Vietnam increases foreign ownership limit
HANOI - Vietnam will allow foreign investors to buy up to 49 percent of stakes in the country's listed firms in a bid to attract more foreign interest in the country's stock market, a State Securities Commission official said Friday.
Prime Minister Phan Van Khai signed the decision Thursday increasing the limit from its current 30 percent to 49 percent, Nguyen Hoang Linh of State Securities Commission told Dow Jones Newswires.
The new rule will become effective after the decision is published by the government gazette in the coming days, Linh said.
Vietnam launched its first stock market in Ho Chi Minh City in July 2000. So far, there have only been 30 listed companies with a combined capitalization of VND4.8 trillion, or $300 million.
Ho Xuan Hung, deputy director of the government's Commission for Enterprise Restructuring and Development, said the extension is aimed at creating more favorable conditions for foreign investors.
"We need foreign participation because many domestic firms lack management expertise, and we hope the new rule will help boost the stock market as well as the economy from now on," Hung said.
Currently, foreign ownership has already reached the 30 percent limit in about 15 listed firms, and in total, their stakes account for more than 10 percent of market capitalization, government figures show.
Foreigners will soon have more listed companies to choose from as the government plans to sell shares in 75 state-owned enterprises, which have been profitable in recent years.
The new listings will be on the country's stock markets in Hanoi and Ho Chi Minh City, and will include big industry names like Vietcombank and Vietnam Import-Export Construction Corp., or Vinaconex.
Vietcombank is among the country's biggest banks and Vinaconex is a major construction company in Vietnam.
Also, 178 shareholding firms, including Vinamilk, the country's largest milk producer, will list their shares in the market, Hung added.
Dominic Scriven, director of Dragon Capital Group, which has already invested in various local businesses, said the higher cap for foreign ownership is "good news for Vietnam's long-term opening."
Analyst Pham Kinh Luan of Thang Long Securities said domestic investors are excited because they "have waited for this for a long time and the market is expected to see new growth soon."
On Friday, the Vietnam's Stock Exchange index rose 13.23 points, or 4.8 percent, to 289.18, its highest level so far this year.
The Associated Press - September 30, 2005.
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