Vietnam opens state companies to foreign investors

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VinashinVietnam’s prime minister pledged to subject state-owned companies to competition and allow greater foreign ownership of banks as the government seeks to revive growth and join a key trade agreement, Bloomberg reported

Over the next five years, Vietnam’s state companies will focus on areas such as infrastructure that “the private sector cannot or does not want to invest in,” Prime Minister Nguyen Tan Dung. The government plans to devalue the dong as much as 2 per cent by the end of the year and let foreign companies own up to 49 per cent of local banks in the “near future,” Dung said.

Vietnam’s economy faces its most severe slump in at least a decade, hurt by slower lending as banks strain under the weight of bad debt incurred largely by the state sector. Removing protections for state companies would help Vietnam in seeking greater access to the US market to strengthen its economy, and underpin efforts to boost political ties.

State enterprises will need “to operate in the market economy,” Dung said. “We will treat them as equal to other enterprises.”

There are plans to sell shares in companies such as Vietnam Airlines Corp., Vietnam Posts & Telecommunications Group, and Vietnam Oil & Gas Group, he said, without giving a specific time frame for divestment.

State-owned companies in Vietnam are a key source of economic vulnerability, the International Monetary Fund said in August. Government policies dictate that the state sector play the leading role in the economy, with preferential access to land and capital, while non-state businesses face restrictions on market access.

Vietnam is considering measures such as tax breaks to help foreign companies, said Vice Minister of Planning and Investment Dao Quang Thu. Vietnam’s macro economic situation is improving even as the risk remains of higher inflation, he said at a conference in Hanoi in September.

 

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Reading Time: 2 minutes

Vietnam’s prime minister pledged to subject state-owned companies to competition and allow greater foreign ownership of banks as the government seeks to revive growth and join a key trade agreement, Bloomberg reported

Reading Time: 2 minutes

VinashinVietnam’s prime minister pledged to subject state-owned companies to competition and allow greater foreign ownership of banks as the government seeks to revive growth and join a key trade agreement, Bloomberg reported

Over the next five years, Vietnam’s state companies will focus on areas such as infrastructure that “the private sector cannot or does not want to invest in,” Prime Minister Nguyen Tan Dung. The government plans to devalue the dong as much as 2 per cent by the end of the year and let foreign companies own up to 49 per cent of local banks in the “near future,” Dung said.

Vietnam’s economy faces its most severe slump in at least a decade, hurt by slower lending as banks strain under the weight of bad debt incurred largely by the state sector. Removing protections for state companies would help Vietnam in seeking greater access to the US market to strengthen its economy, and underpin efforts to boost political ties.

State enterprises will need “to operate in the market economy,” Dung said. “We will treat them as equal to other enterprises.”

There are plans to sell shares in companies such as Vietnam Airlines Corp., Vietnam Posts & Telecommunications Group, and Vietnam Oil & Gas Group, he said, without giving a specific time frame for divestment.

State-owned companies in Vietnam are a key source of economic vulnerability, the International Monetary Fund said in August. Government policies dictate that the state sector play the leading role in the economy, with preferential access to land and capital, while non-state businesses face restrictions on market access.

Vietnam is considering measures such as tax breaks to help foreign companies, said Vice Minister of Planning and Investment Dao Quang Thu. Vietnam’s macro economic situation is improving even as the risk remains of higher inflation, he said at a conference in Hanoi in September.

 

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