VietNamNet Bridge - Decree 60 took effect in September 2015, allowing Vietnamese businesses to lift the ceiling for foreign investors. However, barriers still exist.

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The Vietnamese stock market is busy again after the 2016 Tet holiday. This is attributed to the businesses’ decisions on enlarging ownership for foreign investors in Vietnamese businesses.

The Saigon Securities Incorporated’s (SSI) move on lifting the foreign ownership ratio ceiling to 100 percent taken in late 2015 has been followed by many other businesses.

Everpia Vietnam (EVE) offered 100 percent foreign ownership in it since February 3, 2016. Vinh Hoan Seafood (VHC) has also made a similar decision, effective from February 21.

About 10 businesses have opened their doors widely:  BIDV Insurance BIC (from 21.5 percent to 49 percent), Military Bank MBB (from 10 percent to 20 percent);  businesses whose shareholders have approved plans such as Hoang Huy, IBSC; and businesses moving ahead with the plan. 

The Vietnamese stock market is busy again after the 2016 Tet holiday. This is attributed to the businesses’ decisions on enlarging ownership for foreign investors in Vietnamese businesses.
The figure is modest as there are over 700 listed companies. However, according to the HCM City Securities Company, the foreign ownership rate will be of greater interest this year.

HSC believes that the expectation would help attract investors back to the market. EVE, VHC, BIC and MBB shares all have seen the prices increasing significantly after their decisions to open to foreigners were released.

Two barriers

Decree 60 stipulates that the maximum foreign ownership ratio of 100 percent will be allowed in enterprises operating in unconditional business fields. 

However, it is still unclear which business fields are ‘conditional’ and ‘unconditional’. Securities companies know they are ‘unconditional’ businesses, while banks and insurance companies are ‘conditional’. 

Other businesses still await a document from the Ministry of Planning and Investment to clarify their positions.

The second barrier lies in the concept of ‘foreign invested enterprise’.

Four months after SSI announced the lift of foreign ownership ratio ceiling to 100 percent, foreign sharehoilders raised their ownership ratio in the business to 53.35 percent by December 18, 2015.

Since then, the proportion has stayed above 51 percent of SSI’s charter capital. This means that SSI’s operation license will change to become a foreign invested enterprise.

However, the capital in SSI is from foreign portfolio investment. More than half of the capital is from small shareholders, who may sell shares at any time in the future. This means that SSI is a ‘foreign invested enterprise’ today, but it may not be tomorrow.


NCDT