Prime Minister Urges Faster Privatization

Prime Minister Urges Faster Privatization

Vietnamese Prime Minister Phan Van Khai has called on ministries, concerned state agencies, local people’s committees and state-owned corporations to combine their efforts to help speed up the privatization of the country’s state-owned companies (SOEs) in an effort to bolster economic growth, according to recent instruction 04/2005/CT-TTg.

The privatization process has been running very slowly with many SOEs being sold to the public to raise funds for other development investments, reported the PM’s instructions.

Ratios of outside investors’ stakes in privatized SOEs are still low and the number of firms listed on the Ho Chi Minh City Securities Trading Center (HSTC), the country’s stock exchange is modest at 27 after more than four years in operation.

In the instruction, Mr. Khai also urged relevant state bodies to complete comprehensive schemes on financially restructuring and renovating SOEs on the directions of the ninth Central Party Committee Resolution on this issue and Decision No. 155/2004/QD-TTg dated August 24, 2004 on classification of SOEs.

For large state corporations, almost all of their subsidiaries must be privatized and turned into the form of holding companies. This will help the parent corporations really hold the state ownership in the affiliates. After operating stably for certain period of time, the parent corporations will be comprehensively privatized.

Mr. Khai also asked the Ministry of Finance (MoF) to cooperate with other ministries and state bodies to solidify the instructions.

In a letter to ministries, provincial and city authorities and other agencies last weekend, Finance Minister Nguyen Sinh Hung urged these groups to heighten their cooperation with the finance ministry to accelerate the country’s privatization process.

He also demanded the finance ministry’s Department of Planning and Finance and consultancy firms help key enterprises in every step they take towards equitization (Vietnam’s term for privatization), particularly the auctioning of shares at stock exchanges.

Vietnam started its privatization program in 1992 and so far the communist government has privatized about 2,400 SOEs and plans to privatize more than 1,500 between 2005 and 2008.

In the second quarter this year, the country will complete the privatization of three State-run corporations including the Trade and Construction Corporation, the Electronics and Informatics Corporation and the Vietnam Construction and Export-Import Corporation (Vinaconex).

Vietnam has had two stock markets, The Ho Chi Minh City Securities Trading Center (HSTC) and the Hanoi Securities Trading Center (HASTC). The HSTC started operation in July 2000 and has 27 listed stocks valued at around VND4 trillion (USUS$256.1 million) and around 220 government and bank bonds worth over VND26 trillion (USUS$1.7 billion). The HASTC however was launched on March 8 and duties include holding IPOs of SOEs. It will also become an OTC from mid this year.
VietStock