Vietnam’s Ministry of Industry and Trade (MoIT) has proposed the government to allow foreign investors to join the local petroleum retail market, local media reported.

Vietnam trade ministry proposes opening the petroleum market for foreign enterprises.

The move is part of the revised version of the government's Decree No.83 on petrol and oil trading, which has been submitted to the government for approval.

Under the revised regulation, local oil and petrol traders are now allowed to transfer their stakes to foreign investors but foreign ownership should not exceed 35%.

According to the MoIT, the timing of opening the market for foreign investors has been considered thoroughly, particularly as petroleum products are strategic that directly affect national energy security.

The MoIT said since Vietnam’s entry to the World Trade Organization (WTO) in 2007, the country did not commit to open the domestic petroleum retail market in order to support the development of local firms. After 13 years, Vietnam has now opened its doors to foreign investors in the majority of fields, including electricity, aviation and oil.

The MoIT referred to foreign participation in a number of major state firms with government approval, including PetroVietnam Oil Corporation (PVOil) at 35%, Binh Son Refinery and Petrochemical (BSR) at 49%, and Petrolimex at 20%. Foreign holdings have helped significantly improve their respective corporate governance.

A senior official from the MoIT told Thanh Nien the foreign ownership limit set at 35% would restrict the influence of foreign investors to domestic firms, especially regarding veto rights. Meanwhile, this limit would help local firms to attract capital, technologies and acquire high level of corporate governance.

A shareholder with a share of 36% or more has veto power in a Vietnamese company.