Vietnam Promises Corporate Transparency

For years, foreign investors have been frustrated when they try to evaluate business opportunities in Vietnam because of a lack of financial transparency.  That’s about to change as Vietnam begins publishing audited earnings statements for state-owned companies, many of which are traded on publicly.

The government later this year will require its companies to post  sales, profit/loss, debt, return on assets, return on equity, cash flow and salary information annually and in some cases quarterly — a big change from current practice that often shields financial data from public scrutiny.

The change is expected to help Vietnam improve its industrial productivity (which has grown a dismal 1% annually) and its investment grades by bond-rating agencies — and also create more work for independent auditors KPMG LLP, Ernst & Young LLP, Deloitte Touche Tohmatsu, and PricewaterhouseCoopers.

The announcement signifies another step in Vietnam’s gradual transition from a state-dominated to a free market economy.  Over the past two decades, that transition has led to a decline of the public sector’s share of the economy from 40% to 33% –and an increase in the foreign ownership from 6% to 19%.

More on financial reporting for Vietnam SOEs

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