Vietnam cautious about opening aviation market to foreigners

The Prime Minister has agreed to raise the maximum foreign ownership ratio in Vietnam’s aviation enterprises by 4 percent only.

Under the newly released decree that amends articles of Decree 92/2016 on business conditions in the civil aviation sector, which takes effect on January 1, 2020, the foreign ownership ratio in aviation enterprises must not be higher than 34 percent of charter capital, or 4 percent higher than the old regulation.

Vietnam cautious about opening aviation market to foreigners



The transfer of shares and domestic contributed capital to foreign investors can only be implemented after two years of licensing. The plan to sell shares to foreign investors must be approved by the Ministry of Transport (MOT).

The 'room’ for foreign investors in Vietnam’s aviation enterprises was first put into discussion when Vietnam joined the WTO in 2007 and low-cost carriers began developing strongly all over the globe.

At that time, the government released a decree allowing foreign investors to hold up to 49 percent of chartered capital in Vietnam’s aviation enterprises.

With the open regulation, a series of foreign investors rushed to join forces with Vietnamese partners to set up airlines, including AirAsia and Lion Air. Even Vinashin, a shipping line, also wanted to set up an airline.

At present, 30 percent of Jetstar Pacific’s shares are held by Qatar. More than 24 percent of Vietjet’s shares were held by foreign investors as of the end of 2018. As for Vietnam Airlines, 8.7 percent of shares are held by ANA Holdings.

Later, the government decided to reduce the maximum foreign ownership ratio from 49 percent to 30 percent in an effort to create favorable conditions for domestic enterprises to grow.

 


And in the latest move, the ceiling waslifted to 34 percent.

Establishing airlines just to sell shares

When drafting the decree to amend Decree 92, MOT wanted to lift the ceiling to 49 percent, saying that this would help mobilize all possible capital sources, domestic and foreign, for the development of the civil aviation sector.

Meanwhile, Vietnam Airlines, the national flag air carrier, and Jetstar Pacific wanted to maintain the 30 percent ceiling as stipulated in Decree 92.

They argued that if foreign investors hold more than 35 percent of capital, they will have the right to veto decisions to be made by the shareholders’ meeting in accordance with the Enterprise Law, thus causing difficulties for the management and operation of Vietnamese airlines.

They also warned that if foreign investors hold 49 percent of capital, investors may establish airlines on paper just to sell shares.

Therefore, the 34 percent ceiling was chosen.

At present, 30 percent of Jetstar Pacific’s shares are held by Qantas. More than 24 percent of Vietjet’s shares were held by foreign investors as of the end of 2018. As for Vietnam Airlines, 8.7 percent of shares are held by ANA Holdings.

Chi Mai 

New air routes planned for Vietnam

New air routes planned for Vietnam

Vietnam Airlines has just launched its flights between Hanoi and China’s Macau, with flight VN456 departing from Hanoi at 19:45 on December 16, and VN459 leaving Macau at 8:35 on December 17 (local time).

Vietnam’s airlines transport nearly 55 million passengers this year

Vietnam’s airlines transport nearly 55 million passengers this year

Vietnam’s airlines have so far this year transported 54.7 million passengers and 435,000 tonnes of cargo, respectively 11.4 percent and 7.6 percent higher than the figures last year.

 
 

Other News

.
E-wallet firms battle for slice of cashless payment pie
E-wallet firms battle for slice of cashless payment pie
BUSINESSicon  04/08/2020 

E-wallets firms are battling for a piece of the cashless payment market amid rapid growth in the context of the COVID-19 pandemic.

Corporate income tax reduction comes into effect
Corporate income tax reduction comes into effect
BUSINESSicon  04/08/2020 

Resolution 116/2020/QH14 granting a reduction of 30 per cent on corporate income tax (CIT) for eligible enterprises officially came into effect on Monday.

Big rearers win big
Big rearers win big
BUSINESSicon  04/08/2020 

Many animal husbandry enterprises are leveraging the pork supply shortage to sell at high prices, earning huge profits

VN businesses slow in preparing to enjoy preferential tariffs in EVFTA
VN businesses slow in preparing to enjoy preferential tariffs in EVFTA
BUSINESSicon  04/08/2020 

 Experts have raised concerns that Vietnamese businesses are slow in preparing conditions to enjoy preferential tariffs in the Viet Nam-EU Free Trade Agreement (EVFTA).

