Decree 60 opens business doors, but barriers still exist (30/7)
30/07/2015 - 15 Lượt xem
Some investors sigh with relief
Song Cam Shipbuilding JSC might be relieved to hear about Decree 60 which allows foreign investors to hold up to 100 percent of shares in Vietnamese companies in unconditional business fields.
Song Cam is the only subsidiary of the former Vinashin (Vietnam Shipbuilding Industry Group), now SBIC (Shipbuilding Industry Corporation) which could still make profits in recent years, though its holding company is on the verge of bankruptcy.
Song Cam still can perform well partly because it has been cooperating well with the Dutch company Damen over the last 13 years.
In 2014, Damen and Song Cam JSC established a joint venture – the Damen-Song Cam Company Ltd, in which Damen holds 70 percent of the chartered capital, about 20 million euros.
Damen once tried to negotiate with the Ministry of Transport (MOT) and SBIC on the purchase of 70 percent of Song Cam’s shares. However, the negotiations at that moment all failed because of the limit on foreign ownership ratio.
The Prime Minister’s Decision No 55 dated in 2009 stipulated that foreign investors must not hold more than 49 percent of the chartered capital in one Vietnamese listed enterprise.
MOT many times sought the Prime Minister’s permission to sell 70 percent of Song Cam shares to Damen in an exclusionary case to get money to rescue SBIC which was in difficulty.
MOT also suggested selling 49 percent of Song Cam’s shares to Damen first and selling the other 21 percent shares later, if it gets the nod from the Prime Minister.
However, the foreign investor did not agree with the solution, stating that it would only buy Song Cam’s shares once and at negotiable prices.
The Dutch investor also said that if it could not expand business in Vietnam, it would leave Vietnam for other countries.
When the negotiations were at a standstill, the two sides saw the light at the end of the tunnel when the government released Decision No 60 allowing foreign investors hold up to 100 percent of stake in Vietnamese companies in certain business fields.
As such, the involved parties now can sell and buy Song Cam’s shares as they want, because the biggest obstacle has been removed.
Analysts said that if the negotiations can be wrapped up soon and the two sides can make a deal in 2015, the sale of Song Cam stake to Damen could be the first successful stake transaction to be made thanks to Decree No 60.
Decree brings necessary conditions
The new decree has lifted the barrier set before for foreign investors. However, in equitized enterprises, the ownership ratios will still depend on the equitization board’s decision.
While the old legal barrier has been lifted, new technical barriers may be set up.
An analyst said that Decree No 60 may not be a magic wand for the Vietnam-Oman Investment JSC (VOI), a joint venture between the Vietnam State Capital Investment Corporation (SCIC) and SGRF, the Omani national fund.
In early 2015, SGRF, through VOI, sent words intimating that it wanted to buy all the shares of the Hai Phong Port the government would sell.
In fact, Hai Phong Port made IPO in late 2014 already, but the shares were unsalable at that moment. Analysts believed that investors were not interested in the IPO because of the limited amounts of shares they could buy as the government wanted to retain 65-75 percent of the port’s shares.
Regarding the VOI’s proposal on share sale, the government then allowed Vinalines (the Vietnam National Shipping Lines) to sell 19.68-29.68 percent of Hai Phong Port’s shares to VOI.
Later, the Ministry of Transport asked the government to accept to sell the whole lot of shares to a domestic investor – Vingroup, a major player in the real estate sector. The ministry also suggested reducing the state’s ownership ratio sharply to 20 percent.
However, VOI has not given up its plan. It said that if the foreign ownership ratio ceiling of 49 percent was not raised, it would set up a joint venture to develop the Hai Phong Port.
Will Decree No 60 help VOI win the race with Vingroup?
A senior executive of VOI who asked to be anonymous said that with SGRF’s powerful financial capability, the plan to buy as many shares as the government sells will not change.
However, he noted that Decree No 60 will not have a major impact on share transfer deals of this kind.
“In equitized enterprises where the State still holds nearly 100 percent shares, it is the regulation on equitization and the decision of state management agencies that will matter,” he said, adding that VOI wishes the government to be transparent in its policies.
An analyst noted that foreign investors have every reason to worry about ‘technical barriers’. A foreign investor reportedly was unable to overcome the barrier when buying shares of the Transport Hospital, though the investor is a major one in the healthcare sector.
