In the global money market, commercial paper (CP) is an unsecured promissory

note with a fixed maturity of no more than 270 days. Commercial paper is a
money-market security issued (sold) by large corporations to get money to meet
short term debt obligations (for example, payroll), and is only backed by an
issuing bank or corporation's promise to pay the face amount on the maturity
date specified on the note.

In Vietnam, there are two kinds of commercial paper. The first one is
promissory notes, which is a promise to pay a specified amount on demand or at
a certain time. The second type is bill of exchange (or draft), known as a
document ordering the payment of money; drawn by one person or bank on
another. However, both these two kinds are not broadly used in Vietnam yet.
The promissory notes has not existed in Vietnamese money market, although it
was mentioned in several documents. The bill of exchange, on the other hand, is
primarily used in international trade and usually known as written orders by the
importer to his bank to pay the exporter a specific sum on a specific date
sometime in the future.
However, it just accounts for a small portion in Vietnamese international
trading. There are several reasons explain why CP is not widely used in
Vietnam. Firstly, the law on the CP is not enough for it to active and coming
into reality. Moreover, the constructing and executing laws process is not
practical, which leads to many shortcomings, disunities with reality and
international practices. Thirdly, Vietnamese commercial banks are not strong
enough to loan the firms via discount CP or securement of pledging CP. The
participants don’t really have trust in CP and its liquidity is also a reason for
CP’s absence in Vietnam, Finally, the Vietnamese secondary market has not
developed yet, which limits the potential of CP.