State business share sales to see breakthrough

The number of state-owned enterprises (SOE) to change ownership status was expected to surge after a long period of standstill if the government cleared a decree on SOE equitisation, said an official.

Nguyen Duy Long from the Department of Enterprise Finance under the Ministry of Finance, said the draft decree that the ministry had recently submitted to the government, allowed target enterprises to sell shares to strategic investors, both domestic and international, before auctions were made public.

The current regulation allowed only post-auction sales in regards to shares of enterprises totally owned by the state during the process of turning themselves into joint-stock companies.

The rigidity and inflexibility in the regulation had made it almost impossible for SOEs, including giants such as the Bank for Foreign Trade of Vietnam (VCB) and the Saigon Beer, Alcohol and Beverage Corporation (SABECO), to lure strategic investors, who are rich in both capital and managerial experience.

It also meant that SOEs-turned joint stock companies were unable to tap leading investors’ managerial experience for post-ownership change operations.

The draft decree, recommended permission for SOEs to proceed with the ownership change process even if shares in the initial public offerings were not sold out. Some articles relating to evaluation of property costs, trademark value and employee incomes were also revised.

Long added that the decree’s contents which related to measures for sales of SOE shares had virtually been approved by cabinet members after thorough discussion.

The Ministry of Planning and Investment said the number of SOEs in Vietnam had been sharply reduced in the past two decades, from over 12,000 entities in early 1990s to just over 1,200 in late 2010, as the result of the SOE restructuring and modernisation programme.

Joint-stock companies were the major choice among target SOEs, making up over 55 per cent during the 2001-10 period.

Under government guidelines, the state would hold the entire or major stakes of only a small number of enterprises which operated in the fields of national security, transport, media, energy and forestry. – VIR

Tags: Vietnam companies, Vietnam enterprises, Vietnam SOEs