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.