Vietnam to remove 49% foreign ownership cap for payment firms

The State Bank of Vietnam (SBV) has proposed to remove the 49 per cent foreign ownership limit in payment intermediary businesses, according to a statement on Monday.

SBV will not enlist the foreign ownership cap of 49 per cent in the final proposal to be submitted to the Prime Minister in June 2020, the country’s central bank said.

It had earlier claimed that the draft proposal [with the 49 per cent foreign ownership cap] was an attempt to fix safeguards and assure monetary safety.

However, the central bank said in its latest announcement: “SBV received opinions that because payment intermediary is a new service tapping technology advancement, foreign investment plays a critical role in developing the business. In addition, some startups have already had overseas investments exceeding 49 per cent equity. The proposed regulation [earlier draft] is seen to create an adverse impact on their business.”

The 49 per cent threshold had encountered opposition by both digital payment companies and other ecosystem stakeholders. The American Chamber of Commerce alleged that Vietnam had committed to entirely open up a series of financial sectors, including electric payment services.

“Removing the proposed norms is needed,” said Dang Thanh Son, a partner at Baker & McKenzie. “It will send out a positive message that Vietnam is an attractive market for foreign capital,” he told DealStreetAsia, adding that the local financial services sector would need a lot of know-how and management solutions from advanced markets.

Nghiem Thanh Son, deputy head of SBV’s payment division, was quoted as saying in 2019 that five leading players in Vietnam, which accounted for about 90 per cent e-wallet market share, were 30-90 per cent owned by foreign investors.

If the ownership limit is put forward, Baker & McKenzie’s Son said, existing investors in these companies will have to reduce their stakes. “It will also raise concerns to prospective investors about the stability of policies.”

Foreign companies owned more than 60 per cent of MoMo, according to Vietnam media reports after Son released his statement. The e-wallet is backed by global fund managers Warburg Pincus, Standard Chartered Private Equity and Goldman Sachs.

Payoo, acquired by NTT Data in 2016, is another digital payment firm said to have foreign ownership exceeding 49 per cent.

To date, the local central bank has granted digital payment licences to a total of 32 companies including MoMo, VNG‘s subsidiary ZaloPay, Sea Limited’s AirPay, SenPay – associated with e-commerce major Sendo, Moca – Vietnamese strategic partner of Grab, and Monpay that was acquired by Vingroup.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.