Nov 20, 2018 / 10:59

Hanoi, Ho Chi Minh City lag behind in SOE privatization

It would be challenging to fulfill the government’s plan of selling SOEs in 2018, in which at least 85 state firms must complete the transference to private hands by the end of this year.

Hanoi and Ho Chi Minh City have plans to sell 14 and 39 state-owned enterprises (SOEs) in 2018, respectively, but no progress has been made so far, according to Dang Quyet Tien, head of the Ministry of Finance’s Corporate Finance Department. 
Illustrative photo.
Illustrative photo.
Under the SOE deregulation plan approved by Prime Minister Nguyen Xuan Phuc, at least 85 SOEs must complete the process by the end of this year, of which 21 were carried over from the 2017 agenda, Tien said at a conference on November 19. 

However, only 11 SOEs underwent equitization as of September 2018, totaling 26 out of 126 SOEs due to  change hands in the 2017 - 2018 period, Tien stated, adding that it would be challenging to fulfill the PM’s plan. 

According to Tien, the SOE selling process in Hanoi and Ho Chi Minh City has made slow progress, in which the latter was supposed to sell 39 SOEs, accounting for 44% of the total number in subject to be sold in 2018. However, so far not a single SOE has been transferred to private hands. 

Similarly, Hanoi is subject to sell 14 SOEs, including 11 in 2018 and 3 under the 2017 privatization list, accounting for 16% of total number in 2018.

Moreover, only 18 out of 181 SOEs subject to divestment completed the process during the 2017 - 2018 period, Tien added. 

The progress is far behind expectation set in the list of SOEs marked for divestment during 2017 - 2020 under the PM's Decision No.1232, which targets divestment in 135 SOEs in 2017 and 181 in 2018.  

The divestment and selling process of SOEs in 2017 contributed over VND144 trillion (US$6.34 billion) to the state budget, 2.41 times higher than the target set by the National Assembly, stated a 2017 report on utilizing state capital and assets at SOEs released on May 17. Among the most notable deals, the government sold a 53.6% stake in Sabeco for US$4.89 billion.

According to Saigon Securities Inc (SSI), the largest brokerage house in the country, Vietnam's effort to raise funds from the public-sector reforms is expected to triple in 2018 - 2020 compared to levels seen in the 2011 - 2017 period.

Specifically, the total proceeds from initial public offerings (IPOs) and the share sales of SOEs in the next two years are expected to reach US$26.3 billion, 2.75 times higher than the funds raised for the whole 2011-2017 period. 

Of the total, the value of IPOs will reach US$9.7 billion, while the total amount of divestment could hit US$16.6 billion. 

"Vietnam could end up being the only country in the world that embarks on a new wave of SOE reform in 2018 - 2020, placing large and profitable SOEs on public offer," stated SSI.