Rocky economy to knock equitisation plan off its stride

Vietnam Airlines is one big state player seeking lift off permission for its privatisation plan

Dang Quyet Tien, deputy director of the Ministry of Finance’s Enterprise Finance Department, said many macroeconomic factors such as high inflation and interest rates would handicap enterprises’ equitisation plans.

“From 2008 until now, the stock market faced many difficulties which caused troubles for enterprises in finding investors,” said Tien.

Dao Viet Truong, chief analyst of Hanoi Securities Corporation, said: “Currently, the macroeconomic situation with exchange rate risks is unknown and it will affect investors, especially foreign investors.

“Besides, there are so many attractive choices in Vietnam’s stock market. The market is oversupplied and lacks demand which lessens firms’ appeal.”

Many state-owned corporations such as Vinatex, Vinasteel, Petrolimex and Vietnam Airlines, have announced plans to restart equitisation this year after years of delays.

Le Tien Truong, deputy general director of Vinatex, said the firm expected to complete the equitisation of member companies and the whole corporation by late 2011. However, Truong said now was not the time for enterprises to sell stakes when the world’s economy and the domestic macroeconomic were uncertain.

According to Truong, most of Vinatex’s member companies had finished equitisation. Vinatex began carrying out equitisation of the whole corporation in 2007. However, due to unfavourable market, it was sidelined.

Meanwhile, a government report dated February 15, 2011 said the government was working on Vinasteel and Petrolimex’s equitisation.

Vinasteel started its equitisation plan in 2009. As planned, the state would hold at least a 65 per cent stake upon its equitisation.

A Vinasteel representative said the firm would take its next steps in the equitisation process.

In late January Petrolimex, the country’s largest fuel distributor with a 60 per cent market share, said the firm planned to go public this year with 7 per cent of its shares sold.

Vuong Thai Dung, Petrolimex’s deputy general director, said the company submitted its equitisation plan to the government in December, last year.

Meanwhile, Vietnam Airlines, included in the government’s restructuring scheme for 2007-2010, has proposed the government speed up the pace of privatisation and expected to start its plan in 2011.

Mobifone has missed its privatisation plans several times but Minister of Information and Communications Le Doan Hop indicated that Mobifone and related authorities would discuss the detailed plan in next three months and finish it this year.

“It is true that Vietnam’s stock market is oversupplied, but it is still short of the supply sources of big firms’ shares to attract foreign capital and support the local market development,” said an analyst from a Hanoi securities company.