Vietnam Gov’t Uneasy about SOE Privatization Pace

Tuan Minh

15:51 16/11/2015

BizLIVE - The restructuring process of state-run firms in Vietnam is marching at a snail’s pace and risks missing the deadline set for the 2011-2015 period although the government has taken bold steps to accelerate it.

Vietnam Gov’t Uneasy about SOE Privatization Pace

Deputy Prime Minister Vu Van Ninh hastens the revamp of SOEs. (Photo:

At a conference on the overhaul of state-owned enterprises (SOEs) last Friday, Deputy Prime Minister Vu Van Ninh called upon government agencies and corporations to be more decisive in revamping the state-run sector.
A number of ministries and localities complained that they faced a wide range of obstacles in the revamp of SOEs. Corporate valuation is the biggest hurdle due to discrepancies in pricing land and land-related issues.
They asked for an extension of their deadline for completion of SOE restructuring to 2016.
Mr. Ninh, who heads the Steering Committee for Enterprise Renovation and Development, requested heads of the ministries and localities to take responsibility and speed up the corporate valuation of SOEs, so that equitizations could take place at the start of next year.
“The reasons you [ministries and localities] have raised are groundless as the government had tackled the hindrances,” Mr. Ninh said. “Those heads of companies that resist proceeding with privatization should step aside,” he warned.
According to a report of the Steering Committee for Enterprise Renovation and Development, as many as 471 SOEs have been rearranged from 2011 to November 10, 2015, of which 408 were privatized during the past five years.
A total of 210 SOEs could end up being equitized this year if government agencies and localities ramp up their efforts. As many as 143 SOEs sold shares last year, out of a plan to privatize 432 SOEs in 2014 and 2015.
Consequently, the total number of SOEs poised to undergo privatization in the 2011-2015 period would be 459, or 90% of the plan, the committee said.
Le Manh Ha, Vice chairman of the Government Office, said that the lack of determination, turbulence in the international financial and stock markets, coupled with difficulties in the domestic economy, caused stagnation in the restructuring progress of SOEs.
In addition, complications in corporate valuation caused bottlenecks and selecting strategic stakeholders took time, Mr. Ha said.
Regarding withdrawals from non-core businesses of SOEs, the committee’s report showed that a total of 16.45 trillion dong ($731 million) was divested between 2012 and the end of October.
However, the sum divested from the property, insurance, and stock, finance and banking sectors, remained modest at 8.70 trillion dong ($386.8 million) or just 37% of the plan.
The participation of foreign investors in initial public offerings of SOEs is modest as firms offer minority stakes and the government has yet to lift the foreign ownership limit. They long for buying shares of large SOEs such as telecom MobiFone and airport developer Airports Corporation of Vietnam.