In a decree posted on the government's website, Hanoi said it planned to scrap rules currently forbidding foreigners from owning more than 49 per cent of a company.
"For (some) public companies... The percentage of foreign ownership is unrestricted, unless the company's charter stipulates otherwise," the decree said.
Vietnam's economy grew by 6.28 per cent in the first half of this year, racing along at its fastest rate since 2008, official figures released last week showed.
Hanoi is currently in the process of easing business regulations and a long-running privatisation drive, which the government hopes will keep supporting economic growth.
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Analysts cautiously welcomed the announcement, saying foreign companies and individuals would likely jump on an opportunity to further invest in the booming Southeast Asian nation.
"It is good decision made at the right time," Le Dang Doanh, a prominent economist and one of the architects of the country's reforms, told AFP.
The Bloomberg news agency said there are believed to be around 30 Vietnamese companies where foreign ownership is currently already at the 49 per cent threshold, quoting Hanoi based VNDirect Securities JSC.
"As soon as the limits are raised, you will see a rush to buy in the blue chips," Patrick Mitchell, the head of institutional sales at VinaSecurities JSC, told Bloomberg.
Data compiled by Bloomberg estimates overseas investments in Vietnamese stocks have reached USD 135.6 million in 2015 through June 25, heading for the ninth straight year of purchases.