HANOI - The Ministry
of Planning and Investment has submitted to the prime
minister a list of six foreign direct investment
(FDI)enterprises wishing to convert into joint-stock
companies.
The development is an experimental
step of the policy that aims to improve the
effectiveness of foreign investment and diversify forms
of investment.
The covered businesses are Taya,
Interfoods, Austnam, Taicera, Tungkuang and Focal. This
number, however, is modest compared with the 20 to 25
enterprise target.
"A number of foreign direct
investment enterprises, although wanting to restructure,
did not manage to complete all the required procedures
to submit their files to the ministry," Phan Huu Thang,
head of the Foreign Investment Department said.
They were required to hand their applications to
the ministry before March 25, but a joint circular from
the planning ministry and the ministry of finance,
featuring the necessary criteria, was issued only three
months earlier. The ministry has already proposed to the
premier that the deadline should be extended until at
least the end of the year. Once he agrees, there will be
another FDI enterprise equitization batch
. The
criteria, regulated in the circular, narrows
enterprises' access to equitization. FDI projects that
are smaller than US$1 million or bigger than $70 million
are not allowed to equitize. Neither are those that have
committed to give up their shares to domestic partners
once the projects have expired.
"Other foreign
investors show hesitation when it comes to equitization
due to vague regulations. They want the equitization
policy to be institutionalized by laws," said Thang, at
a recent seminar on the issue held in Ho Chi Minh City.
Under the Government's Decision 146, foreign
investors can hold a maximum 30% of a joint stock's
shares.
Meanwhile, Decree 38 regulates that
investors have to hold, for a long term, 30% of a
FDI-turned-joint-stock company.
"If that joint
stock firm is listed on the stock market we think that
foreign investors' transactions can still be done with
30% of the remaining 70%," said Nguyen Doan Hung, vice
chairman of the State Securities Commission.
Since April 2003, when the government issued the
decree to turn a number of FDI enterprises into joint
stock companies, the ministry has received equitization
registrations from 29 such enterprises. The ministry's
foreign investment department has shortlisted 20 that
satisfy the required criteria.
But to date the
ministry has, in its hands, files applying for
equitization from only 12 of them. These enterprises
meet almost all the requirements, but the majority must
amend files due to vague instruction documents.
They were then classified into three groups. The
first group comprises the six eligible enterprises, the
second, three that will have to amend their files and
submit them to the premier in the second batch and the
remaining three enterprises that do not have sufficient
conditions to be submitted to the premier in the first
batch.
Of these 12, four have a legal capital of
less then $5 million, another four between $5 million
and $10 million and the remaining four more than $10
million.
(Asia Pulse/VNA)
Aug 19, 2004
No
material from Asia Times Online may be republished in any form without written
permission.
Copyright
2003, Asia Times Online, 4305 Far East Finance Centre, 16 Harcourt Rd,
Central, Hong Kong
