VietNamNet Bridge - Foreign investment funds have said that Decree No 60 on lifting the foreign ownership ratio ceiling will mostly affect listed companies. As for other companies, the room for foreign investors remains unclear.

 

Part 1: Some investors sigh with relief

Song Cam Shipbuilding JSC might be relieved to hear about Decree 60 which allows foreign investors to hold up to 100 percent of shares in Vietnamese companies in unconditional business fields.

Song Cam is the only subsidiary of the former Vinashin (Vietnam Shipbuilding Industry Group), now SBIC (Shipbuilding Industry Corporation) which could still make profits in recent years, though its holding company is on the verge of bankruptcy.

Song Cam still can perform well partly because it has been cooperating well with the  Dutch company Damen over the last 13 years.

In 2014, Damen and Song Cam JSC established a joint venture – the Damen-Song Cam Company Ltd, in which Damen holds 70 percent of the chartered capital, about 20 million euros.

Damen once tried to negotiate with the Ministry of Transport (MOT) and SBIC on the purchase of 70 percent of Song Cam’s shares. However, the negotiations at that moment all failed because of the limit on foreign ownership ratio. 

The Prime Minister’s Decision No 55 dated in 2009 stipulated that foreign investors must not hold more than 49 percent of the chartered capital in one Vietnamese listed enterprise.

MOT many times sought the Prime Minister’s permission to sell 70 percent of Song Cam shares to Damen in an exclusionary case to get money to rescue SBIC which was in difficulty. 

MOT also suggested selling 49 percent of Song Cam’s shares to Damen first and selling the other 21 percent shares later, if it gets the nod from the Prime Minister. 

However, the foreign investor did not agree with the solution, stating that it would only buy Song Cam’s shares once and at negotiable prices.

The Dutch investor also said that if it could not expand business in Vietnam, it would leave Vietnam for other countries.

When the negotiations were at a standstill, the two sides saw the light at the end of the tunnel when the government released Decision No 60 allowing foreign investors hold up to 100 percent of stake in Vietnamese companies in certain business fields. 

As such, the involved parties now can sell and buy Song Cam’s shares as they want, because the biggest obstacle has been removed. 

Analysts said that if the negotiations can be wrapped up soon and the two sides can make a deal in 2015, the sale of Song Cam stake to Damen could be the first successful stake transaction to be made thanks to Decree No 60.

TBKTSG