The State Bank of Vietnam has said it will not cap foreign ownership of companies in the payment services industry in its draft decree to replace Decree 101.
It had spoken about plans to bring in a foreign ownership limit of 49 percent on an industry that currently has no restrictions to avoid manipulation by foreign investors.
Decree 101 allows payment service providers, including foreign ones, to freely raise capital to develop their business.
Payment services refer to electronic wallets (e-wallets) which allow customers to make payments from their smartphones and computers.
|Decree 101 allows payment service providers, including foreign ones, to freely raise capital to develop their business__Photo: VNA|
Some experts said the payment services market has grown quickly thanks to the rapid growth in technology that has made it easier than ever to transfer money online, including across borders.
Vietnam has 27 institutions which are not banks but are licensed to provide payment services, a majority of them with foreign ownership of above 49 percent. For instance, 1Pay is 90 percent owned by Thailand’s TrueMoney.
The management of cross-border electronic payments faces many difficulties due to the fact that most transactions are conducted through international payment gateways and handled by international card organizations.
Because of this, many experts think it is time to tighten control over the payment services industry to ensure the security of the country’s payment system.
They said limiting foreign ownership would prevent any manipulation of the banking and financial sectors and ensure local players take up the slack.
The central bank seemed to concur with this contention and indicated it planned to bring limits on foreign ownership rates in the new decree.
But recently there have been protests from experts from various sectors after the draft of the decree was made public.
They said while strict control over the industry is imperative, it is not necessary to cap foreign ownership.
Payment services depend greatly on advanced technology platforms, which often require large investments, meaning foreign investors have an important role to play.
Restricting their ownership rates could scare foreign investors away, they warned.
Ngo Trung Linh, general director of the VietUnion Online Service Corporation, was quoted as saying by Dau Tu Chung Khoan newspaper that Vietnam is an attractive destination for Southeast Asian investors, but if the foreign ownership in the payment services industry is capped at 49 percent, it would prevent the country from attracting investments and advanced technologies, slowing its development.- (VNS/VLLF)