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Aug 16, 2019 / 15:24

Vietnam’s PM requests to complete privatization of 100 state firms before 2021

Following the Prime Minister’s decision, state-owned enterprises (SOEs) would have only 15 months left to complete the privatization process, which is considered a major challenge.

Prime Minister Nguyen Xuan Phuc has approved a list of 93 state firms subject to privatization until the end of 2020, local media reported. 
Illustrative photo.
Illustrative photo.
Among the list, the government would still hold a majority of stake from over 65% at four state-owned enterprises, including Vietnam Bank for Agriculture and Rural Development (Agribank), Vietnam Coal and Mineral Industry Group (TKV), Vietnam Northern Food Corporation (Vinafood 1), and Vietnam Minerals Company. 

Additionally, the government expected to hold 50 – 65% stake in 62 other SOEs, including major corporations such as telecom services company MobiFone, Vietnam Posts and Telecommunications Group (VNPT), Vietnam Cement Industry Corporation (VICEM), Hanoi Transport and Services Corporation (Transerco), Urban Infrastructure Development and Investment (UDIC), among others. 

The remaining 27 would subject to entire state capital divestment or the state holding below 50% of stake, such as Vietnam Paper Corporation, Saigon Jewelry Company (SJC) or Housing and Urban Development Corporation (HUD). 

Ministers, Chairmen of municipal People’s Committees and board member of economic corporations could face disciplinary measures  for delay or not completing the privatization process of SOEs in subject, stated the PM’s instruction. 

Additionally, related government agencies and provinces/cities are scheduled to report the progress of the privatization process to the Ministry of Planning and Investment (MPI), the Ministry of Finance (MoF) for supervision. 

Following the PM’s decision, SOEs would have only 15 months to complete the privatization process, which is considered a major challenge. 

As of present, the progress has been slow with 92 out of 127 state firms required for privatization in 2019 having not completed the process, informed the MoF. 

From 2017 to the end of the second quarter in 2019, a total of 88 SOEs have completed the divestment process under the PM’s request, raising VND8.76 trillion (US$377.57 million) with book value of VND4.55 trillion (US$196.11 million). Meanwhile, divestment activities outside the PM’s request have resulted in proceeds of VND110.39 trillion (US$4.75 billion) from book value of VND3.78 trillion (US$163 million), including the Sabeco deal from ThaiBev, stated the ministry. 

In a conference on August, Dang Quyet Tien, director of the Corporate Finance Department under the MoF, attributed the lack of commitments from ministries, provinces and executives at SOEs to the slow privatization progress of SOEs. 

Meanwhile, problems in finance, land and laborers from periods prior to the privatization also hindered the process at targeted SOEs, added Tien. 

A high proportion of state capital in the privatization schemes has also made SOEs less attractive to investors, causing negative impact on the success of the process.