At the same time, focus on diversification of domestic investor bases, development of various types of securities investment funds; encourage pension funds and insurers to participate in the securities market by investing in government bonds, corporate bonds, stocks, fund certificates, etc. in order to improve investment demand quality, aiming at sustainable investment demand.

2.2. Specific goals

- By the end of 2030, transaction volume is projected to be approximately 70% from individual investors and 30% from institutional and foreign investors. These percentages are expected to increase in the subsequent years, reaching 60% and 40% respectively;

- The quantity of securities trading accounts of foreign investors is projected to be 200,000 accounts by 2030 and is expected to increase by 15% per year in the subsequent years;

- The quantity of securities investment funds is projected to be 500 funds by 2030 and is expected to increase by 25% per year in the subsequent years;

- Total net asset value (NAV) of securities investment funds is projected to be approximately 5% of GDP by 2030 and is expected to reach a double-digit percentage by 2035;

- The quantity of investors having fund certificates is projected to be 2,5 million investors by 2030 and is expected to increase to 5 million investors by 2035.

1. Research and propose improvements to policies and legislative documents on securities, insurance and banking to further increase institutional investor participation in the securities market, promote the development of the fund industry via solutions such as diversifying types of securities investment funds and fund certificate distribution channels; Propose policies and legislative documents on taxation towards encouraging investors to participate in securities investment funds, mobilizing social resources for investment and development; continue to implement solutions to upgrade the securities market to attract foreign indirect investment flows.

2. Promote programs for training, disseminating knowledge and information about securities and the securities market among investors to improve the investor sophistication, aiming at sustainable demand for the market.

3. Intensify management and supervision; gradually transition from compliance-based to risk-based management and supervision with an emphasis on mitigating systemic risks to preserve the integrity of the capital market and the financial market.

1.1. Increase training and dissemination of knowledge and information about securities and the securities market

(i) Solution: Develop and implement an Investor Education and Awareness Program, and a 5-year implementation plan (2025 - 2030).

+ Implementation: Presiding entity: State Securities Commission (SSC); Cooperating entities: Stock Exchanges, Vietnam Securities Depository and Clearing Corporation (VSDC), securities companies, the press and media.

+ Timeline: 2025 - 2026.

+ Deliverables: Investor Education and Awareness Program; 5-year implementation plan (2025 - 2030).

(ii) Solution: Execute programs for dissemination of knowledge about securities and the securities market, products and services of securities companies.

+ Implementation: Presiding entity: SSC; Cooperating entities: Stock Exchanges, VSDC, relevant professional associations, securities companies.

Timeline: 2025 – 2030 and beyond.

+ Deliverables: Program for dissemination of knowledge about securities and the securities market; Program for training in products and services of securities companies.

1.2. Improving the quality of investment advisory service providers and certified securities professionals

(i) Solution: Complete and apply a Code of Professional Ethics for the securities industry.

+ Implementation: Presiding entity: Vietnam Association of Securities Business (VASB); Cooperating entities: SSC, Stock Exchanges, VSDC, relevant securities companies.

+ Deliverables: Code of Professional Ethics for the securities industry, which is updated and applicable to securities companies.

(ii) Solution: Increasing accountability of organizations employing certified securities professionals.

+ Implementation: Presiding entity: SSC; Cooperating entities: securities companies.

+ Timeline: 2025.

+ Deliverable:  A Decree amending the Government’s Decree No. 156/2020/ND-CP dated December 31, 2025 on administrative penalties for securities-related offenses and the Government’s Decree No. 128/2021/ND-CP dated December 30, 2021 on amendments to Decree No. 156/2020/ND-CP.

1.3. Provision of new advisory services for investors

- Solution: Introduce financial planning as a new advisory service; Proposal of a competency framework and legal framework to regulate financial planners.

+ Implementation: Presiding entity: SSC; Cooperating entities: Units of the Ministry of Finance.

+ Timeline: 2028 - 2030.

+ Deliverable: Research report on financial planning consultants.

2.1. Fund management companies and securities investment funds

a) Development and diversification of types of securities investment funds

- Solution: Promulgate regulations on index funds, money market instrument funds, infrastructure bond funds, and exchange-traded funds (ETF), etc. aligned with international practice to meet market demand.

+ Implementation: Presiding entity: SSC; Cooperating entities: fund management companies, market participants.

+ Timeline: 2025.

+ Deliverable: A Circular amending Circular No. 98/2020/TT-BTC dated November 16, 2020 on operation and management of securities investment funds (hereinafter referred to as “Circular No. 98/2020/TT-BTC").

b) Increasing investment limits of open-end funds

- Solution: Increase limits on investment of open-end fund in privately placed securities of listed companies; Increase limits on investment in public offerings linked to listings; research and introduce new income-generating products in investment portfolios of open-ended funds in line with international practice.

+ Implementation: Presiding entity: SSC; Cooperating entities: Units of the Ministry of Finance.

+ Timeline: 2025.

