Signed by Prime Minister Phan Van Khai, analysts said the decision was one of many wide-ranging attempts to boost the ailing stock market since it was launched in July 2000.
Foreigners were quick to welcome the move.
KPMG senior partner Warrick Cleine said: “Relaxation of foreign investment restrictions in the country’s listed shares is most welcome.
“There are many successful Vietnamese companies that would benefit from a closer relationship with their foreign partners.
“This will especially benefit those companies that use foreign technology, trade contacts or experience.”
The need for such a decision was shown when the government recently allowed Sacombank and British-backed Dragon Capital to establish the $500,000 Viet-Fund Management Company. (See related story on P.15).
Over the past three years, the country’s stock market has attracted 21 equitised firms’ shares and two bonds from the government and the state-owned Bank for Investment and Development of Vietnam with total market capitalisation up to VND6.6 trillion ($425 million).
But, according to State Securities Commission (SSC) chairman Nguyen Duc Quang, such figures are still too small compared to what the government and investors expected when the market opened three years ago.
“The ratio of stock investments by individual investors is still tiny while total market capitalisation accounts for just 1.6 per cent of the GDP,” Quang said at the market’s three-year anniversary last week.
“Vietnam’s financial market has been divided separately.
“The monetary market is managed by the State Bank, the insurance market is controlled by the Ministry of Finance and the stock market is supervised by the SSC.
“We have not been systematically combined,” he said.
Dragon Capital’s John Shrimpton said stock-investor confidence should be nourished and attracted if policymakers wanted to see the bourse gain in popularity.
“It is extremely important to raise investors’ confidence [in the stock market’s development]. We need to let investors know that a market exists where they can invest,” he said.
Quang called on the government and concerned ministries to speed up state-owned enterprise reform, and to encourage joint-stock banks to join the market.
He also proposed the MPI fast-track the pilot scheme where the ministry is equitising some foreign-invested firms, in order to create more players to participate in the stock market.
“We are proposing the government exempts corporate-income tax for securities and fund management and listed companies for five years after they join the market,” Quang said.
Ha Nguyen (vir.com.vn)