The Vietnamese Government plans to divest from more than 130 SOEs by 2020, which would significantly push up share supply in the coming years.Saigon Securities Inc estimated that the Government’s planned divestment from SOEs would be worth some 4.35 billion USD – a huge sum that would require capital resources from foreign strategic investors to absorb.
“We know strategic investors will not only bring new financial resources, but also other changes,” Nguyen Dinh Cung, Director of the Central Institute for Economic Management (CIEM) said.
However, the reality is attracting foreign strategic investors is not always easy.
A CIEM report on stake sale to strategic investors of 46 SOEs showed that stake worth a total 28.4 trillion VND (1.25 billion USD) planned to be sold for strategic investors, but only 12.7 trillion VND was purchased. In addition, only four SOEs attracted foreign investment, not to mention that foreign investors only purchased limited stake.
Experts also said the cap on foreign ownership in several sectors discouraged the participation of foreign investors in the equitisation of SOEs. Other problems that made investors hesitant were the lack of accuracy in evaluating SOEs, lack of transparency in the equitisation process and low efficiency of SOEs, besides the complicated procedure.
According to Pham Duc Trung, head of CIEM’s Corporate Development and Reform Department, it was critical to improve transparency in the SOE equitisation process. Besides this, the role of strategic investors in corporate management following privatisation must be enhanced to attract their participation, he said.
According to CIEM, the criteria for strategic investment must be clarified together with renovating the mechanism of evaluating SOEs value and improving the efficiency of SOEs. Dang Quyet Tien, director of Corporate Finance under the Ministry of Finance, said the Government was promoting transparency in SOE privatisation to attract foreign investors.
