New policies are in the making to allow foreign firms to gain greater footing in Vietnam's petrol retail market, according to the Ministry of Industry and Trade (MoIT).

Government Decision 83/2014/ND-CP, for the first time, considers giving the green light to domestic petrol retail firms to sell up to 34% of their shares to foreign buyers. The sales must also be inspected and approved by the MoIT before taking effect. 

In recent years, as domestic firms pushed for equitisation many have become part-owned by foreign firms including the Vietnam National Petroleum Group (Petrolimex) with 8% owned by foreign partners, PetroVietnam Oil Corporation (PVOIL) 20% and Nghi Son Refinery and Petrochemical 34%.

Tran Duy Dong, head of the MoIT's domestic market department, said while the country encouraged foreign firms to invest in the domestic market, the Government must reserve the role of market management, explaining the MoIT must inspect and approve sales of shares by domestic firms.

The 34% ceiling posed little threat to national energy security as domestic firms would still control the businesses, said expert Dr Dinh Trong Thinh. Meanwhile, having foreign firms in the petrol market is one of the fastest ways for Vietnam to build a market economy.

Vu Vinh Phu, former deputy director of Hanoi’s Department of Industry and Trade, said the 34% ceiling allows firms to attract foreign investments and along with them, modern technologies to improve the quality of products and services while maintaining control of the market.

Phu said there was a need to improve transparency and fairness to encourage foreign firms and the Government must ensure a level playing field for all. He also called for petrol prices to be adjusted more frequently (down to a 10-day cycle or fewer compared to the current 15-day) to better reflect the international market's price movement.