Trading through commodity exchanges will be more convenient in Vietnam with the Government’s new regulations on the establishment and trading on the commodity exchange.(Photo: binhduong.gov.vn) Hanoi (VNA) - Trading throughcommodity exchanges will be more convenient in Vietnam with the Government’snew regulations on the establishment and trading on the commodity exchange.
Decree No. 51/2018/ND-CP, which will beeffective from June 1, 2018, amends and supplements a number of articles of theGovernment’s Decree No. 158/2006/ND-CP, dated December 28, 2006, on theconditions for the establishment of commodity exchange.
According to Nguyen Viet Vinh, generalsecretary of the Vietnam Coffee and Cocoa Association, the new decree hassolved many problems in trading activities on the commodity exchange in Vietnamand is expected to open a new era for both businesses and farmers to boosttheir sales through this channel.
Decree 51 expands the list of goods tradedon the commodity exchange, allowing all commodities that are not prohibited bythe State and those subject to conditional trading, including the Vietnameseexport commodities, as well as goods that Vietnam needs to import to serve thelocal production.
The new regulations also extend the formsof trading order by accepting written documents and other forms such astelegraph, telex, fax or data message.
An important content in this decree is thatforeign investors will be allowed to contribute capital to establish commodityexchange in Vietnam. Their ownership in the exchange should not exceed 49 percentof its charter capital.
Foreign investors are also permitted to tradegoods on the commodity exchange as clients and can become members of theexchange (brokers or traders) without ownership restraint.
In addition to this, the decree allows theinterconnection of Vietnamese and global commodity exchanges. This is expectedto help promote the integration process and development of the Vietnamesecommodity exchanges.
“This (interlink) will create a lot ofadvantages in terms of commodity trading volume and value information, bettermarket assessment and stronger capital capacity to prop up infrastructure andhuman resources of local exchanges,” Vinh said at a recent conferenceintroducing the decree.
Underdeveloped market
It has been eight years since the VietnamCommodity Exchange, Vietnam’s first commodity exchange, became operational in2010. Since then, very few exchanges have been established.
The total value of transactions throughcommodity exchanges has reached only 8 trillion VND (351 million USD) since, ofwhich most transactions are focused on coffee products.
Traders are mainly enterprises whilefarmers have no idea of the exchanges.
According to Nguyen Loc An, deputy head ofthe Domestic Market Agency under the Ministry of Industry and Trade, commodityexchange in Vietnam is still underdeveloped mainly due to many legal obstacles.
An said Decree 51 provided better legalbasis for enterprises and farmers to participate and trade on the exchange aswell as for welcoming foreign investment in the exchanges.
With these changes along with hedgingtools, the commodity exchange is expected to help businesses mitigate risks andsecure operations as well as enhance their position in both the domestic andglobal markets.-VNA
VNA
