Viet Nam Forces State Companies to Get Consent for Investments

State-owned enterprises will need to get prime ministerial approval to invest in the financial and property markets, according to a statement posted on the government's Web site.

Prime Minister Nguyen Tan Dung is trying to calm concerns that enterprises have over-invested in markets that aren't linked directly to their businesses, according to the statement. The regulation, which comes into effect immediately, will apply to all 104 state-owned companies. Under a 2004 decree, they haven't had to seek approval for investments.

The restrictions may help prevent companies from inflating securities and property prices, helping to drive up inflation, according to Nguyen Son, Hanoi-based director of the market management department at the State Securities Commission.

The Southeast Asian nation is battling inflation of more than 25%, the fastest since at least 1992. Gains in consumer prices may peak at about 30% in the fourth quarter, according to Don Lam, chief executive of VinaCapital Investment Management Ltd., a Ho Chi Minh City-based fund manager.

The government last week cut the economic growth target for this year to 7% from 9% as it tries to slow inflation. Vietnam is aiming for 2009 growth of as much as 7.5%, according to a statement posted on the government Web site June 7.

State enterprises are holding key areas of the economy and a large amount of national assets, according to a presentation by the Prime Minister to the National Assembly on May 31.

Sixty-three enterprises have invested about 7.4 trillion dong ($455 million) in setting up securities and financial investment funds, commercial banks, stock companies, and real- estate businesses, today's release said. (Bloomberg)