31st Sea Games - Vietnam 2021 Covid-19 Pandemic
Home / Economy / Banking & Finance
Vietnam c.bank drops foreign ownership limit requirement for fintech
Hai Yen 01:04, 2020/02/12
Foreign ownership limit could affect the attraction of foreign direct investment (FDI) in the field of intermediary payment services in particular and fintech in general.

After having sought public opinion for the draft decree on non-cash payment, the State Bank of Vietnam (SBV), the country’s central bank, has opted to discard the requirement of foreign ownership limit of up to 49% in fintech providing intermediary payment services.

 Illustrative photo. 

The SBV’s draft decree is set to be submitted to the government in June.

The SBV acknowledged the fact that foreign investment plays a significant role for fintech, therefore, such a cap could affect the attraction of foreign direct investment (FDI) in the field of intermediary payment services in particular and fintech in general.

Moreover, a number of major intermediary payment firms operating in Vietnam have current capital contribution of foreign investors above 49%, thus a change in regulation would then impact their operations.

Deputy Director of the SBV’s Payment Department Nguyen Thanh Son at a conference last August said the SBV had licensed 27 intermediary payment service providers, of which the majority offer e-wallet service. However, five fintech companies holding 90% of Vietnam’s payment market share have foreign ownership ranging from 30% - 90%.

Son added there have been concern over the actual practices of these fintech companies, particularly the security of information related to transaction and the privacy of customers’ data.

Moreover, foreign companies holding large shares of Vietnam’s leading fintech companies could pose the risk of market manipulation, Son stressed, adding neighboring countries such as Singapore and Indonesia also curb foreign ownership.

Vice President of the Singapore Fintech Association Varun Mittal said for the Vietnamese fintech industry to reach the regional level, government agencies should create conditions for them to expand and access new sources of capital. 

According to Mittal, these fintech companies are very ambitious but the most important issue would be to secure sufficient funds for operation and rapid development, while ensuring full compliance with the current legislation. 

At the Vietnam Business Forum in June 2019, a representative of the American Chamber of Commerce (AmCham) proposed not applying foreign ownership limit in fintech payment companies. 

The AmCham representative added the growth of financial services and fintech in Vietnam would depend on the implementation of appropriate legal framework and investment policies. However, a limitation in foreign ownership is seen as considerable obstruction to fundraising capability of Vietnamese fintech companies.  

RELATED NEWS
TAG: Fintech Vietnam intermediary payment services foreign ownership limit non-cash payment
Other news
15:54, 2022/54/24
Vietnam's stock market on foreign funds’ radar amid possible upgrade to EM status: HSBC
Vietnam has outperformed major regional indices, making the market nearly quadrupled in size compared with the start of 2012 and the trading exceeding $1 billion a day.
10:52, 2022/52/23
Gov’t extends excise tax payment deadline for domestic cars
This has been the third extension of excise tax compliance due date for local cars since 2020, with an expected amount subject to a tax break of VND20 trillion ($US$863 million).
11:26, 2022/26/17
The Vietnam-US comprehensive partnership facilitates investment activities: PM
The prime minister held meetings with executives of US major financial corporations such as KKR, Visa, S&P, and Citigroup over future cooperation in the financial sector.
15:35, 2022/35/11
Vietnam's securities accounts surpass 5-million mark
As of the end of April, Vietnam’s stock market has over 5.2 million securities accounts, of which retail investors make up 98.9%.
08:24, 2022/24/10
Finance ministry proposes extending tax payments worth US$870 million for domestic cars
The ministry considered this an urgent solution for businesses, which should take effect immediately from the date of signing to the end of 2022.
13:44, 2022/44/09
Foreign capital returns to Vietnam's stock market in 2022: SSI
The stability of the VND-USD exchange rate helped Vietnam attract substantial attention from investors in the region, such as Thailand, Taiwan, and Singapore.