Handling the proposal to raise the foreign ownership ceiling of Bamboo Airways

Handling the proposal to raise the foreign ownership ceiling of Bamboo Airways

The Ministry of Planning and Investment was assigned to respond to the proposal of Bamboo Airways Joint Stock Company regarding raising the ceiling on foreign ownership ratio at domestic airlines.

According to current regulations on air transport business and general aviation activities, the capital ratio of foreign investors in an air transport business enterprise is not more than 34% of charter capital.

The Government Office has just sent an official dispatch to the Ministry of Planning and Investment and the Ministry of Transport conveying the direction of Deputy Prime Minister Le Minh Khai on handling the petition of Bamboo Airways.

Accordingly, the Deputy Prime Minister assigned the Ministry of Planning and Investment to respond in writing to Bamboo Airways regarding the proposal to raise the foreign ownership ceiling to 49% in air transport business in accordance with current regulations.

The Ministry of Transport studies the report and proposal of the Ministry of Planning and Investment in Official Dispatch No. 2522/BKHĐT-ĐTNN dated April 4, 2024 to handle it according to its authority and legal regulations, ensuring harmony between national interests and business interests, in accordance with international practices, and ensuring economic security.

It is known that in Document No. 2522/BKHĐT - ĐTNN sent to the Prime Minister in early April 2024, the Ministry of Planning and Investment stated that, according to WTO commitments, Vietnam does not commit to opening the domestic air transport market. Vietnam only commits to allowing international air transport activities by allowing foreign airlines to provide services in Vietnam through their ticket offices or agents in Vietnam.

Therefore, the Ministry of Planning and Investment affirms that opening the domestic air transport market is entirely under the authority of the Vietnamese state.

According to Decree No. 89/2019/ND-CP dated November 15, 2019 on amending and supplementing a number of articles of Decree No. 92/2016/ND-CP dated July 1, 2016 regulating conditional business lines and occupations in the field of civil aviation and Decree No. 30/2013/ND-CP dated April 8, 2013 on air transport business and general aviation activities, the capital ratio of foreign investors in an air transport business enterprise is not more than 34% of charter capital.

This change in capital ratio will affect the attraction of foreign strategic partners to participate in joint business, management reform, participation in international networks... as well as the acquisition of domestic aviation market share for Vietnamese enterprises.

“Increasing the foreign ownership ratio to 49% of charter capital needs to be carefully considered because Vietnam previously opened this ratio but then had to adjust it down to 34% of charter capital,” a representative of the Ministry of Planning and Investment informed and affirmed that this is a task under the functions of the Ministry of Transport according to the provisions of Article 1 of Decree No. 56/2022/ND-CP dated August 24, 2022 of the Government stipulating the functions, tasks, powers and organizational structure of the Ministry of Transport.

“Thus, at present, there is no legal basis to consider Bamboo Airways' proposal to increase the foreign ownership ratio in air transport business to 49%,” said a representative of the Ministry of Planning and Investment.

In Official Dispatch No. 2522, the Ministry of Planning and Investment proposed that the Prime Minister assign this ministry to send a document to Bamboo Airways to respond to the proposal to raise the foreign ownership ceiling to 49% in air transport business in accordance with current regulations.

In addition, the Ministry of Transport is assigned to preside over and coordinate with relevant agencies to study and assess the overall impact on the aviation transport industry in the event of increasing the foreign investor capital ratio to 49% in aviation transport businesses to serve as a basis for perfecting regulations on civil aviation.

Previously, in a number of reports sent to competent State agencies on the Unit Restructuring Project, Bamboo Airways proposed to consider raising the foreign investment ceiling to 49%.

According to the airline's leader, recently, Bamboo Airways, shareholders and investors have approached many foreign investors to present and call for investment in Bamboo Airways.

Through discussions with these investors, their interest in Bamboo Airways in particular, and Vietnamese airlines in general, is real and not small due to the great potential of our country's domestic and international aviation market; the abundance of human resources of pilots, technicians, and flight attendants with reasonable labor costs; and Vietnam's strategic position to develop into a global transit hub for passengers, goods, aviation technical services, and the aviation industry.

However, the current foreign investment ceiling in Vietnamese airlines at 34% as stipulated in Decree No. 89/2019/ND-CP is not attractive enough for foreign investors.

Bamboo Airways’ leadership said that with the ratio limited to 34%, according to the provisions of the Enterprise Law, foreign shareholders not only do not have the desired decision-making rights, but also cannot exercise the right to veto certain important decisions. This makes investing in Vietnamese airlines highly risky.

“To create favorable conditions for Bamboo Airways in particular and Vietnamese airlines in general to attract foreign investment capital, we propose that the Prime Minister consider increasing the foreign investment ceiling in Vietnamese airlines from the current 34% back to the old level of 49% as stipulated in Decree 76/2007/ND-CP dated May 9, 2007,” the leader of Bamboo Airways proposed.

“The 49% ownership ratio is a common control level in the world for foreign investment in airlines. Some Vietnamese airlines when investing in Cambodia or Thailand also enjoy the foreign investment ceiling applied in these two countries of 49% of charter capital,” informed the leader of Bamboo Airways.

Source: https://baodautu.vn/xu-ly-kien-nghi-nang-tran-ty-le-so-huu-nuoc-ngoai-cua-bamboo-airways-d219975.html