+ Deliverables: A Circular amending Circular No. 98/2020/TT-BTC; a research report on new investment products in investment portfolios of public funds.

c) Diversification of stock market indexes

(i) Solution: Complete the Regulation on development, management, operation, and utilization of stock market indexes of Vietnam Exchange (VNX) and its subsidiaries towards diversification of stock market indexes and promotion of ETF product development.

+ Implementation: Presiding entities: Stock Exchanges; Cooperating entity: SSC.

+ Timeline: 2025.

+ Deliverable: A complete Regulation on development, management, operation, and utilization of stock market indexes of VNX and its subsidiaries.

(ii) Solution: Develop new indexes such as bond indexes, derivatives indexes, Environmental – Social – Governance (ESG) indexes, sectoral indexes, etc.

+ Implementation: Presiding entities: Stock Exchanges; Cooperating entities: SSC, index providers, market participants.

+ Timeline: 2025 - 2028 and beyond.

+ Deliverables: New stock market indexes.

d) Proposal of policies and legislative documents on insurance towards permitting social insurance funds, voluntary supplementary pension funds, voluntary pension funds, and unit-linked funds to invest in listed securities and public fund certificates.

- Solution: Propose promulgation of legislative documents on insurance towards permitting social insurance funds, voluntary supplementary pension funds, voluntary pension funds, and unit-linked funds to invest in listed securities and public fund certificates.

+ Implementation: Presiding entities: Insurance Supervisory Authority, Department of Financial Institutions; Cooperating entity: SSC.

+ Timeline: 2026 - 2027 and beyond.

+ Deliverables: Amended legislative documents on insurance.

e) Proposal of promulgation of policies and legislative documents on taxation towards provision of incentives for securities investment fund, voluntary supplementary pension funds, fund certificate investors.

- Solution: Propose promulgation of legislative documents on taxation to encourage development investment funds and investors in securities investment funds towards exemption and reduction of tax for long-term holders of fund certificates; introduce preferential tax treatment for employers’ and employees’ contributions to and income drawdown from voluntary supplementary pension funds.

+ Implementation: Presiding entity: Tax Policies, Fees and Charges Supervisory Authority; Cooperating entity: SSC.

+ Timeline: 2026 - 2027 and beyond.

+ Deliverables: Revised legislative documents on corporate income tax and personal income tax

f) Diversification of fund certificate distribution channels

(i) Solution: Complete legislative documents on application of information technology in distribution of fund certificates.

+ Implementation: Presiding entity: SSC; Cooperating entities: Units of the Ministry of Finance.

+ Timeline: 2025.

+ Deliverable: A Circular amending Circular No. 98/2020/TT-BTC.

(ii) Solution: Develop a system for provision of information about securities investment funds for the public to improve investors’ access to information about the investment fund industry.

+ Implementation: Presiding entity: VSDC; Cooperating entities: SSC, fund management companies and authorized fund certificate distributors.

+ Timeline: 2025 - 2028.

+ Deliverable: A system for provision of information about securities investment funds for the public.

g) Upgrading fund certificate transfer agent system

- Solution: Upgrade the transfer agent system to comprehensively develop functionality, increase processing speed, and satisfy demand for new fund types.

+ Implementation: Presiding entity: VSDC; Cooperating entities: SSC, fund management companies and authorized fund certificate distributors.

+ Timeline: 2025 - 2027 and beyond.

+ Deliverable: An upgraded transfer agent system.

2.2. Securities companies

a) Promulgation of legislative documents on requirements and standards for customer identification

- Solution: Promulgate legislative documents on requirements and standards for organizations conducting customer identification via electronic know your customer (eKYC) process, advanced security protocols for identity verification and privacy protection.

+ Implementation: Presiding entity: SSC; Cooperating entities: Stock Exchanges, VSDC.

+ Timeline: 2025 - 2026.

+ Deliverable: A Circular replacing Circular No. 134/2017/TT-BTC dated December 19, 2017 of the Minister of Finance on electronic transactions on the securities market.

b) Completion of the database system for management and supervision of certified securities professionals

- Solution: Complete a unified database system for management and supervision of certified securities professionals which link licensing with rigorous management and supervision.

+ Implementation: Presiding entity: SSC.

+ Timeline: 2025 - 2028.

+ Deliverable: An upgraded database system for management and supervision of certified securities professionals.

2.3. Commercial banks

a) Increased investment in the securities market

- Solution: Encourage commercial banks to invest in fund certificates and corporate bonds issued for the purpose of debt restructuring.

+ Implementation: Presiding entity: SSC; Cooperating entities: Units of the Ministry of Finance.

+ Timeline: 2026 - 2030.

+ Deliverables: Proposed amendments to Circular No. 16/2021/TT-NHNN dated November 10, 2021 of the Governor of the State Bank of Vietnam on corporate bond trading by credit institutions and foreign bank branches, and other relevant legislative documents in banking.

b) Enhancing service provision in the securities market

- Solution: Encourage commercial banks to provide fund certificate distribution services.

