Long-languishing proposal to raise limit to 60 percent set to undergo changes
Vietnamese authorities will delay a plan that would increase the percentage of voting shares foreigners can hold in companies that operate in certain industries until at least the end of 2015, according to media reports.
A proposal by the State Security Commission (SSC) of Vietnam to increase foreign ownership limits, which has been on hold since last year, is under consideration by the Ministry of Finance and will undergo some changes before it ‘eventually’ passes, SSC chairman Vu Bang says, according to a report from Bloomberg News.
As it stands, the SSC proposal would raise a state-imposed limit on foreign ownership of voting shares in certain companies to 60 percent from 49 percent, although the change must be made consistent with existing laws and probably won’t be ready until October next year at the earliest, Bang says.
While Bang doesn’t outline which industries would be subject to the increased limits, the SSC said at the start of 2014 that foreign ownership restrictions in non-banking businesses would be eased, according to a report in the Saigon Times. The Vietnamese newspaper reported that the limits could be raised with the consent of both the government and current shareholders. It reported in July that the SSC also sought an increase in ownership limits in securities companies.
Speculation of an imminent increase in foreign ownership limits has boosted the Ho Chi Minh City Stock Exchange throughout this year. To date, foreign investors have increased their holdings in Vietnam by a net $131.9 mn, marking the ninth straight year of net inflows, Bloomberg News reports. Citing its own data, it adds that daily trading volume has increased to $98 mn this year from $47 mn last year.
The delay to implementation of the stock ownership proposal comes as Vietnam seeks to integrate its stock market more closely with international markets and boost foreign investment.
‘A series of macro-level solutions are being performed to restructure the market in order to turn it into a comprehensively developed and transparent market that gradually integrates with developed securities markets around the world,’ the SSC said in a September press release in which it recommended that local listed companies start disclosing information in English as well as in Vietnamese.
