A better legal framework and a stronger privatization drive of state-owned enterprises are key measures for Vietnam's securities market to keep attracting foreign investors this year, a senior official has said.
Speaking to news website VnEconomy on Tuesday, Vu Bang, chief of the State Securities Commission of Vietnam, said attracting investment into securities market is priority of the government.
But it will face difficulties this year as China's economic slowdown and oil shock may affect investor sentiment, he said.
Bang said his commission has been working with the Ministry of Planning and Investment to make it easier for foreign investors to buy stocks.
Decree No.60, which took effect on September 1 last year, allows foreign investors to buy up to 100 percent of many listed companies but has never been applied.
Both authorities and businesses have difficulties deciding whether or not some listed firms fall into restricted categories in which foreign ownership is still capped at 49 percent, he said.
Another problem is that businesses are reluctant to attracting more foreign investors, fearing of losing perks and benefits as local companies, he said. In Vietnam companies with a foreign stake of more than 51 percent are categorized as foreign businesses.
"The problems will be solved this year," Bang promised, suggesting the 51 percent cap can be lifted to 65 percent for instance.
In another key measure, Bang said, his agency has asked the government to offer bigger stakes to foreign investors when the equitization of state companies -- the term for privatization in Vietnam.
He said almost no foreign investors bought into state businesses last year, mainly because they found the number of shares on sale was too small to make any difference in business management.
State companies must adopt the process of book building to find strategic investors, according to the official.
Local authorities are also working to upgrade Vietnam's securities market to the "emerging" position to attract stronger foreign investment, Bang said.
Measures include increasing the transparency of listed companies and publishing information in English, he said.
Most of the proposed measures have been supported by the government, because the securities market is now considered as playing a role in helping Vietnam's economy grow and improve capital sources, Bang said.
"Vietnam's economic recovery and growth has been considered a bright spot in the global economy," Bang said. "If we can solve the current problems and open the market, foreign investment will keep flowing in."
Vietnam's stock market ended last year with "a very good achievement" as market capitalization rose 17 percent and the benchmark VN-Index 6.1 percent, Bang said.
VN-Index closed at 547.1 on Wednesday, down 0.18 percent from Tuesday.