Missed opportunities for Vietnam due to slow privatisation pace

08-Aug-2019 Intellasia | HanoiTimes | 6:02 AM Print This Post

The lack of commitments from ministries, provinces and executives at state firms are factors behind the slow privatisation progress, while problems in finance, land and labourers from periods prior to the privatisation also hindered the process at target companies.

The slow progress in the process of divestment and privatisation of state owned enterprises (SOEs) has resulted in missed opportunities of potential investments and damaged credibility, according to Ministry of Finance’s official.

As of the second quarter of 2019, 35 out of 127 enterprises subject to privatisation per instruction by the prime minister has completed the process, said Dang Quyet Tien, director of the Corporate Finance Department under the Ministry of Finance (MoF), leaving other 92 enterprises without being privatised or 72 percent of the plan unfulfilled.

A report at a conference discussing the result of privatisation process of SOEs in the first six months of 2019 on August 5 showed that regarding the divestment process, 62 SOEs are planned to conduct divestment of state stakes in 2019. However, as of the end of second quarter, only 9 have reazlied this task for returns of VND1.65 trillion (US$71.12 million) with book value of 759 billion (US$32.72 million).

From 2017 to the end of the second quarter in 2019, a total of 88 SOEs have completed the divestment process under the PM’s request, raising VND8.76 trillion (US$377.57 million) with book value of VND4.55 trillion (US$196.11 million). Meanwhile, divestment activities outside the PM’s request have resulted in proceeds of VND110.39 trillion (US$4.75 billion) from book value of VND3.78 trillion (US$163 million), including the Sabeco deal from ThaiBev.

According to Tien, on August 15, 2017, the MoF disclosed the list of 747 privatised SOEs which have not listed shares on the stock market.

As of the end of the second quarter, there remain 622 companies subject to the listing, while further review made by the MoF revealed other 158 companies, resulting in a total of 780 not having gone public as required.

Nevertheless, Tien said the quality of the privatisation process has been improved as transparent privatisation schemes are based on market mechanism and the process has gone through public auction, resulting in profits for the state budget.

Tien attributed the lack of commitments from ministries, provinces and executives at SOEs to the slow privatisation progress of SOEs.

Meanwhile, problems in finance, land and labourers from periods prior to the privatisation also hindered the process at targeted SOEs, added Tien.

A high proportion of state capital in the privatisation schemes has made SOEs less attractive to investors, causing negative impact on the success of the process.

For the remaining months of the year, the MoF recommended government agencies to review a number of laws, including the Law on Enterprises, Law on Management and Utilisation of State Capital invested in the Enterprise’s Manufacturing and Business activities, Law on Cadres and Civil Servants, and Law on Bankruptcy, among others, with the aim of facilitating the privatisation and divestment processes.

The SOEs subject to divestment and privatisation in the 20182020 period are urged to speed up the process and to seek the PM’s endorsement if necessary.



Category: Economy, Vietnam

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