Company reports must meet world standards
Company reports must meet world standards
Credit-risk management should be enhanced to make sure business information was transparent and reliable to improve Viet Nam’s trade, economic and investment conditions, according to Nguyen Quang Thuan, CEO from data analysis firm StoxPlus.
Thuan said credit-risk management was normally referred to as a core business activity done only by the banking-financial sector. However, he said potential risks may also pose threats to the country’s trade and investment environment if they were not fully addressed.
Transparent business and economic information and data would help strengthen international trade between Viet Nam and other economies, draw more attention from foreign investors, improve the performance of local businesses and help them accessl foreign capital markets, Thuan said at a workshop yesterday.
At the moment, “the reliability of data inputs in Viet Nam is still weak given the fragmented data-source infrastructure and poor financial reporting environment,” Thuan said.
In addition, better credit risk and business data management would provide local banks better insight of the finance and operation of local businesses, he said.
“As banks conduct insightful reviews of company profiles, they are able to determine whether the businesses are strong enough and whether lending rates should be high or low based on the financial risks that the business may encounter,” Thuan said.
Credit risk and data management would help local authorities prevent foreign companies from transfer pricing, which is used to avoid taxation, and improve the quality of foreign investment in the economy, he added.
In fact, there was a big difference between a company’s financial statement sent to the tax authority and the one sent to credit institutions for making loans, Thuan said.
“We find out in some cases that if companies do not issue tax invoices for the products sold in the market, they do not have to record the transactions in the financial reports for tax purposes to avoid business income tax. But they can record the transactions in the financial statements submitted to the banks for credit purposes.”
Therefore, Thuan urged authorities to empower independent third-party vendors that have technological advances, such as StoxPlus, to collect and analyse financial and economic data so that the information was transparent and reliable for investors.
Agreeing with StoxPlus CEO, World Bank Vietnam lead financial sector specialist Alwaleed Alatabani said that the local authorities must compel companies to improve their financial statements and reports to meet international standards.
He said that local authorities also needed to work with financial institutions on corporate earnings reports so that the country would provide better business environment and give foreign investors better insight into the Vietnamese economy.
