Foreign non-life sector faces curbs in step-by-step opening of market
The country will continue to restrict market access to foreign companies offering non-life insurance indefinitely, according to a senior finance official.
Foreign companies offering life products continue to enjoy unfettered access to Vietnam's population of close to 80 million, but Pham Thi Tuat, director of the Department for Banking and Financial Organisations said non-life companies would be allowed only to do business with other foreign entities.
'Our policy is to open the insurance market step-by-step,' she told the Vietnam Investment Review.
'The opening of the market here must be consistent with the development level of the economy and the industry itself. We cannot open the whole market and allow everyone to come rushing in at once.
'With 40 foreign insurance representatives in Vietnam, it will not be possible for all or even a large number of them to be franchised to sell their policies here next year,' she added.
The policy is consistent with mainland insurance regulations, but the announcement drew criticism from foreign players in Vietnam's market who allege it is designed to protect the monopoly of domestic companies.
'Of course it is protectionism. [The government] doesn't even try to justify its position - it just says this is the law and that is that,' said Allianz spokesman Jean-Noel Rousselle.
'There is a fear that foreign companies will take over the [non-life] market, but I do not believe that will happen because many Vietnamese people will feel more comfortable dealing with Vietnamese companies.
'Many Vietnamese businesses have no insurance at all, and foreign insurers can actually help the market develop by providing new products and providing networks,' Mr Rousselle said.
The announcement does not auger well for foreign companies eyeing the non-life sector as foreign investment in Vietnam continues to fall.
Recently released official figures revealed that foreign investment had fallen nearly 45 per cent to the end of September compared with the same figures last year.
VIETNAM
