Large corporations rush to lift foreign ownership ratio limit
A number of leading corporations have lifted the foreign ownership ratio limit after the government issued Decree 60.
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Hau Giang Pharmacy (DHG) has announced a decision to consult shareholders on raising the foreign ownership ratio ceiling to 100%.
The current ceiling at DHG is 49 percent, while Taisho Pharmaceutical from Japan, the biggest foreign shareholder, holds a 24.44% stake.
At the annual shareholders’ meeting last April, Hoang Nguyen Hoc, chair of DHG and deputy CEO of SCIC, which holds a 43.3% DHG stake, said the lifting of the foreign ownership ratio limit needs to be considered thoroughly to improve share liquidity, but it must not affect the company’s long-term business strategy.
SCIC will divest from DHG and other enterprises operating in fields in which the state doesn’t need to invest, as requested by the government. However, the divestment won’t be made for another 2-3 years.
Domesco (DMC), a medical equipment import/export company, has also decided to lift the foreign ownership ratio ceiling to 100%.
In order to be able to lift the foreign ownership ratio, both DHG and DMC have to adjust their registered business fields, because under the current laws FIEs are not allowed to import medicine for domestic sale.
Soon after getting approval for lifting the foreign ownership ratio, CRF International belonging to Abbott raised its ownership ratio in Domesco to 51%.
Besides the two leading pharmaceutical manufacturers, businesses in food, construction and other business fields are also considering lifting the foreign ownership ratios.
Kido (KDC) has approved a proposal to raise the foreign ownership ratio from 49% to 100%. The company’s management board believes that the adjustment will bring great opportunities for development and help increase the value of existing shareholders.
“We don’t care much about the balance of ownership between domestic and foreign investors. The most important thing for us is that cooperation will bring optimum benefits to involved parties,” said Tran Le Nguyen, Kido’s CEO, adding that in the immediate time, the company will expand production and follow M&A.
Coteccons’ shareholders recently approved a plan to raise the foreign ownership ratio ceiling from 49% to 60% to improve share liquidity.
In order to do this, the company has to stop some business fields, including real estate brokerage and hotel and travel services, or do business through subsidiaries.
According to Bui Thao Ly from Phu Hung Securities, though businesses have been given autonomy, the process of raising foreign ownership ratios still has been going slowly because of legal barriers and the fear of losing control.
