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Foreign investors permitted to participate in petroleum retail in Vietnam

Foreign investors permitted to participate in petroleum retail in Vietnam

Wednesday 15, 07 2020
Foreign investors can hold a maximum of 35% stake in petroleum retail companies. This contributes to significantly improving corporate governance, efficiency and competitiveness.

Foreign investors may purchase a maximum of 35% of the shares in a petrol and oil trading enterprise

After many surveys asking for opinions of petrol and oil production and distribution enterprises, and provincial-level Industry and Trade Departments, the Ministry of Industry and Trade has recently submitted to the Government a draft Decree which amends and supplements Decree No. 83/2014 / ND-CP dated September 3, 2014 of the Government on petrol and oil trading.

In addition to the recommendations made in previous consultations, the report also noted the regulation to facilitate foreign-invested companies to participate in the distribution of petroleum. Specifically, Article 1 of the draft Decree amending and supplementing Article 1 of Decree 83 stipulates that, in addition to petrol retailers who are approved by the Prime Minister to transfer shares to foreign investors, petroleum retailers may transfer shares (not exceeding 35%) to foreign investors.

In the view of the Ministry of Industry and Trade, which is in charge of drafting the revised Decree, because petroleum is a strategic commodity, greatly affecting the people's livelihood and energy security, the Ministry has carefully considered the time to open this market.

When Vietnam joined the WTO in 2007, petroleum was a field that Vietnam did not commit to opening the market so that domestic enterprises have the opportunity to grow, build facilities and hold important positions in the domestic gasoline distribution system. Currently, after 13 years, Vietnam has opened its doors to foreign investors to the most important sectors such as electricity, oil and gas, aviation, etc.

Therefore, the Ministry of Industry and Trade believed that with the participation of foreign investors in some large state-owned enterprises allowed by the Prime Minister has contributed to significantly improving corporate governance, efficiency and competitiveness, especially helping business value increase through value of shares. 

Foreign investors permitted to participate in petroleum retail in Vietnam

A fair game

Previously, in early December 2019, at the Conference to get opinions on the draft Decree to amend and supplement Decree No. 83/2014 / ND-CP dated September 3, 2014 of the Government on petroleum business, the Ministry Industry and Trade also affirmed the need to amend Decree 83 / CP after 5 years of implementation. Decree 83 / CP will be amended towards reducing administrative procedures, reducing business investment conditions, and creating a favorable business environment for businesses.

At the same time, the revised Decree will create a fair game for State enterprises and private enterprises, for large enterprises and small enterprises; attract social resources to participate in developing the petroleum trading network; and attract a part of foreign investment capital to petroleum production and trading. However, the State still has to play a dominant role.

There are at least 8 contents that need to be amended in Decree 83 / CP such as the Regulation on business conditions and petrol and oil distribution systems; Reviewing and perfecting management subjects that Decree 83 does not yet have; Modification of the operating mechanism of gasoline prices. The formula for calculating base prices of petrol and oil products is also amended this time. There are also amendments related to the Price Stabilization Fund, and petrol import tax, etc.

Regarding the review to complete the management and trading of petroleum, the representative of the Domestic Market Department (Ministry of Industry and Trade) said that the draft will allow the opening of mini gasoline dispensers operating in areas where petrol stations have not yet been invested and approved by the local Department of Industry and Trade.

This ensures the supply of petroleum for remote areas where few businesses invest in gas stations due to economic inefficiency, and for narrow areas in big cities, downtown, old town where there is not enough space to invest in gas stations as prescribed.

>> 
Expert opinion: Why Vietnam attracts foreign investors?

Source: cafef

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Investment

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