New era dawns for telecom ventures in vietnam

Foreign investors are looking to have more control in telecommunications now that Vietnam is a member of the WTO, said Tran Duc Lai, Deputy Minister of Post and Telematics.

Investors want to participate in joint ventures, where they can own and operate telecommunications businesses with Vietnamese partners, instead of signing a business co-operation contract (BCC), he said.

“When you set up a joint venture, the foreign partners will have the right to manage and run the company’s operations the same as the Vietnamese partners,” said Lai. “This will attract the attention of a lot of investors.”

Agreeing to a BCC was the only way foreigners could invest in telecommunications companies before Vietnam officially became the 150th member of the WTO on January 11. But it’s still up to companies whether they want to use a BCC or choose to form a joint-venture or joint-stock partnership, according to Lai.

“If both Vietnamese and foreign partners want to establish a joint venture, they can negotiate to stop the BCC and implement the procedures for a future joint venture,” he said. Market experts predict foreign companies that have already signed a BCC will be looking to establish joint ventures with local posts and telecommunication companies rapidly in the near future.

One example is the recent announcement of a joint venture between DHL, the world’s leading express and logistics company, and the VNPT. There are seven telecommunications business co-operatives that have been formed so far this year.

Three BCC contracts have expired, with four still valid. The companies still under a BCC are: France Telecom and the VNPT, the NTT of Japan and the VNPT; the South Korean SK Telecom Co and the Sai Gon Postel; and the Hutchison Whampoa of Hong Kong and the Hanoi Telecom.

BCCs are the most flexible model foreign investors can adopt in order to do business in Vietnam. They are particularly popular in telecommunications and advertising sectors.