Opinions split on lifting the cap on foreign ownership in Vietnam

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Economists are divided as to whether a pilot program to increase the foreign ownership of local companies will actually boost Vietnam's economy as intended, or merely benefit foreign firms.

The State Securities Commission is considering permitting overseas investors' non-voting ownership of Vietnamese companies to exceed 49 percent and it said last Wednesday it will plan to initiate a pilot program to that effect.

The program will be applied to domestic companies excluding those in "conditional" areas as determined by Vietnamese law. Banks, for instance, one of the "conditional" sectors, will be excluded from the program.  

Nguyen Hoang Hai, general secretary of the Vietnam Association of Financial Investors, told Tuoi Tre newspaper that foreign companies will definitely be interested in investing in Vietnam if the cap is lifted.

Huynh Anh Tuan, general director of SJC Securities Company, expects that once overseas investors pour more money into local companies, the economy will be able to deal with bad debts and its stock market will become increasingly liquid.

Economist Bui Kien Thanh said he has been waiting far too long for the commission to allow the increased participation of foreign firms.

Just let overseas investors buy bigger stakes in Vietnamese businesses so the latter can advance their capital to develop, he said.

But economist Le Dat Chi disagreed, saying most foreign companies seeking to invest in Vietnam are only interested in their own profit margins and will manipulate the Vietnamese market to their advantage.

According to Chi, the food and beverage sector is among those that foreign investors will target.

If Vietnam continues to reduce its limitations on foreign ownership, the country will lose control of its major sectors to foreign companies, he said.

Economist Dinh The Hien asserted that increasing foreign ownership in domestic companies is inevitable if the Vietnamese economy is to be fully integrated into the modern global marketplace.

But it is hardly a perfect plan because most local firms lack the efficiency required for complete integration, and are likely to be manipulated by investors, he said.

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