Vietnamese companies are intensifying efforts to raise their corporate governance standards, seeing strong governance as the key to attracting international investors, as the country's stock market enters its next phase.

 

This message was underscored at the 8th Annual Forum of the Vietnam Institute of Directors (VIOD), themed 'Board of Directors Breakthrough: Reaching Regional Scale, Establishing Trust and Reputation in the Capital Market', held late last week in HCM City.

 

As Việt Nam's stock market prepares to enter a new phase, with a likely upgrade to 'emerging market' status, many in the business community see corporate governance not just as a matter of compliance, but as a strategic asset.

 

The country could draw US$3–5 billion in foreign investment in the short term, with the potential to scale up to $25 billion by 2030, assuming global index providers include Vietnamese stocks in regional benchmarks.

 

These potential inflows reflect growing expectations. But they also come with greater scrutiny: institutional investors and large global funds now demand stronger protections for minority shareholders, reliable financial disclosure, clear risk management processes and transparent corporate governance mechanisms – standards higher than those traditionally required in Việt Nam.

 

For the chairwoman of the State Securities Commission of Vietnam (SSC), Vũ Thị Chân Phương, governance will be the key factor in this new phase, as it largely determines whether Vietnamese firms can compete for long-term foreign capital from pension funds and large financial institutions.

 

Long-term governance strategy

 

Governance must evolve beyond mere regulatory compliance.

 

According to the VIOD, a professional, experienced and independent board of directors, equipped with a risk-aware mindset and long-term vision, is the foundation for successful capital raising, sustainable growth and a solid reputation.

 

"A responsible, well-functioning board capable of effective oversight and risk governance will create a strong ripple effect, building investor trust and enhancing the company's market reputation," said VIOD Chairperson Hà Thu Thanh.

 

In that view, corporate governance becomes the axis around which capital allocation, risk stewardship, minority investor protection and transparency revolve, all of which matter greatly for investors evaluating emerging-market firms. Thanh said that governance quality often becomes the top deciding factor for responsible investors when considering allocations.

 

Meanwhile, Nguyễn Hồng Giang, representative of the Swiss State Secretariat for Economic Affairs, said that global investors increasingly see financial results not only as a function of products or services, but as deeply connected to governance practices that emphasise accountability, transparency and sustainability.

 

She added that these governance principles strengthen corporate credibility, boosting a company's appeal and ultimately its value in global capital markets.

 

 

Speakers attend the discussion session at the event. — Photo courtesy of the organiser

 

Opportunity and challenge

 

Việt Nam's push toward upgrading its equity market comes with systemic changes across the entire capital market ecosystem.

 

As local firms prepare for increased foreign participation, regulators and enterprises alike are called upon to raise governance and disclosure standards and to rethink long-term strategies. The SSC has signalled that corporate governance is central to this transformation.

 

Yet the journey is not without its challenges. According to previous assessments by VIOD, Việt Nam remains behind regional peers in corporate governance scores under the ASEAN Corporate Governance Scorecard.

 

This gap suggests that many public companies still need to catch up in terms of independent board composition, risk management, minority shareholder protections, transparent reporting and accountability practices.

 

Given this backdrop, the VIOD forum served not only as a rallying cry, but also as a call for companies to reset their mindset, treating governance not as a box to tick but as a long-term, strategic commitment.

 

At its core, the message is that for Vietnamese firms to emerge as credible, attractive destinations for foreign capital, they must earn trust, and trust is built more on governance than on short-term financial performance.

 

Governance is the source of transparency, and governance quality is the number one criterion for capital allocation decisions by responsible investors in emerging markets like Việt Nam, said Thanh.

 

This represents a paradigm shift. Historically, many firms focused on financial metrics, profit growth, business expansion and return on equity as their primary measure of success.

 

Now, under the pressure of global capital flows and heightened investor scrutiny, non-financial attributes like board effectiveness, disclosure transparency, risk governance and ethical standards are taking centre stage.

 

The SSC Chairwoman called on businesses to view governance as a long-term strategy, transparency as a commitment to investors and risk management as the foundation of sustainability.

 

"When we share this vision, Vietnamese firms can not only break out regionally, but also reach international markets," she said. — BIZHUB/VNS