Decree allowing higher foreign stakes in Vietnam’s firms approved

Hanoi, June 29 (VNA) - The Vietnamese Prime Minister has ratified Decree 60/2015 to replace Decree 58, which included a long-awaited regulation on removing limits on foreign ownership in listed companies. The new decree will not only have huge, positive impacts on the development of the securities market but also accelerate the privatisation process that the Government is determined to hasten drastically and efficiently, Finance Minister Dinh Tien Dung said at the ministry's meeting to revise results in the first half of the year and plan for the second half on June 26. "When Decree 60 takes effect and foreign stakes are lifted, a significant amount of foreign capital is expected to flow in and boost markets," he added. The current regulation capped foreign stakes in public companies at 49 percent. Under the new decree, foreign stakes can be lifted up to 100 percent for most sectors, and firms will also be allowed to propose their own limits. However, the limit on foreign stakes at banks will be retained at the existing level of 30 percent. The details of the regulation will be disclosed soon. SSC's Chairman Vu Bang noted that detailed instructions for the implementation of the new decree will be issued soon. Both benchmark indices closed down yesterday after sell-offs in the afternoon trading as investors were still awaiting more details of the new decree. According to the BIDV Securities' statistics, dozens of listed companies in national bourses currently ran out of "room" for foreign investors, including major names such as Vinamilk, FPT Group, and REE Corporation. Stock analysts see the lifting of limits on foreign stakes as a significant impetus for the stock market this year, predicting an inflow of foreign capital worth billions of dollars, together with increasing mergers and acquisitions deals. At the recent Vietnam Business Forum, Nguyen Kien, a representative of the capital market working group, said the scale of Vietnam's stock market remained modest in comparison with the markets of other countries in the region. Vietnam's market capitalisation was equivalent to 25 percent of GDP, while the rates were 65 percent in the Philippines and 112 percent in Thailand. Experts remarked that the modest scale of the stock market would make it hard to support the privatisation process, adding that opening more doors for foreign capitals would be a solution./.