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Limit on foreign investment will impede fintech development: expert
The Saigon Times Daily
Tuesday,  Aug 20, 2019,19:04 (GMT+7)

Limit on foreign investment will impede fintech development: expert

The Saigon Times Daily

Phung Anh Tuan, vice president and general secretary of the Vietnam Association of Financial Investors, speaks at a roundtable discussion on Vietnam’s fintech management policies, held in Hanoi on August 20 – PHOTO: ICTNEWS

HCMC – Financial technology (fintech) firms are in dire need of foreign investment, so a draft Government decree that limits this kind of investment could hinder their development, an expert told a roundtable discussion in Hanoi today, August 20.

Held by the Vietnam Association of Financial Investors (VAFI) and the ICTnews website, the event was aimed at urging policymakers to make the right policies to boost the development of the fintech sector, reported the Vietnam News Agency.

The digital economy and the Fourth Industrial Revolution are growing trends in the local fintech sector, according to Phung Anh Tuan, vice president and general secretary of VAFI.

Therefore, institutional reform that addresses existing difficulties is key to stimulating investment in the information technology field, which includes fintech, said Tuan.

Last year, the State Bank of Vietnam (SBV) suggested foreign ownership limits of 30%-50% for payment-intermediary firms in a draft decree replacing the Government’s Decree 101/2012.

Tuan said that the foreign ownership limit would make it difficult to mobilize large sources of capital or attract professional investors and organizations in the local fintech sector.

He cited the SBV as saying that putting a 30% cap on foreign investments in the payment-intermediary sector, similar to that of the banking sector, was meant to ensure the stability and security of the national monetary policy, avoid manipulation by foreign investors and ensure national sovereignty in banking and finance operations.

However, the VAFI representative noted that foreign funds are currently needed for fintech firms to invest in technologies, markets and human resources. Therefore, “the limit on foreign investment will inhibit fintech development,” he said.

He added that the Government has allowed wholly foreign banks to set up branches in the country and has considered relaxing foreign ownership limits at commercial banks.

Speaking at the Vietnam Business Forum in mid-2019, a representative of the American Chamber of Commerce (AmCham) expressed concern when referring to the foreign ownership limitation proposal of the central bank.

AmCham stated that the plan for the fast-growing payment and fintech fields would significantly limit Vietnamese fintech startups from mobilizing capital from foreign investment institutions, thereby reducing their ability to attract talent and making them less competitive than other businesses in the region.

This limit will hinder the development of the payment sector, so the Government should maintain the policies that facilitate fintech services to give them the opportunity to contribute to technological innovation and financial popularization in Vietnam, said the representative.

Sharing a similar point of view, the forum’s working group also pointed out that the foreign ownership restriction may adversely affect the development of local fintech firms since the majority depend heavily on the use of artificial intelligence and Big Data analyses, adding that many foreign businesses have a head start in developing these technologies.

Ngo Van Duc, deputy head of the Payment Systems Oversight Division of the SBV’s Payment Department – PHOTO: ICTNEWS

Fintech activities are developing strongly all over the world, and Vietnam is following this general trend with much room for development, stated Ngo Van Duc, deputy head of the Payment Systems Oversight Division of the SBV’s Payment Department, at the roundtable discussion.

However, the development of the local fintech sector has yet to match its potential in recent years. Duc cited unofficial statistics of the central bank as indicating that nearly 150 fintech firms are operating in various sectors, mainly payment services, in the country.

Among them, some 30 payment intermediary agencies are licensed by the central bank. Some other sectors include bank lending and banking solutions, such as electronic authentication, blockchain applications and personal finance services, he added.

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