Vietnam sparingly gives more “room” to foreign investors
Vietnam sparingly gives more “room” to foreign investors
Foreign investors have said the government of Vietnam proves to be very mean about the rises of the foreign ownership ratios in Vietnamese banks.
Foreigners said they feel disappointed about the latest decision by the government of Vietnam on offering more “room” in Vietnamese banks to foreign investors.
The Decree No. 01, which took effect in late February 2014, stipulates that foreign strategic investors must not hold more than 20 percent of the legal capital of a Vietnamese credit institution.
The new ceiling of 20 percent, which is just a little higher than the 15 percent stipulated in the Decree No. 69 dated in 2007, has been described as a “drib.”
The decree also stipulates that the total foreign ownership ratio in a Vietnamese credit institution must not be higher than 30 percent of the institution’s legal capital.
However, the foreign ownership ratios could be higher than the ceiling 30 percent in some specific cases to be considered and approved by the Prime Minister.
Nicolas Audier from EuroCham said at a recent workshop that the decision has discouraged the foreign investors who really want to make investments in Vietnamese banks.
No considerable improvement has been made in the Decree No. 01. The total “room” for foreign investors remains unchanged at 30 percent. Meanwhile, the 20 percent foreign ownership ratio has been existing in reality already, he commented.
The businessman, recalling the case of the Asia Commercial Bank (ACB), emphad that if foreign investors do not have the ownership ratios big enough to obtain the power big enough, they would not be able to make the important decisions to help develop banks.
ACB was once controlled by some shareholders. Meanwhile, the two foreign shareholders – Standard Chartered and IFC, an arm of the World Bank – did not know about this.
He went on to say that Vietnam should think of lifting the ceiling further, especially when it needs the foreign resources to deal with its big problems, including the high bad debt ratio, cross-ownership and mismanagement.
He warned that the merger of the Vietnamese weak banks would not help settle the bad debts, once foreign strategic partners cannot put hand into it.
Remco Gaanderse from ING Bank noted that Vietnam should have lifted the room to 50-51 percent instead of the low 20 percent as decided.
He believes that once Vietnam still puts a cap on the foreign ownership ratio, this means that Vietnam still closes the door and tries to manage itself. If so, it would not be able to approach the modern corporate governance technology in the world.
Mac Quang Huy, Managing Director of Maritime Bank Securities, agreed that it is necessary to lift the foreign ownership ratio ceiling, and it is necessary to do this now instead of 5-10 years.
“We invite foreign strategic partners to join to help settle bad debts. Therefore, we should invite them right now, not after 5-10 years, when the house is cleaned up already,” he said.
Meanwhile, Nguyen Manh Hung from the Banking Strategy Institute, recalling the massive foreign capital withdrawal some years ago, believes that Vietnam should take cautious steps when lifting the ceiling.
vietnamnet
