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100% foreign owned fund management companies to be set up in VN
In order to prevent crises, stabilise and develop the stock market, the Prime Minister has requested that the Ministry of Finance draw up a mechanism on allowing 100% foreign owned fund management companies in Vietnam.
Vo Thi Huyen Lan, Chief Representative of Jaccar Capital, applauding the plan, said that the presence of 100% foreign owned investment fund management companies in Vietnam will have positive impacts on the stock market’s development.
This proves to be good news for funds which are now operating under representative offices in Vietnam. In the long term, the presence of the companies in Vietnam will lead to a big flow of capital into the market, which will increase demand, thus helping balance demand and supply, and stabilise and develop the stock market.
According to Lan, there is competition among 25 domestic owned, joint ventures and representative offices of foreign funds in Vietnam. Once 100% foreign owned fund management companies are allowed to operate in Vietnam, the competition will become fiercer, and only the best competitors will win.
Foreign investment funds are always powerful in financial capability. Meanwhile, domestic funds, which may be less financially capable than foreign investment funds, use their money for domestic investments only; therefore, their capital proves to be more stable.
Experts have also anticipated that big sums of money will flow into the stock market if 100% foreign owned fund management companies are allowed to be set up in Vietnam. Regarding the competition, the director of a domestic investment fund management company said that commodities are now in excess, and enough for foreign investment funds to purchase at will.
Nguyen Nhan Nghia, Deputy General Director of BIDV Investment Fund Management Joint Venture Company, also thinks that the decision on allowing 100% foreign owned fund management companies in Vietnam will help attract more foreign investment.
However, Nghia has pointed out a lot of changes will occur when 100% foreign owned companies appear in Vietnam. The tax scheme is one of the problems. Currently, foreign funds have to pay the tax of 0.1% on the value of transactions. However, the taxation scheme must be different when they set up 100% foreign owned entities in Vietnam.
Nghia said that the State Securities Commission should consider allowing 100% foreign owned companies to be set up in Vietnam soon. He said that with the procedures simplified recently, it may take only two weeks to establish a securities company.
VNN
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