In October, auctions for shares of the Vietnamese coal industry made a great impression in the market with 80 per cent of shares belonging to foreign investors. However, many economic experts have expressed their concern about the impression. As coal is considered as black gold of Vietnam, how it will be exploited if shares in the coal industry are held by foreign investors?
In October, four auctions of shares of coal mines made a great impression with an acquitision by foreign investors. The stake held by foreign investors from the auction for shares of Nui Beo Coal shares in late 2005 to the auctions for shares Coc Sau, Deo Nai, Cao Son and Ha Tu in October 2006 increased from 60 per cent to 99 per cent. Prices offered by foreign investors double or triple prices offered by foreign investors.
Before coal companies had been listed in the market, many people said shares of the industries may be treated as bonds, because they are stable and not expected to produce high profits in the short term. High profits will come in the long term provided that investors have deep financial strength. That is why local investors seem uninterested in shares of the local coal industry. On the contrary, foreign investors have rushed to buying the industry’s shares as they have foreseen great profits in the future.
With an initial asking price of VND 10,000 per share, the ordered volume of shares of Nui Beo Coal was ten fold higher than the supply volume, 30 per cent of the figure was from foreign investors. Total registered volume for shares of Coc Sau was also high, reaching 16 million shares, or eight fold against the offered volume, and 32 per cent from foreign investors. With 1,600,000 shares of Coc Sau auctioned, total registered volume of shares reached 8,962,700, or 5.6 fold higher than the initially offered volume.
With an increase from 60 per cent to 99 per cent, it is possible to affirm that foreign investors have paid great attention to buying shares of enterprises in the coal industry in particular and the energy industry in general.
The prospectus of each of the companies shows an optimistic growth rate, more than 20 per cent. The dividend ratio is not so high, around 12 per cent, but is considered stable. In particular, foreign investors said prices of shares of the coal industry would have great advantages in the future and have low risks.
Foreign investors have poured their investment in shares of the local coal industry because of ups and downs in oil prices, and the floating of prices of petrol in the local market, as well as increased prices of coal, which are thought to increase further in the near future. Recently, the Government to the National Assembly mentioned a limit on the export of coal and no longer price compensation. As a result, prices of coal may increase soon. On the other hand, there are no worries about markets for coal. The more coal is exploited the more it becomes exhausted, leading a high prices. As a result, why foreign investors have paid a careful attention to shares of the industry is clear.
Many people say that equitisation of the industry means to sell gradually existing natural resources while resources are limited. Foreign investors did not hesitate to offer high prices to turn Vietnam’s coal mines into their gold mines.
Cu Thi Hau, president of the Vietnam Labour Confederation, urged the National Assembly to review the policies on equitising mines and Vietnam’s natural resources, as well as the piloting plans for the coal industry. Concerns about the fact that capital may concentrate in some foreign organisations have been raised for a long time but no solutions have been found for the concerns yet. The coal industry should perfect its capital management and should have mechanisms to protect the interest of workers, Hau said.
Enterprises in the coal industry need capital, so they have to mobilise from the stock market while the State should have mechanisms to exploit effectively its natural resources for a sustainable development. This will be a difficult problem for the local coal industry.
H.Ly
Vietnamese
