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Economic Sector

Last updated: Thursday, August 16, 2018

 

Over US$1.2 Bln Proceeds from SOE Equitisation, Divestment in First Half

Posted: Wednesday, August 01, 2018

Proceeds from equitisation and divestment of State-owned enterprises (SOEs) surged since 2016, equal to 2.5 times of the total takings in the 2011 - 2015 period.

Proceeds from SOE equitisation and divestment have amounted to VND198 trillion (US$8.6 billion) thus far, including VND30 trillion (US$1.3 billion) in 2016, VND140 trillion (US$6 billion) in 2017 and VND28 trillion (US$1.2 billion) in 2018.

The Steering Committee for Enterprise Renovation and Development recently reported on SOE reorganisation, equitisation, divestment and restructuring as well as enterprise development in the first half of 2018, and previewed tasks and solutions for the last six months.

The committee said authorities approved equitisation plans for 19 SOEs (equal to 86.2 per cent of entities in the same period of 2017) with a total corporate value of over VND40.6 trillion (US$1.8 billion), of which State capital value was over VND23 trillion (US$1 billion).

According to the approved plan, the registered capital of these 19 companies is over VND22 trillion (about US$1 billion), of which the State holds nearly VND13 trillion (58.83 per cent of the registered capital), their employees keep over VND112 billion (0.51 per cent), and public investors keep nearly VND9 trillion (40.66 per cent).

In the first six months of 2018, 16 SOEs launched initial public offerings (IPOs) and sold shares to strategic shareholders, with eight approved for equitisation in 2017 and eight in 2018. Proceeds approximated nearly VND22.5 trillion.

Under the approved equitisation plans, these 16 companies have a combined registered capital of over VND136 trillion (US$6 billion), of which the State holds 54.12 per cent, their employees keep 0.52 per cent and public shareholders own 45.36 per cent.

Notably, some equitised companies are big in scale, including PetroVietnam Power Corporation (PV Power), PetroVietnam Oil Corporation (PV Oil), Binh Son Refining and Petrochemical Co., Ltd (BSR), Vietnam Rubber Industry Group (VRG), Vietnam Southern Food Corporation (Vinafood 2), Power Generation Corporation 3 (Genco 3), and Hanoi Trade Corporation (Hapro).

As State capital divestment from SOEs, the report of the Steering Committee for Enterprise Renovation and Development showed that the State has divested from 42 SOEs with the book value of over VND1.8 trillion, taking proceeds of nearly VND5.6 trillion (more than 3.08 times of the book value), of which 10 are listed for divestment under Decision 1232/QD-TTg.

“As a result, proceeds from equitisation and divestment in the first six months of 2018 were over VND28 trillion (US$1.3 billion), of which nearly VND22.5 trillion came from equitisation and more than VND5.6 trillion was from divestment. Thus far, proceeds from SOE equitisation and divestment have amounted to VND198 trillion (US$8.6 billion), including VND30 trillion (US$1.3 billion) in 2016, VND140 trillion (US$6 billion) in 2017 and VND28 trillion (US$1.2 billion) in 2018,” said the committee.

The committee added that total proceeds from SOE equitisation and divestment surged since 2016, equal to 2.5 times of total takings in the 2011 - 2015 period (VND78 trillion).

The amount of money transferred to the State Budget was VND115 trillion (US$5 billion) out of VND250 trillion (US$10.9 billion), reaching 46 per cent of the whole value set for the 2016 -2020 period.

IPO proceeds approximated VND22.5 trillion in the first half of 2018, much higher than the takings in the same period of 2017 (VND5.2 trillion).

"Big IPOS considerably contributed to the overall success, for example, BSR (more than VND5.4 trillion), PV Power (nearly VND7 trillion), PV Oil (VND4 trillion), VRG (VND1.3 trillion,) Hapro (VND2.8 trillion), and Vinafood 2 (VND2.400 trillion)," said the report.

Nevertheless, the Steering Committee for Enterprise Renovation and Development also pointed out some existing shortcomings, one of which is the slow pace of SOE equitisation. According to the equitisation plan in 2018, as many as 85 SOEs must be privatised, but up to now just 19 SOES have done this.

Furthermore, the divestment progress at SOEs is also slower than the plan. Specifically, 135 SOEs had to be divested by the State in 2017, but only 17 did this. In 2018, the plan counted 181 SOES to be divested by the State, but just 10 have completed it.

What's more, the transfer of ownership rights to SCIC, the registration for securities trading on the stock exchanges, and information reporting compliance have not been seriously and severely implemented in some ministries, sectors, localities and SOEs. Up to 747 enterprises have not registered for securities trading or listing on the stock market, as reported by the Ministry of Finance as of August 1, 2017.

Therefore, to complete the 2018 SOE equitisation and divestment plan in the second half of this year, the Steering Committee for Enterprise Renovation and Development urged ministries, sectors, localities and SOEs to urgently and resolutely implement the resolutions of the Government and tasks assigned by the Prime Minister.









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