Vietnam’s Corporate Bond Market Under Scrutiny: The Government Inspectorate’s Landmark Conclusions & Path to Reform

On August 5, 2025, the Government Inspectorate of Vietnam (GIV) released Conclusion No. 276/KL-TTCP, summarizing the inspection results on the compliance with laws and regulations governing the issuance of privately placed corporate bonds and the use of proceeds during the period from January 1, 2015, to June 30, 2023.

This conclusion has made significant waves across Vietnam’s financial, corporate, and legal sectors — not only for revealing systemic violations, but also for laying out a comprehensive roadmap to restore transparency and trust in the bond market.

Below is a concise, structured summary of the most critical findings and recommendations — presented in a way that’s easy to digest in just a few minutes. 👇

1. Key Violations Identified by the Government Inspectorate

1️⃣ Issuance without meeting legal conditions

• Bonds were issued without proper approval or incomplete documentation, often lacking collateral and key financial criteria.
• Many issuers failed to disclose information fully or on time, or even released inaccurate or misleading data.
• Some enterprises engaged in overlapping or complex issuance structures, creating opaque cash flows and exposing investors to elevated risks.

2️⃣ Misuse of bond proceeds

• Bond proceeds were diverted among affiliated companies, or used to repay debts and make equity contributions inconsistent with approved issuance purposes.
• Several issuers failed to submit required periodic reports or misrepresented how funds were actually used, breaching Vietnam’s disclosure regulations (Decrees 153/2020/NĐ-CP and 65/2022/NĐ-CP).

3️⃣ Violations of tax obligations and investor rights

• Some companies failed to pay principal or interest on schedule, directly harming investors.
• Certain cases showed potential tax violations, especially in transactions involving the transfer of capital or shares financed through bond proceeds.

GIV assessed that these violations are widespread and systemic, distorting the corporate bond market and creating systemic risks that could threaten financial stability if left unchecked.

2. Root Causes: Legal Gaps and Weak Corporate Governance

Objective (external) causes

• The regulatory framework changed repeatedly, creating inconsistency across Decrees 90/2011, 163/2018, 153/2020, and 65/2022.
• Post-issuance supervision remained weak, with no effective mechanism to track the flow of funds after issuance.
• Macroeconomic volatility (2020–2022), including the pandemic and liquidity tightening; exacerbated repayment pressure and fueled “bond rollovers.”

Subjective (internal) causes

Some enterprises knowingly violated regulations, misused proceeds, concealed bad debts, and raised capital non-transparently.

• Boards of Directors and management failed to exercise due governance, approving issuances beyond their authority or without shareholder approval.
• Intermediaries — advisory firms, auditors, and underwriters — did not perform adequate due diligence, enabling misconduct to persist.

3. GIV’s Recommendations and Corrective Actions

For the Government and the Ministry of Finance

• Refine and consolidate the legal framework on corporate bond issuance, emphasizing post-issuance monitoring of fund utilization.
• Establish a centralized disclosure and reporting system, connecting the Ministry of Finance, the State Bank of Vietnam (SBV), the Tax Authority, and the Business Registration Agency to track bond cash flows in real time.
• Publicize violations and strengthen enforcement with deterrent penalties for non-compliance.

For the State Bank of Vietnam (SBV)

• Tighten oversight of commercial banks involved in advising, underwriting, investing in, or distributing corporate bonds.
• Prevent “closed capital loops” — situations where a company issues bonds bought by a bank, then uses loan proceeds from that same bank, effectively recycling risk.

For provincial governments

• Strengthen oversight of bond-funded projects, especially in real estate and infrastructure, ensuring funds are used as approved and on schedule.
• Coordinate with tax authorities to audit potential tax violations and prevent revenue losses.
  For issuing enterprises
• Review and update issuance documentation and disclose actual fund utilization.
• Refund or rectify misused funds where applicable.
• Reinforce internal governance: establish robust project-level cash flow monitoring, enhance the role of Boards and Supervisory Committees, and protect investors’ rights through transparency and accountability.

4. Decisive Action: Referral to Investigative Authorities

The final section of Conclusion No. 276/KL-TTCP sends a clear and firm message:

The Government Inspectorate will transfer relevant information, documents, and evidence of potential violations to competent investigative, audit, and specialized inspection authorities for handling in accordance with the law, including criminal prosecution where warranted.

In addition, the report directs:

• Administrative, financial, and disciplinary accountability for organizations and individuals responsible for violations;
• Clarification of personal responsibility of agency heads, corporate executives, and advisory firms;
• Enhanced targeted inspections in high-risk sectors such as real estate, banking, and securities.

🎯 This marks a shift from diagnosis to enforcement, signaling the Government’s resolve to cleanse the bond market, enforce discipline, and restore investor confidence through accountability.

5. Broader Implications: A Path to Market Reform

Conclusion No. 276/KL-TTCP lays out a roadmap for the structural reform of Vietnam’s corporate bond market, transitioning:

• from weak post-issuance oversight to proactive supervision,
• from unrestricted issuance to responsible issuance, and
• from fragile investor confidence to a transparent, resilient financial ecosystem.

In the long term, effective implementation of these recommendations will:

• Enable enterprises to raise capital transparently,
• Ensure investors are genuinely protected, and
• Bring Vietnam’s capital market closer to international standards of integrity and financial discipline.

🔗 Final Thoughts

Transparency is not just compliance — it’s the foundation of a healthy market.

Conclusion No. 276/KL-TTCP serves as both a wake-up call and a blueprint: only by restoring trust and enforcing accountability can Vietnam’s corporate bond market truly become a sustainable and credible channel for medium- and long-term capital mobilization.