Government allows SOEs to sell non-core stakes below VND10,000

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The announcement was made by Pham Viet Muon, deputy head of the Government Committee, at last week’s national conference on state-owned enterprise (SOEs) equitisation for 2014-2015.

The resolution will help speed up the slow process of SOEs withdrawing capital from non-core business fields, according to a Ministry of Finance (MoF) report.

A major stumbling block in the withdrawal process has been the inability of SOEs, which invested in securities companies, investment funds, banks, insurance and real estate firms, to sell their assets due to the depressed stock market.

To avoid losses, these firms offered divest at a price of VND10,000 per share. However, even at that price, many groups have failed to divest, including Vinacomin’s attempts to offload Vietnam Airlines Insurance JSC and SHB – Vinacomin Insurance JSC.

Another example that its success was still questionable was the case of 25.2 million shares of AnBinhBank owned by Vietnam Electricity (EVN) being sold to Hanoi General Export Import Corporation (Gleximco) at a price of VND10,000 dong per share in late December 2013 while its book value on June 20 was only VND7,419 dong per share.

Many economists have suggested that the government will have to accept capital losses on the deals, as the prevailing non performing loan crisis has resulted in very few banks reporting profits. In such a climate, the likelihood of the SOEs making a profit during the divestment of said banks seems remote.

Muon from the Government Committee said they estimate that by 2015, state-owned groups and corporations will have withdrawn nearly VND22 trillion (roughly $1 billion) from non-core businesses.

As of 2012, SOEs had invested VND21.8 trillion ($1.04 billion) in non-core businesses, according to the MoF.

Of this total, VND10.1 trillion ($481 million) was injected into the banking sector while VND5.3 trillion ($252.38 million) was invested in real estate.