VietNamNet Bridge – Foreign owners will be allowed to take a higher stake in securities companies, but not in all businesses, as was expected.

Foreign investors may have felt a bit disappointed when Vu Bang, chair of the State Securities Commission (SSC), said it was highly possible that the lifting of the ceiling foreign-ownership rate in all Vietnamese businesses would not occur. For now, it will only be applied to securities companies.

However, this does not mean foreign investors will have fewer opportunities to buy more shares in non-securities companies. Bang said the government has assigned the Ministry of Planning and Investment to classify business fields to decide how much room to offer to every field.

SSC is still awaiting a final decision from the government.

Meanwhile, SSC wants to lift the ceiling foreign-ownership ratio in securities companies as soon as possible to be sure that Vietnam is strictly complying with the WTO commitments.

SSC plans to proceed with the lifting of the foreign ownership ratio in securities companies first. A detailed plan on the issue would be submitted to the Ministry of Finance in several days, which says that foreign investors can hold 0-100 percent of capital in a securities company.

There are now two kinds foreign invested securities companies licensed in Vietnam – foreign invested enterprises, i.e., ones where foreign investors hold no more than 49 percent of stake, and 100 percent foreign owned companies.

The general director of a securities company has urged competent agencies to set up the regulations allowing foreign partners to hold up to 100 percent of capital of securities companies.

This would help fix the current problem that foreign institutions cannot obtain 100 percent of capital of companies if they cannot collect enough stakes from all the shareholders. It is really difficult to do that in a company with thousands of shareholders.

A report from the Ministry of Finance shows that about 90 securities companies are operating in Vietnam, including over 40 foreign-invested securities companies.

Of these, over 10 companies with foreign-ownership ratios comprise 49 percent. There is only one 100 percent foreign owned securities company, Maybank Kim Eng.

Thus, only one company has turned into a 100 percent foreign company since the the government decree No 58 that allowed 100 percent foreign owned securities companies in Vietnam. The decree took effect in 2012.

The majority of other companies are still awaiting government decisions so they can raise their ownership proportions to over 49 percent but not 100 percent.

Foreign investors want to hold the controlling stakes, but they still want to have Vietnamese partners in their companies.

The information about the lifting of the foreign-ownership ratio in securities companies could be why stock prices rose in the last few days.

SSC announced the plan on the ownership ratio increase 18 months ago. However, the draft plan still must be amended many times.

TBKTSG