New policies to speed up state divestment present opportunities for investors

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According to Nguyen Trong Dung, deputy head of the Central Steering Board for Enterprise Reform and Development under the Government Office, the Vietnamese government views the sale of state stakes as an important way to restructure the economy and increase its competitiveness.

A recent report conducted by the Ministry of Finance (MoF) showed that from now to 2020 the government expects to continue selling its stakes in non-public companies in 26 business fields. This process was only 40 per cent completed in the 2011-2015 period. Divestment from companies that have already gone public also needs to continue as the government is currently holding 81 per cent instead of the planned 62 in these businesses because it has not been able to sell.

Dung said the prime minister had recently asked ministries to draft a new decision to replace Decision No.37/2014/QD-TTg on the issuance of criteria to classify state-owned enterprises. Accordingly, the new piece of legislation would detail the portfolio of companies to be divested and the criteria that the divestment will have to meet.

The government will decrease the number of fields in which it would hold 100 per cent to 12 from the current 19. Thus it is going to hold 100 per cent in 190 companies, mostly in lottery (63 companies), publishing (13 companies), and irrigation (87 companies). The state is going to hold 65 per cent in five fields, and between 50-65 per cent in 30 companies. In 108 companies the state will hold none or 36 per cent at most.

Moreover, as policies that were meant to accelerate the process met various obstacles in real life implementation, the government will also review the body of problematic decisions and directives.

Hoang Van Thu, deputy director of the Department of Corporate Financing under the MoF, said that the ministry has received feedback from investors and will introduce changes. For example, regarding concerns whether the state will set aside stakes to sell to strategic investors, he said that the point of divestments is to improve the companies’ governance, which necessitates the involvement of strategic investors. However, the new regulation will stipulate that if there is only one strategic investor registering to buy, a public auction will be held instead, to increase transparency.

The new regulation will not place a limit on the cost of equitisation in order to let the companies decide for themselves. It is also going to let qualified foreign appraisers evaluate the companies.