VietNamNet Bridge – The Ministry of Finance has finished fielding suggestions for the draft decree on foreign ownership limit in listed enterprises and will submit it to the Government soon, said Vu Bang, chairman of the State Securities Commission (SSC).

The move, which has been suggested by many local organizations and international investors for many years, aims to lure more foreign capital into the local stock market.

However, SSC and the Finance Ministry up until now have just made official proposals to the Government.

At present, foreign individual and institutional investors are allowed to hold a maximum stake of 49% in listed enterprises. For banks, the combined stake that foreign investors and those related to them can hold in a Vietnamese bank is 30% while a foreign strategic investor can own a maximum stake of 20% in a credit institution with regulatory approval from the Prime Minister.

According to a report of Maybank Kim Eng Securities Company, the draft decree is seeking approval to raise foreign ownership limit from 49% to 59% which is likely through the use of non-voting shares in listed firms and a pilot use of voting shares in sectors without conditions.

However, Bang said that banks are not included in this draft decree, though with the use of non-voting shares. All of these ratios are just suggestions and the final result will have to depend on a decision of the Government.

Bang has said that the suggestion will include an increase of foreign ownership cap in listed firms through the issue of non-voting shares. The limit will be increased in certain sectors or administering agencies which will give approval on case-to-case basis.

Maybank Kim Eng said that the increase of 10% in sectors without conditions will be applied at securities companies first. Meanwhile, foreigners may be willing to raise their holding through non-voting shares in enterprises whose foreign room is almost full such as FPT in the telecom sector, DHG, TRA, DMC, IMP in the pharmaceutical sector, dairy firm VNM and BMP in the plastic industry.

According to securities firm KIS, foreign holdings reached a record high at 48% of foreign ownership limit while they have filled up 71% of foreign space in local banks.

KIS also predicted that foreigners may cut back on buying shares in the second half of this year after posting strong net buying value in the first five months.

Source: SGT