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Dinh Vu


Last updated: Tuesday, May 22, 2018


State Divestment Still Slows

Posted: Friday, May 19, 2017

The Corporate Finance Department recently released a report on equitisation and divestment in 2016, in April and in the first four months of 2017, showing continued sluggish progress of divestment and equitisation of State-owned enterprises (SOEs) in Vietnam.

In 2016, 56 enterprises were approved for equitisation, according to the Corporate Finance Department. Their combined actual value was VND34,017 billion, of which VND24,390 billion was actual State capital. According to equitisation plans approved by competent authorities, the registered capital of these 56 companies was VND24,379 billion, of which VND11,937 billion was kept by the State, VND7,670 billion was sold to strategic investors, VND388 billion was sold to their employees, VND8 billion was offered to trade unions and VND4,374 billion was offered to the public via auction.

In the first four months of 2017, nine enterprises were approved for equitisation by competent authorities. Their actual valuation of these companies was VND2,468 billion, of which the actual value of State capital was VND564 billion. According to equitisation plans approved by competent authorities, the registered capital of these companies was VND878.5 billion, including VND412.9 billion held by the State, VND347.3 billion to strategic investors, VND14.3 billion to their employees, VND9.3 billion to trade unions, and VND94.4 billion from the public via auction.

In 2016, the State divested VND3,645 billion and took VND6,839 billion, of which it divested VND490 billion from five companies in sensitive industries and collected VND450 billion. The divestment value from in other businesses was VND1,578 billion, sold for VND2,273 billion. SCIC sold 67 enterprises for VND1,577 billion and collected VND4,116 billion.

In the first four months of 2017, the State divested VND3,101 billion and earned VND14,299 billion (including the value divested in 2016 but recorded in the first four months of 2017). Particularly, it divested VND35.8 billion from companies in sensitive areas and earned VND36.3 billion. The divestiture value in other companies was VND1,712 billion and the sale value was VND2,073 billion. SCIC sold State interests worth VND1,353 billion in 16 companies for VND12,190 billion (it sold its partial interests in Vinamilk with a book value of VND783.7 billion in 2016 for VND11,286.4 billion).

With respect to unlisted equitised companies, on April 7, 2017, the Ministry of Finance sent Official Letter 4601/BTC-TCDN to the Government Office reporting on unlisted equitised enterprises as of December 31, 2016. Accordingly, based on reports by 14 ministries and 41 localities, 29 State-owned groups and corporations submitted reports to the Ministry of Finance which compiled and submitted a list of 578 unlisted equitised companies to the Prime Minister. Carrying out the direction of Deputy Prime Minister Vuong Dinh Hue in Official Letter 4090/VPCP-DMDN dated April 21, 2017, the Ministry of Finance is conducting reviews before making public the list of 578 companies on the information portals of the Government and the Ministry of Finance.

However, the progress of arranging and equitising remains slow and fails to keep up with requirements and plans, as companies are building equitisation and divestment plans and programmes according to the plan approved by the Prime Minister. At the same time, companies equitised in this period were mainly big ones with a wide scope of business and complex financial situations, thus requiring time to prepare, settle and audit before making public their corporate values. On the other hand, the equitisation of big firms required the participation of big investors with strong financial capacity, good governance and good investment performance, thus necessitating more time to prepare.

The transfer of equitised SOEs to SCIC is still slow. Divestitures and State holdings reductions in categorised SOEs are slow too. The divestment from core businesses and from sectors where the State does not necessarily hold the stake has yet to meet expectations.

Bao Chau

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