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More chances for foreign investors to buy SOEs

VGP - Early this month, the Government issued Decree 109/2008 NĐ-CP on the sale and transfer of wholly State-owned enterprises (SOEs). The Decree opens more opportunities for foreign businesses to involve in the trading of enterprises in Việt Nam.

October 24, 2008 7:12 AM GMT+7

Under the Decree, foreign investors, including foreign-invested companies, economic and financial organizations established under foreign laws and operating in foreign countries or in Việt Nam, and foreign individuals, will be permitted, together with Vietnamese enterprises or citizens, to buy a part of SOEs, with a percentage which does not exceed Việt Nam’s international commitments on foreign investors’ rights to do business in the areas where Việt Nam has made commitments.

For SOEs in other areas, foreign investors are allowed to purchase the whole enterprises which are approved by the Vietnamese PM.

However, if foreign investors are intermediary financial organizations, or employees of those organizations, engaging in consulting about the bidding and pricing of the enterprise sale, they will not be allowed to buy SOEs.

Foreign investors who want to buy SOEs are obliged to open a cash account in Vietnamese currency in some payment service provider operating in Việt Nam’s territory. Then the investors must do all their payment for the deals via this account.

Over the past 2 years, the enterprise merger and acquisition (M&A) have boomed in Việt Nam, especially in finance and banking fields.

In August this year alone, there was a wave of buying shares of Vietnamese commercial banks. France’s Societe Generale bought 15% of the Southeast Asian joint stock banks; HSBC raised its ownership of Techcombank to 20%, and OCBC of Singapore bought 15% of VP Bank.

According to economists, foreign investors are interested in M&A in the Vietnamese market because it’s the shortest way for them to access the market and utilize available distribution networks, customers and workforce of their Vietnamese partners.

 By Ngọc Vân