Source: TBKTSG
Song Cam Shipbuilding JSC might be relieved to hear about Decree 60 which allows foreign investors to hold up to 100 percent of shares in Vietnamese companies in unconditional business fields.
Song Cam is the only subsidiary of the former Vinashin (Vietnam Shipbuilding Industry Group), now SBIC (Shipbuilding Industry Corporation) which could still make profits in recent years, though its holding company is on the verge of bankruptcy.
Song Cam still can perform well partly because it has been cooperating well with the Dutch company Damen over the last 13 years.
In 2014, Damen and Song Cam JSC established a joint venture – the Damen-Song Cam Company Ltd, in which Damen holds 70 percent of the chartered capital, about 20 million euros.
Damen once tried to negotiate with the Ministry of Transport (MOT) and SBIC on the purchase of 70 percent of Song Cam’s shares. However, the negotiations at that moment all failed because of the limit on foreign ownership ratio.
The Prime Minister’s Decision No 55 dated in 2009 stipulated that foreign investors must not hold more than 49 percent of the chartered capital in one Vietnamese listed enterprise.
MOT many times sought the Prime Minister’s permission to sell 70 percent of Song Cam shares to Damen in an exclusionary case to get money to rescue SBIC which was in difficulty.
MOT also suggested selling 49 percent of Song Cam’s shares to Damen first and selling the other 21 percent shares later, if it gets the nod from the Prime Minister.
However, the foreign investor did not agree with the solution, stating that it would only buy Song Cam’s shares once and at negotiable prices.
The Dutch investor also said that if it could not expand business in Vietnam, it would leave Vietnam for other countries.
When the negotiations were at a standstill, the two sides saw the light at the end of the tunnel when the government released Decision No 60 allowing foreign investors hold up to 100 percent of stake in Vietnamese companies in certain business fields.
As such, the involved parties now can sell and buy Song Cam’s shares as they want, because the biggest obstacle has been removed.
Analysts said that if the negotiations can be wrapped up soon and the two sides can make a deal in 2015, the sale of Song Cam stake to Damen could be the first successful stake transaction to be made thanks to Decree No 60.
Decree brings necessary conditions
The new decree has lifted the barrier set before for foreign investors. However, in equitized enterprises, the ownership ratios will still depend on the equitization board’s decision.
While the old legal barrier has been lifted, new technical barriers may be set up.
An analyst said that Decree No 60 may not be a magic wand for the Vietnam-Oman Investment JSC (VOI), a joint venture between the Vietnam State Capital Investment Corporation (SCIC) and SGRF, the Omani national fund.
In early 2015, SGRF, through VOI, sent words intimating that it wanted to buy all the shares of the Hai Phong Port the government would sell.
In fact, Hai Phong Port made IPO in late 2014 already, but the shares were unsalable at that moment. Analysts believed that investors were not interested in the IPO because of the limited amounts of shares they could buy as the government wanted to retain 65-75 percent of the port’s shares.
Regarding the VOI’s proposal on share sale, the government then allowed Vinalines (the Vietnam National Shipping Lines) to sell 19.68-29.68 percent of Hai Phong Port’s shares to VOI.
Later, the Ministry of Transport asked the government to accept to sell the whole lot of shares to a domestic investor – Vingroup, a major player in the real estate sector. The ministry also suggested reducing the state’s ownership ratio sharply to 20 percent.
However, VOI has not given up its plan. It said that if the foreign ownership ratio ceiling of 49 percent was not raised, it would set up a joint venture to develop the Hai Phong Port.
Will Decree No 60 help VOI win the race with Vingroup?
A senior executive of VOI who asked to be anonymous said that with SGRF’s powerful financial capability, the plan to buy as many shares as the government sells will not change.
However, he noted that Decree No 60 will not have a major impact on share transfer deals of this kind.
“In equitized enterprises where the State still holds nearly 100 percent shares, it is the regulation on equitization and the decision of state management agencies that will matter,” he said, adding that VOI wishes the government to be transparent in its policies.
An analyst noted that foreign investors have every reason to worry about ‘technical barriers’. A foreign investor reportedly was unable to overcome the barrier when buying shares of the Transport Hospital, though the investor is a major one in the healthcare sector.
Source: TBKTSG