Probe into Tenma Vietnam’s alleged bribery underway: police official
Probe into Tenma Vietnam’s alleged bribery underway: police official
BUSINESSicon  04/08/2020 

The investigation into the Japanese-invested Tenma Vietnam company’s allegation of bribing civil servants and tax and customs officers of northern Bac Ninh province is still ongoing, according to a police official.

VN textile, electronics hardest hit in pandemic: official
VN textile, electronics hardest hit in pandemic: official
BUSINESSicon  04/08/2020 

Textile and electronics have been the two export-oriented sectors mostly impacted by the COVID-19 pandemic, an official has said.

Businesses in HCM City's central business districts are idle as demand is weak
Businesses in HCM City's central business districts are idle as demand is weak
BUSINESSicon  05/08/2020 

Many streetfront buildings in large cities that house shops that were busy in the past are idle because business activities have declined due to Covid-19.

Vietnam prepares to receive investors from Japan, the US, EU
Vietnam prepares to receive investors from Japan, the US, EU
BUSINESSicon  04/08/2020 

Japanese businesses have begun relocating factories to Vietnam, and it is expected that American and European businesses will also come soon.

VN Civil Aviation Authority's plans for new Quang Tri Airport face opposition
VN Civil Aviation Authority's plans for new Quang Tri Airport face opposition
BUSINESSicon  04/08/2020 

The Civil Aviation Authority of Vietnam (CAAV) plans to build Quang Tri Airport in Quang Tri province, but experts disagree with the idea.

Vietnam factory activity dips in July as Covid-19 impacts grow
Vietnam factory activity dips in July as Covid-19 impacts grow
BUSINESSicon  03/08/2020 

Despite a drop in output in July, firms remained confident in the 12-month outlook for production.

Enticing legal changes lure in foreign investors
Enticing legal changes lure in foreign investors
BUSINESSicon  04/08/2020 

Foreign investors are making new investments moves into Vietnam on the back of supporting policies and new rules. However, as some legal concerns remain, the development of the next steps still requires some preparation. 

Summary of new points of amended Law on Investment 2020
Summary of new points of amended Law on Investment 2020
BUSINESSicon  03/08/2020 

After more than six years in effect, the Law on Investment has been officially amended with a number of new articles to improve the country’s appeal to higher-quality foreign investment flows.

Outlining the preferential mechanisms for new PPP projects
Outlining the preferential mechanisms for new PPP projects
BUSINESSicon  04/08/2020 

Public-private investment projects play a significant role in developing infrastructure and have the potential to accelerate large-scale construction works across the country.

Vietnam economic outlook remains positive despite Covid-19 resurgence: HSBC
Vietnam economic outlook remains positive despite Covid-19 resurgence: HSBC
BUSINESSicon  03/08/2020 

HSBC economists forecast GDP expansion of 3% in 2020 for Vietnam, the only ASEAN country they expect to have positive growth this year.

Vietnamese startups bag millions of US dollars despite COVID-19 pandemic
Vietnamese startups bag millions of US dollars despite COVID-19 pandemic
BUSINESSicon  03/08/2020 

A slew of Vietnamese startups managed to secure millions of US dollars even in the midst of the rapidly escalating COVID-19 pandemic.

Capital inflows to Southeast Asian startups up 91 percent despite outbreak
Capital inflows to Southeast Asian startups up 91 percent despite outbreak
BUSINESSicon  03/08/2020 

Southeast Asian startups, especially e-commerce and fintech companies, have witnessed a significant increase in investment between April and June.

Sky-high livestock prices may breach competition law
Sky-high livestock prices may breach competition law
BUSINESSicon  03/08/2020 

Although many livestock companies could face an inspection to ensure they follow through on commitments to cut their prices, the market outlook still looks dreary in spite of the government’s call to stabilise the selling cost of live pigs.

Aligning with trade remedy principles
Aligning with trade remedy principles
BUSINESSicon  03/08/2020 

The EU-Vietnam Free Agreement (EVFTA) is a giant leap for Vietnam in international integration.

Electricity of Vietnam suggests not to extend deadline for wind farm FiT
Electricity of Vietnam suggests not to extend deadline for wind farm FiT
BUSINESSicon  03/08/2020 

In order to ensure transparency and stability in the selling price of wind power, EVN opposes the Ministry of Industry and Trade's proposal to extend the deadline on the current feed-in tariff (FiT) scheme for wind power projects

Ministry seeks to further open petroleum retail market
Ministry seeks to further open petroleum retail market
BUSINESSicon  03/08/2020 

The Ministry of Industry and Trade has called for allowing all foreign investors to further participate in the petroleum retail market.

 
 
 
Leave your comment on an article

OR QUICK LOGIN