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Aug 22, 2020 / 14:39

Finalization of legal framework needed to accelerate SOE privatization: Vietnam DPM

State firms that have completed the privatization process are expected to float shares on local bourses and create space for more foreign investors to invest in the local stock market.

A finalization of legal framework is needed to address issues during the process of privatization and divestment of state capital at state-owned enterprises (SOEs) in the 2021 – 2025 period, according to Deputy Prime Minister Truong Hoa Binh.

 The progress of SOEs privatization remains slow, meeting 28% of the target so far. 

The Ministry of Finance  is tasked with instructing the State Securities Commission (SSC), the country’s stock market watchdog, to ensure SOEs that have completed the privatization process float shares on local bourses and create room for more foreign investors to invest in the local stock market.

Meanwhile, the Ministry of Planning and Investment is responsible for summing up suggestions and concerns from the business community to report to Prime Minister Nguyen Xuan Phuc for appropriate supportive measures.

Deputy PM Binh also requested the Ministry of Natural Resources and Environment to review existing land-related regulations that are hindering the privatization process and causing difficulties for some SOEs to determine their own values.

The privatization process is expected to speed up at Vietnam Cement Corporation (VICEM) and Housing and Urban Development Corporation (HUD) under the management of the Ministry of Construction, as well as for the Vietnam Bank for Agriculgure and Rural Development (Agribank) under the State Bank of Vietnam.

In a recent report from the Ministry of Finance, of the total of 128 SOEs due to undergo privatization during the 2017 – 2020 period, only 37 have completed the progress as of July 2020, or 28% of the target.

From 2016 to July 2020, 177 SOEs had their privatization schemes approved with 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 177 SOEs, only 37 are from the list of 128 firms expected to be privatized by the end of this year under the instruction of PM Phuc, which means that the remaining 91 should complete the process in the next five months.

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; 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).