Jun 16, 2013

Vietnam - Who dares sell “big SOE guys”?

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VietNamNet Bridge – The equitization of state owned enterprises (SOEs) has got stuck. Weak enterprises cannot find the buyers, while no state’s official dares to make decisions on selling good enterprises with the prefix of “Vina” in their names, because they fear they mistakenly sell the enterprises at a loss.

Speeding up the SOE equitization is the important task mentioned in most of the state’s and party’s important resolutions.

Cheap goods cannot find buyers

A report of the Ministry of Planning and Investment showed that 909 SOEs, or 73 percent, are subject to the restructuring (they have either to undergo the equitization or ownership restructuring). However, to date, only 5 SOEs have undergone the equitization or have withdrawn their capital from 62 enterprises.

The latest report of the Enterprise Development Agency said 76 SOEs belonging to 23 state owned economic groups have asked for the delay of the equitization plan until the years after 2015.

The equitization delay has been attributed to the gloomy stock market, which has made the stock prices fall down dramatically. If the State still wants to equitize its enterprises at this moment, it would have to sell them at a loss.

The problem is that the managers of SOEs and ministries’ high ranking officials, who have the responsibility of preserving the state’s capital, dare not bargain the enterprises away just to fulfill the equitization plan.

However, foreign investors have repeatedly urged Vietnam to speed up the equitization process. They said at the Vietnam Business Forum, a dialogue between the government of Vietnam and enterprises, that selling SOEs at low prices is an unavoidable thing Vietnam has to accept in the equitization. This would help improve the market liquidity.

The government’s spokesman, Minister Vu Duc Dam, also admitted at a recent press conference that in some cases, it would be better to sell some businesses right now for low prices, because the prices may even fall down further in the future.

However, a question has been raised that who would buy weak SOEs?

Vietnam should put good commodities on sale

“Someone asks me what to do to rescue SOEs. I said to them that it’s necessary to sell parts of stakes to foreign investors, who could be the new owners who have good corporate governance skills, high technologies and professional managing staffs,” said Le Xuan Nghia, a well-known economist, who was Deputy Chair of the National Advisory Council for the Monetary Policy,

Nghia calls the action as “selling to rescue”, i.e. selling the state’s stakes in big and good enterprises and use the money from the deals to rescue the weaker enterprises.

For example, the State should consider selling the stakes at Vinamilk, the leading dairy producer in Vietnam, which is called the “goose that lays golden egg” with the pay of VND1 trillion to the state budget.

If the State does this, it would have tens of trillions of dong which can be used for many other purposes. If it doesn’t, it would have to wait 40-50 years more to receive the similar benefits.

Le Dang Doanh, a well-known economist, highly appreciates the idea, saying that the State should consider selling good and big SOEs, provided that the SOEs do not operate in the business fields which make strategic products for the nation.

However, Doanh still believes that there is still demand for weak enterprises, which means that selling small and unprofitable enterprises would still be feasible.

Lao Dong

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