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New wave of indirect investment to come to Vietnam (15/11)

06/08/2010 - 132 Lượt xem

Experts believe that there is a new wave of foreign indirect investment flowing toward Vietnam. How do you comment about this?

The Government of Vietnam is pushing up the equitisation of a series of state owned corporations, including Bao Viet (insurer), the Vietnam Post and Telecommunication Corporation (VNPT), Electricity of Vietnam (EVN). Once equitised, these big enterprises will provide a big volume of shares worth several billions of dollars for the market.

Before becoming Managing Director of VincaCapital, Pham Uyen Nguyen was the founder and Executive Director of Bao Viet Securities Company in HCM City. He was also the co-founder and Deputy Director of the HCM City Urban Development Fund. He is now also the member of the directorial boards of many leading companies in Vietnam, including Kinh Do Confectionary Company, Hau Giang Pharmaceutical Company. He is the lecturer on securities market and financial investment at the State Securities Commission.

At the same time, the legal framework on equitisation and securities market has been active in creating a good investment climate in Vietnam. The limits on foreign ownership in Vietnamese companies have been removed. This should be seen as a big opportunity for Vietnam to attract the biggest ever investment capital volume. I personally think that the growth rate in indirect investment attraction will be calculated by how many times, not how many percent.

VinaCapital is managing one of the biggest foreign investment funds in Vietnam with the total capital of $800mil. Vinacapital is targeting the equitised companies being managed by Vietnamese staff. 

You have said that the Government’s policy proves to be very open, but there are still worries about the negative impact of the indirect investment. Will this bring any difficulties to investors?

It is true that some people are concerned that Vietnamese enterprises will be controlled by foreign investors. However, I must say that foreign investors themselves also compete with each other in one company. Meanwhile, one Vietnamese shareholder can also control a company as he holds the controlling stakes of 51%.

I don’t think the worries you have mentioned come from the Government. I know that the Government is going to replace the currently valid Decision 36 on foreign ownership in Vietnamese companies with a new one, which is being drafted. As far as I know, no limit on foreign ownership will be set up, excluding in the very sensitive fields. This spells that the Government is self-confident and it has realised the active impact of the equitisation. 

However, I must say that barriers still exist which can dampen foreign investors.

Let’s take an example. An equitised company has registered to do business in different fields, including real estate trading. When equitising, it has the right to sell its stakes to the public, including foreign investors. However, the local department of planning and investment later said that foreign investors cannot purchase the company’s shares, because the real estate is not open to foreign investors. In this case, foreign investors would feel that they had been cheated.

Vietnam is in a transitional period and people should keep perspective on what is happening. It will require big exertion to settle the shortcomings like this.

Vietnam has officially been admitted to the WTO. How will this event affect financial investors in Vietnam?

As an investor, I am interested more in the impact to be brought about by the equitisation process. I think the WTO membership is just a tool for Vietnam to reach its target. More investors will be interested in Vietnam once Vietnam joins the WTO.

I can draw up a scenario like that. Many enterprises will be eliminated by the anticipated fierce competition, while others will survive the competition and become stronger. I think in the future, Vietnam will have its international groups, which we have never dreamed of. The groups will be based in Vietnam, mobilising capital from all over the world and operating worldwide.

Regarding the adjustment of policies, I would like to know your opinion on the fact that listing companies will not be given tax incentives if they list on the bourse after January 1, 2007?

The unexpected decision by the Ministry of Finance (MoF) has prompted enterprises, which plan to list next year, to apply for listing right at this moment. I think MoF has its reasons for making this decision. The tax incentive regime has been resulting in the loss of revenue in budget collection. However, I think, it would have been better if MoF had announced this one or two years in advance. 

Several billion dollars will be injected in Vietnam. How will the disbursement be carried out if the financial market in Vietnam is believed to lack transparency, thus being risky?
 
When Vietnamese enterprises and investors can find common voice, this will be the driving force for development. Our funds are considered to have the fastest disbursement rate in Vietnam thanks to our suitable investment policy. I believe that we can appraise the opportunities in Vietnam. At first, one can see many risks, but opportunities still can be found behind the risks.

There are many opportunities for financial investors here, in Vietnam. If MobiFone and Vinaphone are equitised, there will be a big volume of securities for investment. The State can take back $5bil if it equitises the two big telecommunications companies. If equitising power plants, the State will also get several tens of billions of dollars. The total goods on the financial market are estimated to be valued at several hundred billion dollars, while the total investment capital of the investment funds is just $2-3bil.

Source: VietnamNet