Foreign ownership ratio in aviation sector may be lowered

The foreign capital contribution in Vietnam’s aviation sector could be lowered to 30 percent only instead of current 49 percent, citing the amended draft Decree 76 written by the Civil Aviation Authority of Vietnam according to the request of Ministry of Traffic and Transportation.

The five big issues of amended Decree are logo, business plan and product development strategy, ownership rates in charter capital, authority to deal with administrative procedures and effective supervision in air firms.

According to Decree 76, when a domestic air firm cooperates with a foreign investor, the foreign ownership ratio in a domestic air carrier or a general aviation service company is no more than 49 percent. A foreign individual or enterprise is disallowed to keep more than 30 percent of charter capital of a domestic air company.

There are now two domestic air firms participated by foreign investors, namely Jetstar Pacific with the Australian partner Qantas and VietJet Air with AirAsia with the capital contribution ratio of 30 percent each. However, many people are afraid of foreigner’s domination on the domestic market.

Vietnam Airlines said that Law on Civil Aviation and Decree 76 regulated the foreign ownership ratio but did not distinguish ordinary foreign investors and special foreign investors [air firms] clearly.

The amended draft Decree 76 will be submitted to the government by this December.

 

Category: Legal