Maximize Foreign Investors' Shares

Investment laws, coming into force on July 1, 2006, contain important content pertaining to the new limitless foreign investment into Vietnamese enterprises, and listed firms except conditional businesses.

However, this regulation is not working as there is no guideline yet inplace. Mr. Nguyen Hoang Hai, the secretary of VAFI (Vietnam’s association of financial investors), says that the ministry of finance is rapidly compiling the PM’s decision on foreign investors’ capital contribution and share buying. It may take between 3 and 5 months to issue this guideline as they will have to compile and consult the opinions and feedbacks from Ministry of Justice and other relevant ministries.

While waiting for the investment laws,VAFI recommends revising decision no. 238/2005/QD-TTG. The revision is simple, not time consuming and in accordance with the investment laws and its guideline.

In the decision no. 38, foreign individuals and organizations selling and buying stocks in stock markets are entitled to hold the maximum of 49 per cent of all the listed bonds. The registration procedures for a company to be listed or involved in the securities trading centre should be revised to permit 100 per cent of the share holding except conditional businesses .The revision is in accordance with the 17^th draft of the guideline on investment laws.

VAFI says among 70 listed and ready-to –be-listed enterprises, there are only five whose main business activities are conditional and restricted to the proportion of foreign enterprises’ shareholding

Previously, there was opinion that we should not have issued this temporary regulation but concentrate on the permanent one. However, the revision requires simple administrative procedures and takes just a little time to compile but it is of great importance to gradual financial market development.

Mr Hai also says that the revised decision no. 238 will bring such a lot of benefit as follows: Decision no. 238/2005-TTG dated September 29, 2005 has strongly impacted the tock market. This decision, being into effect for nearly a year, has contributed to the changes in the scale of stock market and speeded up the process of equalization of state owned enterprises. It has also raised the direct investment capital into Vietnam, currently attracting over 1 billion of FDI, stimulating the domestic capital of some billion USD into stock market .The scope of stock market has risen tenfold; lots of enterprises have been listed and many commercial banks have been able to mobilize thousands of billion dong

The revised decision no. 238 will also bring such benefit as ensuring the continuation and the stability of financial markets .The more financial markets develop, the more efforts should be made to exploit the domestic and foreign resources. This revised regulation, though completed 3 months before the deadline, is likely to raise the state budget by hundreds of billion USD.