Hanoi (VNS/VNA) - The Ministry of Industry and Trade (MoIT) has proposed a35 percent cap on foreign investment in local oil and petrol businesses, butsaid it was open to scrapping the regulation.

Theproposal is part of the draft revision and supplement of several articles inGovernment Decree No 83/2014/ND-CP on petrol and oil trading, whichcurrently does not regulate a cap on foreign investment in the sector.

Theministry said 24 out of 25 comments from Government members approvedthe draft decree with the 35 percent cap, while one disagreed.

TheMoIT said foreign investment into the local petrol and oil market has causedcontroversy over the years and the Ministries of Public Security,Planning and Investment, and Finance have long had concerns about energy security,legality and the intrinsic benefits of investment from foreign firms.

TheMoIT said despite these concerns, several firms already have sizeable foreignownership, including Petrolimex (20 percent owned by foreign investors),PVOil (35 percent) and BSR (49 percent) through equitisation, capitalmobilisation and receiving approval from the Prime Minister. All the abovefirms have operated stably.

Foreigninvestors have contributed to a significant improvement in governance andtransparency in financial statements, improving efficiency and competitiveness,while helping businesses increase their value, the MoIT said.

Accordingto the ministry, foreign investors have abided by Vietnamese laws andregulations in the sector, but a lack of specific regulations on theshareholding ratios of foreign investors has caused confusion among domesticfirms and regulators when discussing investment and capital increases.

Theissue has even caused a lack of consistency in the shareholding rate whenlisting on the stock exchange.

Inaddition to the State-owned enterprises that have been permitted to sell stakesto foreign investors by the PM upon equitisation, there are thousands oflisted petroleum companies that wish to attract foreign investors. Foreignbusinesses are also interested in their stocks but face difficulties due to thelack of clear and specific regulations.

Theseissues prompted the draft revision of the decree and the ministry is infavour of the 35 percent cap.

“Theproposal to open the petroleum market stems from the needs of domesticpetroleum businesses, not from foreign enterprises,” said the MoIT, addingthat many countries have opened their petroleum markets such asChina, Singapore, Thailand and Japan.

Theministry said petroleum enterprises, regardless of economic sector, when doingbusiness in Vietnam, must comply with the conditions and provisions of thisdecree and other documents.

Anystake transfer is an indirect investment activity that does not allowenterprises to directly exercise the right to distribute petroleum in Vietnam.The exercise of the right to distribute petroleum in the country is onlypossible when a foreign enterprise establishes a branch in Vietnam./.