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|In its newest draft, the MoIT would raise the foreign ownership limit in petrol and oil trading companies significantly|
The MoIT has submitted the draft decree which will replace Decree No.83/2014/ND-CP on petrol and oil trading. Accordingly, the highlight of the proposal is the authorisation for foreign investors to own up to 35 per cent stake in Vietnamese oil and petrol trading companies.
“Petrol and oil trading is a conditional business sector where domestic companies hold a dominant market share. The amended regulations in the upcoming decree will open more opportunities for foreign investors,” said Tran Duy Dong, director of the Domestic Market Department under the MoIT.
As of now, a number of foreign names are present in Vietnam, including JX Nippon Oil & Energy which owns an 8 per cent stake in Petrolimex and Idemisu Q8 (the joint venture between Kuwait International Petroleum and Idemitsu Kosan) – which are the only foreign enterprises allowed to trade oil and petrol in Vietnam.
Idemitsu Q8 opened its first petrol station in 2017 at Thang Long Industrial Park. So far, it has four stations, one less than its target for this year.
Previously, Total Group from France had been trading in Vietnam since 1990 but under the franchise model only.
A representative of a foreign-invested company which contributed capital to a joint venture exploiting oil in Vietnam, affirmed that difficulties in administrative procedures along with complex investment conditions are hampering foreign players in this sector.
JX Nippon Oil & Energy previously showed interest in increasing its holding in Petrolimex to 20 per cent and Idemitsu Q8 also shared plans to expand its station system to other cities and provinces. In addition, PV Oil is also looking to raise its foreign ownership rate to 35 per cent.
The amended decree is expected to help these enterprises realise their plans.