Vietnam set to relax foreign holding limit in special sectors
Experts suggest the foreign ownership limit should be 49% to make the country’s finance and banking sector more attractive to foreign investors.
The government will implement a pilot project to allow foreign investors to hold a higher stake in some conditional business lines that have a direct impact on Vietnam’s economic safety and security.
Local banks find it hard to lure foreign capital due to the 30%-ownership limit.
|
Currently, the foreign ownership limit is in place for the business lines to avoid giving foreign interests too much power. The maximum foreign ownership for banking and aviation sectors, for example, is 30%.
According to experts, relaxing the limit on foreign ownership will further broaden the investment scale for foreign investors. The use of non-voting depository receipts may help foreign investors buy more shares in Vietnamese companies without raising their power.
Buying non-voting depository receipts is an alternative option for foreign investors as they receive the same benefits in terms of dividends and warrants as those investing directly in a company’s ordinary shares. The difference between those buying ordinary shares and those buying non-voting depository receipts is voting rights. Non-voting depository receipts holders cannot be involved in company decision-making.
Increasing attraction
Foreign ownership limit regulation is one of main causes making the business lines, especially banking, less attractive to foreign investors. Domestic banks are currently finding it hard to lure foreign investors, especially prestigious financial institutions, as the foreign ownership in the sector is capped at only 30%.
According to Ngo Long, associate director at the Research Department of Viet Capital Securities, investment trends in the banking industry will depend on when the government lifts the foreign ownership ceiling.
Sharing the same view, banking expert Nguyen Tri Hieu said the current foreign ownership limit of 30% on the banking industry isn’t encouraging foreign investors to invest in local banks as they can’t be involved in banks’ decision-making with such holding rate.
To make the country’s finance and banking sector more attractive to foreign investors, Hieu suggested the government should increase the foreign ownership limit to 49%.
Oliver Massmann, general director of international law firm Duane Morris Vietnam, also believes the government should open up more room for foreign ownership in local financial institutions, as the foreign ownership limit in many lenders has nearly reached the permitted level.
The government should also continue to complete the legal framework for the financial service sector to comply with its commitments under free trade agreements, thus raising investor confidence in the system and their willingness to invest further, he said.
The same trend is also seen with the aviation industry, where the ceiling is also set at 30%. Representatives from VietJet Air expected the increase of foreign shareholding will not only boost the healthy performance of aviation transport firms through the application of modern management formats by foreign investors, but also prove the Vietnamese government’s open-door policy through allowing more foreign capital injection into the aviation sector which is capital-intensive and requires governance expertise.
Several ASEAN economies have raised their foreign ownership limit in the aviation businesses, with Thailand and Indonesia to 49% and the Philippines to 40%, VietJet Air said, adding if Vietnam continues keeping the rate below the level applied in other regional countries, this could result in an imbalance between market entry conditions and investment environment openness, which will make it more difficult to attract foreign capital flows into the aviation transport sector.
15:51, 2025/02/24
Vietnam set to have digital banks within financial centers
Credit institutions headquartered in these financial centers will not be bound by restrictions on to foreign ownership or foreign investment conditions when providing services there or across borders.
14:30, 2025/02/15
Hanoi expands cashless parking pilot program
Hanoi is advancing its efforts to integrate technology into urban management by expanding the pilot program for cashless parking payments throughout the city.
16:58, 2025/02/11
Prime Minister urges banks to prioritize economic support over profits
One of the key priorities for the banking sector is to support small and medium-sized enterprises (SMEs), as they generate a large number of jobs and contribute significantly to the economy.
17:23, 2025/02/07
Vietnamese Gov’t forecasts CPI growth of up to 4.5% in 2025
With the goal of at least 8% GDP growth, the money supply in the economy will be significantly larger than in 2024. This will have an impact on price indices, particularly consumer prices.
17:51, 2025/01/07
Vietnam prioritizes agriculture and renewable energy for access to green loans
The move is part of the government’s effort to accelerate economic restructuring and build resilience to climate change while protecting the environment.
16:49, 2025/01/06
Vietnam GDP expands by 7.09% in 2024
The 2024 growth rate is considered positive amidst global uncertainties and domestic challenges such as natural disasters.
- Vietnam stock market set to accelerate in 2025: Experts
- Vietnam stock market aims for emerging status by 2025: Finance minister
- Vietnam set to extend VAT cut for six months
- Vietnam’s credit growth projected to expand by 16% in 2025
- Regional, international financial centers mean boosters to Vietnamese economy: Deputy PM
- IFC sets record with US$1.6 in climate financing to support Vietnam’s green transition