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    Southeast Asia
     Apr 9, 2005
Foreigners to hold larger stakes in Vietnam firms

HANOI - A draft law has been proposed that would allow foreigners to hold more than 30% of the shares in domestic companies in Vietnam.

Nguyen Dinh Cung, head of the Macroeconomics Board of the Central Institute of Economics Management, said the unified Enterprise Law was designed to attract more foreign investment.

He said foreign stock ownership in Vietnam was much lower than the 10-50% rates seen in many countries in the region.

"The current 30% cap has limited the country's capacity to mobilize overseas capital resources."

The Vietnam Chamber of Commerce and Industry also said the current cap is not in line with the government's strategies to develop domestic capital and stock markets.

Dr Tran Du Lich, director of the Ho Chi Minh City Economics Institute, said opening up the domestic market further was essential for integration in the global economy.

But he noted that financial investment laws in Vietnam are still too weak to protect domestic enterprises.

"If the nation's economy depends heavily on foreigners' finances, there could be problems if foreigners decided to withdraw their capital at the same time," Lich said.

More suitable would be a cap of 49% invested in processing and light industries that have relatively good financial health, he said. The current 30% cap should stay on key industries such as post and telecommunications, banking and electricity.

Bui Nguyen Hoan, chief representative of the State Securities Committee in Ho Chi Minh City, also expressed his disagreement with the draft that allows foreign investors to hold more than 30% of the shares in domestic companies in a bid to draw more foreign indirect investment. Instead, Hoan said, the banks should offer reasonable interest rates to mobilize more money from the public.

(Asia Pulse/VNA)

 

 
 

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