Opinion divided as Vinamilk wants no foreign ownership cap

By Hong Suong - Tran Tam, Thanh Nien News

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 Vinamilk yogurt in a Hanoi supermarket shelf. Photo: Ngoc Thang
Vietnamese economists are divided over Vinamilk's proposal to not cap foreign ownership in it amid the government’s plan to sell its entire 45.1 percent stake in the dairy giant.
Vietnam Dairy Products JSC, as the company is officially known, currently has a 49 percent stake owned by foreign investors -- a cap that the government imposed on listed companies but scrapped for most of them in June. 
In a recent letter to the government and the National Assembly's Economic Committee, Vinamilk said since dairy is not a "sensitive" sector and not related to the country's food security, it should not be subject to the ownership cap.
But speaking to Thanh Nien Wednesday, Tran Dinh Thien, chief of the Vietnam Institute of Economics, said the proposal is not advisable as it might leave the dairy market open to manipulation by foreign companies.
He also pointed out that Vietnam needs to protect the Vinamilk brand, the country's biggest brandwith an estimated value of US$1.13 billion and one that can compete with foreign rivals in the domestic market.
"It is not only about protecting the local market, but Vietnam also needs big brands to reach international markets."
But economist Phan Minh Ngoc said Vietnam needs to be more open-minded about foreign acquisitions of local companies, because they are a common business deal bound to benefit all involved parties.
Foreign investors' takeover of Vinamilk does not mean its brand will be gotten rid of, as many Vietnamese brands still exist, even though businesses have been acquired by foreign investors, Ngoc said.
Vo Tri Thanh, deputy chief the Central Institute for Economic Management, also backed Vinamilk's proposal, saying it would help the company become stronger.
In an interview with Reuters early this week, Dang Quyet Tien, deputy chief of the Ministry of Finance’s financial department for enterprises, said there would be no ceiling on foreign ownership in Vinamilk.
But he said sovereign fund the State Capital Investment Corporation would decide on how it would sell the government’s stake in the company.
The media recently reported that Singaporean-owned F&N Dairy Investment, the second biggest shareholder in Vinamilk with a 9.54 percent stake, offered to buy the entire government stake for $4 billion.
But its parent company, Singaporean conglomerate Fraser & Neave, quickly rejected the reports.
Speaking to Thanh Nien, many foreign investors like VinaCapital expressed interest in buying into the dairy giant.
Vinamilk shares closed at VND128,000 Thursday, up 4.07 percent from the previous day, and many analysts think the value can be higher, at around VND150,000.
The company, which made its initial public offering in 2003, reported a net profit of over VND7 trillion ($310.29 million) for the first nine months of this year, up 30.2 percent year-on-year.
It assets are estimated at more than VND25.95 trillion ($1.14 billion) as of September 30.
Vinamilk is one of 10 companies along with information technology giant FPT and insurer Bao Minh Group in which the government said last month it would sell out its stakes.
But no time frame has been announced for the sale.

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