Apr. 5 -The Vietnamese government has said that foreign investment in the country’s airlines cannot be restricted.

According the Transport Ministry, existing laws do not allow the government to restrict FDI in the sector, making the Malaysian budget carrier AirAsia’s acquisition of a 30 percent stake in VietJet Air legitimate.

The stake transfer in February was carried out in accordance with the Enterprise, Investment and Civil Aviation Laws, and it will not create a new airline in Vietnam, Vietnam Economic Times cited a Transport Ministry’s note as saying Thursday.

National carrier Vietnam Airlines requested the government to prohibit the move last month, fearing that a joint venture between VietJet Air and the Malaysian low-cost airline would hurt the local airline industry.

The Ministry of Transport turned down the request, calling Vietnam Airlines’ claims that AirAsia was the main reason behind the downturn at Malaysia Airlines and one of the factors causing political turmoil in Thailand as groundless.

Low cost airlines are a development trend in the global aviation industry the ministry said.