Vietnam appears ready to restart its privatisation drive after the government signalled it was preparing to sell two of the largest state-owned enterprises.
Nguyen Tan Dung, the prime minister, earmarked Petrolimex, the largest fuel importer and distributor, and Vietnam Steel Corp, the steelmaker, as the next candidates, but did not give a timetable.
Analysts said the move, known as equitisation in Vietnam, marked a return of confidence on the back of strong economic data and recovering markets. The long-pledged privatisation drive has stuttered so far.
Analysts said it was impossible to give an accurate valuation for either company because the companies did not publish accounts. Petrolimex, which controls 60 per cent of the fuel distribution market in Vietnam, could be worth $1bn-$1.5bn.
Warrick Cleine, head of KPMG in Vietnam, said: "Getting equitisation going again is very important. Some of these companies are very well established; they have good brands and they represent industries with quite high barriers to entry, either in regulatory terms or in establishing the physical infrastructure which they need to operate."
Other analysts sounded a note of caution. Petrolimex, formally known as Vietnam National Petroleum Corp, is dominant in fuel product imports but faces growing competition as Vietnam starts building its own refineries that are not tied to distribution deals.
The finance ministry also suggested last month that fuel prices might be returned to state control, a move that would damp investor enthusiasm.
Petrolimex, which has 6,000 petrol stations, turned over an estimated 25,000bn dong ($1.3bn) in 2008.
Vietnam Steel Corp is also facing increased competition as foreign rivals, including Posco of South Korea and Formosa Plastics of Taiwan, expand their output in the country.
Gross domestic product rose by 5.3 per cent last year and the Ho Chi Minh stock index rebounded 125 per cent from its lows last year. But investors are still cautious. Tai Hui, an economist for Standard Chartered Bank, said: "There is still some anxiety today over the dong, asset bubbles and the preference for US dollars and gold.
"The appetite for investment in Vietnam is quite low," he said. "It all depends on the pricing of course, but market conditions are still turbulent." -By Tim Johnston in Bangkok
http://www.ft.com/cms/s/0/fbb109c4-fa22-11de-beed-00144feab49a.html
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