VietNamNet Bridge - The Viet Nam Association of Financial Investors (VAFI) sent a document late last week to the Government, the State Securities Commission and concerned ministries to urge them to raise the maximum limit on foreign ownership in listed companies and commercial banks.

Under Government Decree No 69/2007/ND-CP issued in 2007, foreign investors are not allowed to own more than 30 per cent of the total charter capital of any bank or more than 49 per cent of a listed firm.

VAFI has proposed that these caps be raised to 35-40 per cent for a bank and beyond 49 per cent for a listed company.

"Viet Nam should consider permitting foreign investors to purchase common stock or ordinary shares in banks, but without rights to vote on additional shares," said VAFI in its proposal. "This is a valuable lesson from some other countries in the world in order to help increase capital for banks."

Thailand, for instance, allowed foreign investors to own shares representing up to 49 per cent of a bank's charter capital, and they were also eligible to own additional common shares without voting rights, the association said, noting that there was no evidence that such a regime tended to encourage foreign speculation.

Adopting a similar measure here would help draw more foreign indirect investment into Viet Nam as well as stabilise the foreign exchange market and the balance of payments, said VAFI general secretary Nguyen Hoang Hai.

VAFI also urged that the equitisation of State-owned enterprises (SOEs) be hastened, since the number of SOEs equitised during the three years of 2008-10 was merely half the figure in the single year of 2005.

Experts blamed the slow pace on the poor performance of the stock market in the two years since the global financial crisis.

"However, we have to recognise that the goal of equitisation is to improve the operation of SOEs, to remodel corporate governance and raise transparency," Hai said. "It is not essential to sell a large proportion of the State interest, so long as the SOE's operations become more effective. We can see lessons from Vietcombank and Vietinbank."

Minor stakes could be sold to strategic investors in such SOEs as Mobiphone, Sabeco, Habeco, and PV Oil if equitisation were carried out, he said.

A speedier equitisation process in 2011 would help Viet Nam generate an additional source of foreign currency, helping stabilise the exchange rate, Hai said.

Source: VNS