How much room is there for foreign investors in Vinamilk?

It is still unclear how much of Vinamilk’s stake will be sold to foreign investors. Experts have warned that once foreign investors hold the controlling stake in Vinamilk, they would control the Vietnamese dairy market.

Hoang Thach Lan, a securities expert, noted that Vinamilk shares will attract foreign investors because Vinamilk is the leading dairy producer in Vietnam.

In principle, the State could sell Vinamilk’s shares at the best price if it sells to foreign investors. However, Lan thinks, in this case, the State will think carefully about this.

Vinamilk is not an enterprise operating in sensitive business field such as national defence, but it dominates the domestic dairy market.

“Once foreign investors hold the controlling stake in Vinamilk, they will be able to control the Vietnamese dairy market, while dairy products are listed as essential goods which need the state’s control in pricing,” Lan said.

Nguyen Minh Tan, deputy director of the State Budget Department under the Ministry of Finance, said in Tuoi Tre that the State needs capital for investment in many fields, but it will not sell stakes to anyone willing to pay high prices. 

A senior official of the Enterprise Finance Department also said it is necessary to think carefully about when to sell and how much to sell for to gain the highest possible benefits.

He went on to say that it is whom to sell to, not how much to sell for, which is the most important factor the state needs to consider Vinamilk’s case.

“I think the foreign partners which commit to ‘go together’ with Vinamilk for a long time, not just financial investors, would be prioritized to acquire Vinamilk’s shares,” he noted.

Some Vietnamese large corporations have been swallowed by foreign investors and controlled by them. And analysts have every reason to worry that this would happen with Vinamilk as well.

Meanwhile, Phuong Ngoc Thach, deputy chair of the HCM City Economics and Management Science Association, believes there is no need to be worried.
Coca-Cola went to Vietnam as a partner in joint venture with Vietnamese enterprises. But it later weeded out its partners, one after another, to acquire the entire enterprise. 

Unilever and Colgate have ousted Vietnamese partners to swallow toothpaste brands. Some Vietnamese detergent brands have also been taken over by foreign companies after certain periods. 

Therefore, it will not be a problem if one more Vietnamese enterprise, Vinamilk, is taken over by foreign investors.

An analyst said he believes it would be better not to worry too much about foreign investors, suggesting that foreign investors should be allowed to buy up to 51% of stake in Vinamilk.