The State Securities Commission (SSC) will hold a seminar this week to provide market participants and businesses with detailed information about Decree 60 on foreign ownership limits.
SSC vice chairman Nguyen Thanh Long made this announcement during an online conference on the website chinhphu.vn late last week. The meeting is expected to take place on August 13.
Decree 60, issued on June 26, 2015 and comes into force on September 1, will remove limitations on foreign ownership in the securities market.
This is a much-watched issue that has attracted attention from the investor community but, to date, the regulation on sectors that are conditional for foreign investment remain unclear. The market is awaiting the circular providing guidelines to implement the decree.
"Under the Ministry of Finance's direction, the commission has completed guiding circulars and will hold a seminar on Thursday to provide the details," Long said.
"Guiding circulars will be issued soon in the near future."
According to Decree 60, the foreign ownership ratio will adhere to specific laws and international treaties, to which Viet Nam is a member. However, the breakthrough provided by this decree is the full removal of the foreign ownership cap, which is currently limited to 49 per cent in public companies.
Further, companies will be allowed to determine the percentage of foreign holding in its charter of operation.
Those conditional businesses that have not specifically regulated foreign ownership limits will have the current maximum ownership of 49 per cent to be temporarily applied.
Other businesses, such as banks, will continue to have foreign ownership limited by specific regulations.
"The introduction of Decree 60 is the most brilliant offer to foreign investors," said Vo Tri Thanh, deputy director of the Central Institute for Economic Management (CIEM).
Thanh said the decree was issued at the right time, as Viet Nam is integrating more deeply into the world, which contributed to ongoing legal reforms in the country.
However, though the decree is laying a very good foundation to attract foreign capital, analysts said the core issue was still the businesses, themselves.
Long noted that foreign investors pay much attention to operations of companies, corporate transparency and efficiency.
According to Le Anh Tuan, chief economist and deputy general director at Dragon Capital, foreigners often complain about the lack of information about companies.
"Financial reports and other documents from companies are available, mostly in Vietnamese. Therefore, if they have an investment plan, foreign investors must seek information by themselves," Tuan said.
He also emphasized that the first thing that may interest foreign investors was a company's transparency and determination of its board of directors to improve their business.
Additionally, SSC's vice chairman Nguyen Thanh Long said the relaxation of the foreign ownership limit would result in spillover effects that could help lift the Vietnamese stock market's position from being labeled as a "frontier market" to an "emerging market".
With the higher level of development, the domestic market would likely draw more foreign capital and part of it would be channeled into small – and medium-sized companies