+ Implementation: Presiding entity: SSC; Cooperating entities: Units of the Ministry of Finance.

+ Timeline: 2026 - 2030.

+ Deliverables: Proposed amendments to legislative documents on banking.

2.4. Insurers, voluntary pension funds, voluntary supplementary pension funds

- Solution: Permit insurers to buy corporate bonds issued for the purpose of restructuring debts of the issuers; Increase the limits on investment by voluntary pension funds in secured corporate bonds, investment by voluntary supplementary pension funds in listed corporate bonds.

+ Implementation: Presiding entities: Insurance Supervisory Authority, Department of Financial Institutions; Cooperating entity: SSC.

+ Timeline: 2026 - 2027 and beyond.

+ Deliverables: Amended legislative documents on insurance.

3.1. Further improvement to the legal framework governing foreign investors’ activities

(i) Solution: Propose amendments to legislative documents on banking procedures are relevant to the opening of indirect investment capital accounts and checking accounts towards simplification and reduction of time required for foreign investors to open their accounts.

+ Implementation: Presiding entity: SSC; Cooperating entities: Units of the Ministry of Finance, market participants.

+ Timeline: 2025 - 2026.

+ Deliverables: Proposed amendments to legislative documents on banking.

(ii) Solution: Implement administrative reforms, simplify administrative procedures for investment to facilitate foreign investors’ participation in the securities market.

+ Implementation: Presiding entity: SSC; Cooperating entities: Units of the Ministry of Finance.

+ Timeline: 2025 - 2026.

+ Deliverables: Amended legislative documents on securities.

3.2. Accelerated implementation of solutions for upgrading the market from frontier market to emerging market

(i) Solution: Implement the Central Counterparty Clearing (CCP) mechanism for the underlying securities market.

+ Implementation: Presiding entity: VSDC; Cooperating entities: SSC, Stock Exchanges, market participants.

+ Timeline: 2027.

+ Deliverable: Operational CCP mechanism.

(ii) Solution: Propose amendments to legislative documents on banking regarding foreign exchange transactions towards allowing foreign investors to conduct forward and swap transactions with credit institutions when holding securities.

+ Implementation: Presiding entity: SSC; Cooperating entities: Units of the Ministry of Finance.

+ Timeline: 2025 - 2030.

+ Deliverables: Proposed amendments to legislative documents on banking.

(iii) Solution: Review foreign holdings in non-essential sectors that do not impact national security, with the aim of increasing foreign holdings and encouraging foreign investor participation in the securities market.

+ Implementation: Presiding entity: Foreign Investment Agency; Cooperating entity: SSC.

+ Timeline: 2025 - 2027 and beyond.

+ Deliverable: Reviewed foreign holdings based on core business activities, aligned with the enterprises’ business operation.

(iv) Solution: Launch a Straight Through Processing (STP) system for electronic communication between securities companies and custodian banks; study the application of omnibus trading accounts (OTA) to foreign securities investment fund management companies.

+ Implementation: Presiding entity: VSDC; Cooperating entities: SSC, Stock Exchanges, securities companies, custodian banks.

+ Timeline: 2025 - 2026 and beyond.

+ Deliverable: STP system, omnibus trading accounts for foreign fund management companies.

3.3. Diversification of supply sources

- Solution: Promote public securities offering linked to securities listing; diversify supply sources by promoting IPO and listing of major enterprises and FDI enterprises; develop bond payment guarantee institutions in the securities sector.

+ Implementation: Presiding entities: SSC, Stock Exchanges, VSDC; Cooperating entities: Units of the Ministry of Finance.

+ Timeline: 2025 - 2030.

+ Deliverable: Diversified supply sources.

1.1. Responsibility of units of the Ministry of Finance:

a) SSC shall propose introduction of mechanisms and policies to the Ministry of Finance in order to encourage individual investors to invest via securities investment funds; increase the proportion of domestic institutional investors and foreign investors on the securities market; introduce policies on development of the fund management industry; encourage pension funds and insurers to participate in the securities market; request Stock Exchanges to consider diversifying stock market indexes; cooperate with relevant professional associations and securities trading organizations in running investor education and awareness programs.

b) Units of the Ministry of Finance (SSC; Department of Financial Institutions; Insurance Supervisory Authority; Tax Policies, Fees and Charges Supervisory Authority; Foreign Investment Agency) shall, within the scope of their assigned duties and functions, proactively implement solutions for investor restructuring and development of securities investment fund industry in Section II Article 1 of this Decision.

1.2. Responsibility of market participants and relevant professional associations

Market participants (fund management companies, securities companies, custodian banks, supervisory banks and organizations providing services for securities investment funds), relevant professional associations shall implement the specific solutions herein.

Funding for implementation of this Scheme shall comply with applicable laws.

Article 3. Chairperson of SSC, the Chief of the Office of the Ministry of Finance, heads of units of the Ministry of Finance, relevant organizations and individuals are responsible for the implementation of this Decision./.