Vietnam targets IFRS alignment for reform

Vietnam is moving to put global financial reporting norms at the centre of its capital market upgrade, betting that higher transparency and global standards can unlock foreign capital and sustain its newly upgraded status.

- By Hazy Tran

Following its market upgrade confirmation by FTSE Russell, Vietnam is now rolling out a coordinated set of measures to sustain this milestone and move towards higher international benchmarks.

Accordingly, a draft circular on International Financial Reporting Standards (IFRS) adoption, now open for public consultation, proposes a voluntary, phased rollout in the initial stage, targeting enterprises with sufficient capacity and demand.

The proposed scope includes enterprises and economic organisations operating within Vietnam’s international financial centres, as well as foreign-invested enterprises, particularly subsidiaries of multinational corporations already applying IFRS globally.

“IFRS is a critical solution to enhance corporate governance, improve comparability of financial statements, reduce information asymmetry, and strengthen investor confidence, especially among institutional and foreign investors,” said Nguyen Quang Thuong, deputy CEO of the Vietnam Exchange. “This is also a key enabler for building a transparent, modern capital market and enhancing Vietnam’s ability to attract international capital.”

Nguyen Thi Thu Ha, deputy head of Accounting Supervision of Financial Institutions at the Ministry of Finance (MoF), noted that adoption would significantly strengthen foreign investor confidence and support international recognition of Vietnam as a full-fledged market economy.

“Foreign-invested enterprises that are subsidiaries of multinational groups will no longer need to convert their financial statements for consolidation with parent companies. For the capital market, public-interest entities applying IFRS will also help unlock foreign investment flows by meeting the requirements of global investment funds and trusts,” she added.