Law prevents pharmaceutical firm from distributing
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The Ho Chi Minh City Department of Planning and Investment has rejected the registration for the distribution license for the Mekophar Chemical Pharmaceutical JSC, whose stake is partially held by a foreign investor, saying it is against the law for a foreign invested firm to distribute medicine.
On June 2 last year, the previously state-owned Mekophar listed its shares on the Ho Chi Minh City Stock Exchange (HOSE) with the registered capital of VND92.1 billion (US$4.7 million).
A foreign investor purchased 4.7 percent of the company, while the government holds 29.47 percent.
In 2010, Mekophar, a pharmaceutical manufacturer and exporter, added the pharmaceutical product distribution to its business in their license renewal registration to the Ho Chi Minh City Department of Planning and Investment.
The department refused to grant the license to Mekophar, saying it’s against regulations stated in the Law on Investment.
According to Article 6.3 of the Law on Investment, a foreign invested firm is defined as a firm established with foreign investors to carry out business in Vietnam, or one where foreign investors have purchased shares, merged with or acquired.
Mekophar’s CEO, Huynh Thi Lan, said the firm’s business has been greatly affected because they could not get the license to distribute medicines renewed.
She said Mekophar has been asking for help from relevant agencies since June 2010.
The State Securities Commission (SSC) sent a document sent to the Ministry of Planning and Investment on February 15 saying that Article 29.4 from the Law on Investment stated that foreign investors should have the same investment conditions as the domestic investors if Vietnamese investors hold more than 51 percent of the charter capital of an enterprise.
Therefore, the restriction is too rigid and is unfair for the other domestic firms, the SSC said.
On March 28, in a response to the SSC, the Ministry of Planning and Investment reiterated Article 6.3 of the investment law, saying that Mekophar is a foreign invested firm.
An investigation by Tuoi Tre has found that all of the pharmaceutical firms listing shares on the stock exchange have foreign investors.
But these foreign invested firms got the licenses before listing shares, so are still allowed to distribute medicine.
However, any foreign invested firm that registers for a new or renewal license will not be accepted, which Lan said was unfair.
She said Mekophar might have to withdraw their shares on the stock market and reduce the shares of the foreign investor to zero in order to get the license.
