Vietnam’s 49% ownership cap on overseas investment will be removed for select industries beginning on 1 September. The change – which will effectively enable foreign ownership of up to 100% for Vietnamese corporates – was a welcome surprise to many who had expected the limit to be increased only to 60%. However, it remains to be seen whether this will create enough momentum for the government to meet their mildly outlandish target to privatize as many as 289 state companies in 2015. Note that only 61 listings were completed as of the end of June.
The country’s existing oligopoly of state-owned enterprises (SOEs) across many key sectors has largely kept foreign investors on the sidelines since Vietnam’s nascent stock market was launched 15 years ago. Even last November 2014, when the government floated a paltry 3.5% of Vietnam Airlines in an initial public offering, foreign investors did not buy a single share. In July, the now partly ‘privatized’ airline launched a new brand identity that “embodies modernity and uniformity while… retaining the flag carrier’s familiar traits”. In other words, the new company logo is literally indistinguishable from the last. If the Vietnamese government wants to boost interest in its stagnant stock market (its market capitalization-to-GDP ratio of 27% is one of the lowest in Asia) then it may want to consider launching its own re-branding campaign.
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