Vietnam finance ministry pushes for speedier privatization of SOEs

With only seven state-owned enterprises (SOEs) being sold in the first nine months of this year, the Ministry of Finance (MoF) has proposed four measures to create breakthroughs in the process.

Only seven state firms have completed their respective privatization process in the first nine months of 2020.

Firstly, the MoF expected leaders of SOEs and provinces and cities to take greater responsibility in realizing the privatization plan.

Secondly, there is a necessity to finalize the legal framework regarding the operation and management of SOEs, especially in the privatization and divestment processes.

Thirdly, the MoF would focus on drafting a proposal on SOE restructuring in the 2021 – 2025 period, with a focus on major state corporations to ensure greater efficiency in operation.

Fourthly, government agencies and localities should give priority to supporting SOEs during the privatization process while promoting transparency and efficiency in utilizing state funds at state firms.

From 2016 to September 2020, 178 SOEs had their privatization schemes approved with a total asset value of VND443.5 trillion (US$19.1 billion), of which the state capital was estimated at VND207.1 trillion (US$8.91 billion).

However, of these 178 SOEs, only 37 are from the list of 128 firms expected to be privatized by the end of this year under the instruction of Prime Minister Nguyen Xuan Phuc, or 28% of the target, which means that the remaining 90 should complete the process in the final three months of the year.

The MoF said the privatization process in the January – September was behind schedule, making it highly unlikely to realize the target set by the PM.

Notably, SOEs subject to privatization in Hanoi and Ho Chi Minh City make up 54% of the total, including 13 in Hanoi and 38 in Ho Chi Minh City.The others include six managed by the Committee for State Capital Management (CSCM), four under the Ministry of Industry and Trade (MoIT), and two under the Ministry of Construction (MoC).

Meanwhile, in the first nine months of this year, SOEs divested a total of VND899 billion (US$38.7 million) in book value for VND1.84 trillion (US$79.5 million) in proceeds.

This resulted in an accumulated amount of VND25.66 trillion (US$1.1 billion) in divested capital for VND172.9 trillion (US$7.45 billion) in proceeds.

Due to complicated financial situations, some large SOEs are facing difficulties in determining their own values, including Vietnam Posts and Telecommunications Group (VNPT), Vietnam National Chemical Group, Vietnam National Coal – Mineral Industries (Vinacomin), telco MobiFone, the Vietnam Bank for Agriculture and Rural Development (Agribank), among others.