Vietnam Begins Effort to Open Stock Exchange : Economy: But private bankers cite bureaucracy and a crumbling infrastructure in saying it could take years to develop a full-fledged market.

Vietnam, trying to graft a modern market economy onto a rickety communist base, is taking its first steps toward setting up a stock exchange this year.

But experts say a full-fledged stock market is some way off and that the form it will take is unclear.

Officials are also studying whether and how to build on the fledgling “foreign exchange transaction centers” in Hanoi and Ho Chi Minh City that set Vietnamese dong-U.S. dollar rates.

Businessmen would like to deal in government bonds, which are issued by the state bank but not traded on a secondary market. The government is looking at the money market idea too.

Cabinet approval is expected soon for the launch by the end of this year of a “stock exchange center” at which shares in some of Vietnam’s 48 joint stock companies would be traded, sources close to the project’s planning committee said.

Stock of privatized state companies will also be traded eventually, though none has yet been transferred to private ownership. Many are unprofitable and will be hard to sell off.

“We envisage starting the stock exchange center this December,” Nguyen Van Tru, director of the state bank in Ho Chi Minh City, said recently. “But a stock exchange will be at least two years coming.”

Private bankers say it could take much longer because trained staff members are scarce, bureaucracy entrenched, the infrastructure crumbling and the banking system outdated.

“Anybody who is talking about a stock market here is shooting for the moon,” said Nguyen Xuan Oanh, a leading economist and managing director of Indovina, a joint venture bank in Ho Chi Minh City.

“You have to have an exchange market, a local money market. When you put them together, you might have something,” he said.

Although rules for the stock exchange center have not been announced, the government plans to let both foreign and local investors buy shares in Vietnamese companies once it is up and running. Nguyen Trung Truc, managing director of Peregrine Capital Investment Ltd. in Ho Chi Minh City, briefed 20 foreign fund managers on Vietnam last week and reported, “They are excited at the prospect of being able to buy shares in six to eight months.”

Even skeptics say Vietnam is performing well, with inflation steady at about 15%, a trade surplus in 1992 on the basis of increased rice and crude oil exports, more than $5 billion of foreign investment pledged and ample foreign exchange reserves, estimated by bankers at $600 million to $1 billion.

Oanh anticipates a boom in a few years but says the banks are antiquated.

“We are on the threshold of the 21st Century, but it looks like we have a banking system that’s still of the 19th Century,” he said.

Bankers say the foreign exchange transaction centers, operating since 1991 on alternate days in Hanoi and Ho Chi Minh City, work well but that their role is limited.

Banks tend to use them to meet only a small proportion of their needs, one banker said. Monthly turnover at the Ho Chi Minh City center averages $27 million.