Early this year, HSBC predicted that 2009 may be a "difficult year" for Vietnam"s stock market. In contrast, Ernst & Young"s Global Megatrends 2009 reported that "economic power is moving from developed to emerging economies". It also identified countries as diverse as Egypt, Iran and Vietnam as having the potential and conditions to rival Brazil, Russia, India and China.

This year, 2009, is considered to be an important milestone in the trading and distribution sector in Vietnam. On January 1 2009, Vietnam committed under the World Trade Organisation (WTO) to allow full market access to foreign investors seeking to engage in the retail sector. This means that foreign investors are now allowed to establish a 100% wholly-owned company to engage in trading and distribution.
Since Viet Nam joined the World Trade Organisation (WTO) on January 11, 2007, many issues relating to the clarity and implementation of investment commitments have arisen. The first big issue is that WTO commitments and domestic legislation provide different conditions for some business sectors – and are silent about some other business sectors. For instance, both sets of rules provide no guidance when foreign investors want to invest in multiple-sector projects subject to different business conditions and limits on foreign ownership.

The Government issued the eagerly-anticipated decree last Thursday on re-registration and conversion of foreign-invested enterprises pursuant to the new unified Law on Enterprises and common Investment Law.

The equitisation of State-owned enterprises (SOEs) in Viet Nam is a high priority for the Government as the country transforms into a market-based economy. Currently, the conversion of SOEs into joint-stock companies, known as "equitisation", is governed by Decree 187/2004. Decree 187 was based on the Law on State-Owned Enterprises 2003, which was replaced by the Enterprise Law 2005 in July 1, 2006. Hence, the Government needs to issue a new Decree to replace Decree 187.

The new Law on Enterprises, which took effect on July 1, introduced the concept of cumulative voting in shareholder elections. Specifically, Article 104.3.c stated: "Voting for members of the Board of Management or Control Board shall be by accumulatively calculating votes; each shareholder shall have a total number of voting cards corresponding to the total number of shares he owns multiplied by the number of elected members of the [respective board], and shareholders can accumulate their voting cards for one or a number of candidates."

Many foreign investors are keen to purchase stakes in existing domestic companies to establish a presence in the Vietnamese market, an option made even easier now that the new Investment Law has taken effect. 

Under the previous legal regime, purchases of stock in existing unlisted domestic companies were governed by Government Decision No 36/2003/QD-TTg dated on March 11, 2003.

Prices of shares in many domestic joint stock banks have increased dramatically in recent months, largely on the speculation that foreign investors will soon be able to buy larger stakes in Vietnamese financial institutions.


Foreign banks are interested in buying into local banks as a good way to develop partnerships and take advantage of local banks’ branch networks and customer bases, while assisting domestic banks in such areas as risk management, consumer banking, and building brand recognition.