“Proposing a Dedicated Government Bond for Multi-Billion Dollar ‘Mega Projects'”

At the Conference on Summarizing 15 Years of Operations and Development of the Government Bond Market (GBM) held by the Ministry of Finance on December 5, Ms. Pham Thi Thanh Tam, Deputy Director of the Finance and Banking Department, Ministry of Finance, shared that alongside the growth of the economy and the capital market, the GBM has witnessed robust development over the years. It has become a pivotal channel for the government’s capital mobilization, with government bonds emerging as a safe and efficient investment option for investors.

During the period of 2009-2024, the total capital mobilized in the GBM exceeded VND 1.7 quadrillion. The GBM comprises 12 market makers, including commercial banks and securities companies. The capital mobilization efforts through GBM have contributed to the restructuring of the government’s borrowing portfolio, given favorable market conditions.

Long-term investors actively participate in the GBM, with a growing trend in their bond holdings. In the third quarter of this year, the bondholding ratio of non-bank financial institutions with long-term investment horizons stood at 60.5%, marking an increase of approximately 40% compared to 2009. The system of market makers plays a crucial role in boosting the liquidity of the primary and secondary GBM. However, alongside the achievements, there are still certain challenges and limitations, prompting the proposal of various solutions for the GBM’s further development.

According to Mr. Bui Hoang Hai, Vice Chairman of the State Securities Commission, the investor base in the secondary market is not yet diverse enough, primarily consisting of commercial banks and the Vietnam Social Security, with limited participation from foreign and domestic organizations. Mr. Hai suggested diversifying risk hedging options for foreign investors, such as foreign exchange risks, to encourage their involvement and foster a more diverse investor landscape.

Mr. Vu Quang Dong, Vice Chairman of the Vietnam Bond Market Association, proposed that for the primary GBM, there should be a consistent issuance of bond products linked to the restructuring of the GBM debt portfolio toward sustainability. This should ensure a diverse range of bond maturities, from short-term to long-term, ranging from 3 to 30 years.

Mr. Dong further suggested that for the secondary GBM, there is a need to continuously improve the market organization model and trading system, enhance the information and reporting regime, and eventually establish a standard yield curve for the financial market. Given the government’s ambitious mega-projects, each with a scale of several billion USD, Mr. Dong expressed his desire for specific GBM instruments dedicated to these projects to attract additional investors.

Ms. Phan Thi Thu Hien, Director of the Finance and Banking Department, Ministry of Finance, highlighted that the Finance Strategy and the Securities Market Development Strategy, targeting a minimum bond market debt of 58% by 2030, have been set. Recently, the National Assembly approved the principle of investing in the high-speed North-South railway project, with preliminary total capital of VND 1.7 quadrillion, equivalent to USD 67 billion, to be completed by 2035. The government and the National Assembly have set ambitious economic and social development goals for the coming years.

For 2025, the National Assembly has set a growth target of 6.5-7%, and the government aims to strive for GDP growth of around 8% to create momentum for the entire 2021-2030 period. With the orientation of harnessing internal resources for the country’s economic development in the new era, this underscores the imperative to develop the GBM in terms of scale, liquidity, and proactive integration with the international market.