SCIC looking to play its cards right in 2011

The SCIC is predicting some SOEs will be welcomed with open arms by buyers this year

The value of the stakes will be 2.65 times higher than in 2010. Last year, among 106 firms the State Capital Investment Corporation (SCIC) sold the state’s stakes in, the corporation offloaded stakes in 97 firms for VND642 billion ($31 million) compared to their book value of VND278 billion ($13.4 million).

SCIC’s spokesman Tran Hoang Ly said that in 2011 when economic difficulties  passed, SCIC would have more favourable conditions to complete its divestment plan.

In 2010, the number of enterprises the corporation withdrew the state stakes was lower than its plan of 170 enterprises.

“The unfavourable macroeconomy and the unstable stock market affected investment demand regarding the corporation’s portfolio. However, we expect a brighter picture in 2011,” said Ly.

In addition, SCIC’s general director Lai Van Dao said another reason was that many poor performing enterprises had proven a turn off for investors.

Dao said the corporation this year would diversify its portfolio such as finance investment, project investment, prior to investing in priority fields and industries under the government’s direction.

The SCIC is considered the most powerful corporation in Vietnam with its management of VND11,865 billion ($573 million) of the state capital which has been poured into 538 enterprises.

Ly said the 281 state-owned enterprises (SOEs) the government would withdraw its stakes this year belonged to Group C, which included small-sized enterprises operating in the fields such as tourism, transportation and agriculture.

These enterprises have small capital of less than VND20 billion and low returns on equity of below 15 per cent.

SCIC’s portfolio includes 12 enterprises in Group A, 111 enterprises in Group B and more than 700 enterprises in Group C.

Group A includes enterprises operating in the important fields of the national economy with the capital of VND80 billion ($4.1 million) or more, in which the state-owned proportion is 50 per cent and higher. Group B includes enterprises with the capital of between VND20 billion and VND80 billion, in which the state held capital is 30-50 per cent.

However, Dao said despite many economic difficulties last year, the SCIC’s capital continued to grow.

Last year, SCIC reported the total revenue of VND2,753 billion ($133 million), up 46 per cent compared to its plan. The pretax profit reached VND2,445 billion ($118 million), 40 per cent exceeding the plan and up 30 per cent against 2009.

Until December 31, 2010, SCIC took up the state capital in 932 enterprises, successfully sold state stakes in 442 enterprises, including 399 enterprises selling entire state stakes with the collection of VND2,209 billion ($106 million) compared to the book value of VND984 billion ($47.5 million).