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Economic conditions

Low Foreign Investment in Vietnam's Stock Market: A Concern

Strategic Insights

— 1 min read

Vietnam's stock market has operated for over four years, with more than 1,500 State-owned enterprises undergoing equitization and over 200 businesses meeting the requirements for listing. However, despite these efforts, the foreign direct investment (FDI) in the country remains low, with foreign indirect investment (FII) accounting for only 1.19% of the total FDI. Foreign investors have primarily focused on investing in small funds, with a total of $200 million poured into 70 Vietnamese joint stock companies.

Key Takeaways:

  • Foreign indirect investment (FII) currently represents 1.19% of the foreign direct investment (FDI) in Vietnam, compared to 10-50% in regional countries.
  • Almost all foreign investors in Vietnam are small funds capitalized between $5-20 million each.
  • Individual investors have primarily invested in shares listed on the stock market, with a static flow of FII despite the market's operation for four years.
  • The lack of transparent policies for FII and a legal system to attract FII are key reasons for the low FII proportion, according to Pham Chi Lan from the Government's research committee.
  • Vietnam's regulations on joint stock companies and equitization of State-owned enterprises have failed to protect the interests and rights of strategic and specialized investors.
  • Participants at the seminar agreed that the Government should issue a transparent policy to attract FII and consider increasing the portion of share holding by foreigners in high-tech and export-oriented businesses.
  • A proposal was made to increase the portion of foreign share holding in banking, insurance, telecoms, and power enterprises up to 49% of statutory capital.

Statistics:

  • Foreign indirect investment (FII) accounts for 1.19% of the foreign direct investment (FDI) in Vietnam.
  • $200 million has been invested by foreigners in 70 Vietnamese joint stock companies.
  • 1,500+ State-owned enterprises have undergone equitization in Vietnam.
  • 200+ businesses have met the requirements for listing on the stock market.
  • The stock market has operated in Vietnam for over four years.

Sources:

  • Viet Nam Association of Financial Investors (VAFI)
  • National Assembly Committee for Economy and Budget
  • Ministry of Planning and Investment
  • VNA (Vietnam News Agency)

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