The Ministry of Industry and Trade has said that local fuel traders may sell shares to foreign investors, but foreign ownership should be capped at 34%.

Motorbikes are refilled at a gas station in HCMC. The Ministry of Industry and Trade
has proposed that local fuel traders may sell no more than 34% of their shares
to foreign investors - PHOTO: THANH HOA 

The Ministry of Industry and Trade has sent the Government a draft decree amending and supplementing a number of articles in Decree 83/2014 on petrol and oil trading, which includes the proposal, the local media reported.

According to the ministry, many fuel firms have become foreign-invested after equitization. The move was made to create a level playing field for both State-owned and private enterprises.

A leader of Vietnam National Petroleum Group (Petrolimex) said that foreign investors have participated in the oil refining market through partnerships with local firms.

The participation of foreign firms in the local fuel market is an indispensable trend to promote competition on the market. It is more important to ensure effective State management to meet market mechanism requirements and guarantee the security of the nation’s energy.

Nguyen Tuan Quynh, vice chairman of the HCMC Young Business Association, who is an experienced investor in the energy sector, said the Ministry of Industry and Trade’s proposal will benefit both the domestic fuel market and consumers.

The local fuel market has been strictly controlled by the State. With the participation of foreign investors, services will be improved and fuel prices will become more competitive, Quynh added.

Associate Professor Dr Dinh Trong Thinh from the Academy of Finance also threw his support behind the proposal, saying that it is necessary to allow foreign firms to join the local fuel market. Energy security would not be a concern if the proposal is approved, as local firms still hold two-thirds of the companies.

Although Vietnam has yet to commit to opening its fuel market in the deals it has signed, it may fail to keep pace with the global market developments in the long term.

Quynh, from the HCMC Young Business Association, shared the view, noting that the State still has the right to control fuel prices and import fuels. Local fuel firms account for more than 90% of the local market share, so they should not be concerned about the participation of foreign firms.

The participation of foreign firms in the local fuel market will force domestic firms to improve the quality of their service, said Professor Ngo Tri Long, former director of the Ministry of Finance's Price Market Research Institute.

At present, Nghi Son Refinery and Petrochemical Limited Liability Company has two foreign shareholders, who hold a combined 35.1% of the company. Petrolimex also sold its 8% stake to Japan’s JX Nippon Oil & Energy in 2016.