A corner of Vinamilk diary farm in Viet Nam. The State is expected to unload its all capital in the business this year. — Photo vinamilk.com.vn

HA NOI (Biz Hub) — The Viet Nam Dairy Products Joint Stock Company (Vinamilk) has proposed that the Government raise limits on foreign stakes to 100 per cent of the business.

The dairy industry is not a sensitive one that affects national food security. The foreign investors' ownership of the majority stake in Vinamilk is not synonymous with the elimination of a Vietnamese trademark, but rather, it will support Vinamilk in penetrating the world market.

The proposal, which includes methods for selling State-owned capital in Vinamilk, has been sent to the Prime Minister and National Assembly's Committee for Economic Affairs. It aims to enhance the effect of State divestment in the business and provides a divestment itinerary and the methods and norms for selecting investors.

The business has asked the Government to quickly announce the State's capital divestment itinerary to help investors prepare. Vinamilk said this was the right time for a divestment. The itinerary should be divided into three stages, and each should feature a minimum divestment of 10 per cent of Vinamilk's charter capital.

Vinamilk said it was necessary to hire an international financial consulting organisation to hold auctions. Meanwhile, the norms for selecting investors to take part in the auction should be discussed with Vinamilk to secure the company's operations after the State has divested its capital.

In an interview with giaoduc.net.vn on November 2, Deputy Director of the East Economic Development Institute Nguyen Van Dung said it was important to select investors who can support the company's long-term development.

"As for Vinamilk, it has performed well and will become better if its shareholders have experience in the dairy industry. However, the price and method of divestment is still our greatest concern," Dung said.

The State Capital Investment Company (SCIC) holds 45.1 per cent of Vinamilk's stakes, worth almost $2.5 billion, which is too high a price for most domestic investors. The company is the largest listed company in Viet Nam, with a market value of VND127.2 trillion ($5.7 billion), as of October 14.

Dung said it was not important whether investors were domestic or foreign, and ways of offering stakes should be a greater concern.

To secure the business' interests, the Government should let Vinamilk participate in the divestment plan, Dung said.

"Vinamilk will help the SCIC find potential investors in the dairy industry because no one else has a better understanding of the industry. The SCIC will need to establish the norms, itinerary and supervision during the divestment process," Dung said.

As for concerns about the loss of the trademark following the sale of stakes to foreign investors, Dung said Vinamilk held a high-value trademark, one that belonged to the best group in Viet Nam. "If foreigners take part in the business, they would not be foolish to lose this trademark worth billions of US dollars. After the divestment, the company should be controlled by the market and competition because the customers must benefit in the end."

He said the auction of shares in businesses such as Vinamilk and FPT would attract investors. If he had the money, he said he would not hesitate to invest in Vinamilk. The SCIC only needs to set a date and issue detailed procedures for offering the State's stakes in Vinamilk. — VNS