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The Vietnam News

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Vietnam names sectors in need of foreign funds

HANOI - Vietnam's finance minister gave the green light on Thursday to the energy, banking, telecoms and aviation sectors to raise funds from foreign investors to help raise $150 billion in estimated investment needed to fuel growth.

"The government encourages and backs up the companies in need of huge funds in the areas of power generation, telecoms, coal, aviation, ship building, insurance, banking, oil and gas etc. to prepare sufficient conditions to tap the global capital market," Nguyen Sinh Hung told an investment forum. He said companies could offer to sell shares or bonds overseas, suggesting the government may be willing to allow foreign investors in such sectors as oil and gas. Hanoi has previously said it wanted to keep full control of strategic industries such as aviation, energy, publishing and defence.

In March last year, an official said the only sector that would not be privatised was oil and gas. Hung said Vietnam planned to privatise around 1,400 state owned enterprises, or half the current number by 2010. The minister reiterated that the government expected 35 percent of the $150 billion in investment needed to fuel the economy to come from foreign investment. He said companies could raise funds via commercial loans, by issuing shares or bonds overseas, adding that a $750 million sovereign bond last October was issued to create a benchmark for more bonds.

Dominant utility Electricity of Vietnam plans its maiden overseas bond issue of $250 million in the third quarter of 2006. Three state-run banks, Vietcombank, BIDV and Mekong Delta Housing, plan initial public offerings of shares in 2007. Vietnam caps the foreign ownership at 30 percent in a domestic bank and allows individual investor to hold 10 percent. To boost more foreign indirect investment, Hanoi has raised the foreign ownership ceiling to 49 percent of a company listed on Vietnam's stock market , from 30 percent previously. Much still needed to be done to underpin growth, said investors attending the forum to assess business opportunities in Vietnam after it joins the World Trade Organisation, which is expected later this year.

"Vietnam's capital market is still at the starting stage of its development process," Trinh Thanh Hoan, chief executive of Bao Viet, Vietnam's largest insurer, told the forum. Foreign investors interest, apart from the capital market, includes infrastructure and property. "We will be respectively involved in the development of transportation infrastructure... roads, rails and airports," David Hornery, ANZ Managing Director for Asia told Reuters.

Reuters - March 16, 2006.