Investors and securities professionals are calling on authorities to
allow foreign investors to own 100 per cent stakes in listed companies, a rule
long overdue for change that would likely have a strong impact on the capacity
of the market to attract foreign capital.
Decree No 58, which took effect
on September 15, allows foreign investors to own 100 per cent of the charter
capital of operating securities companies or to set up a new 100-per-cent
foreign-invested brokerage. However, foreign ownership in all listed enterprises
(except securities firms) remains capped at 49 per cent under current
regulations.
According to market insiders, the
regulation lifting the cap on foreign ownership in securities companies cannot
alone bring positive effects to the market since securities firms have lost
their appeal in light of the prolonged market downturn.
They are urging the Government to
lift the foreign ownership limit on all listed companies, noting that a number
of companies were still capable of drawing foreign investor interest but the
room for their investments has become almost exhausted.
The Law on Investment permits
foreign investors to establish 100 per cent foreign-owned companies in many
industries and the rules regulating foreign investments in the stock market
should agree with that regulation, Alternative Investment Capital Group
chairman Hoang D. Quan told the newspaper Dau tu Chung khoan (Securities
Investment).
Limiting foreign ownership at 49
per cent of listed companies has created a legal discrepancy that negatively
affects foreign views of the investment environment in Viet Nam, Hoang said.
"The biggest obstacle to
foreign investment is the lack of transparency of listed companies," he
added. "Thus, opening more room for foreign investors is just one way in
which Viet Nam's stock market could improve."
A number of analysts, however,
had voiced concerns that allowing foreign investors to buy 100 per cent of
listed companies would enable foreigners to acquire listed companies at cheap
prices.
But Saigon Securities Inc
chairman Nguyen Duy Hung dismisses such concerns, saying that the bigger problem
was that many companies wanted to sell shares but nobody wanted to buy them.
The State Securities Commission
has been collecting comments from market participants as it develops guidelines
for further regulations to govern foreign investment in the Vietnamese stock
market.
Nguyen Son, head of the State
Securities Commission's market development department, said increasing foreign
ownership in listed companies wouldn't happen soon, since regulators also
needed to consider other related issues.
A draft decision regulating
foreign investment on the stock market, meanwhile, would allow foreign
investors to own over 49 per cent of a listed company which operates in a
specific industry in which the law already allows foreign ownership of over 49
per cent, Son said.
VNA
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