In 2020, nine SOEs were privatized for proceeds of VND949 billion (US$41.2 million), which resulted in a total of 180 state firms completing the privatization process in the 2016-2020 period and raising VND36.5 trillion ($1.58 billion) for the state budget.

Production at Garment 10 Company. Photo: Thanh Hai

The information was revealed in a recent government report on the restructuring process of the state sector, suggesting the progress remains slow at 27.3% of the plan as of late 2020.

According to the report, the process remains pending in 89 SOEs, including 13 in the capital city and 38 in the country’s southern hub. The others include six managed by the Committee for State Capital Management (CSCM), four under the Ministry of Industry and Trade (MoIT), and two under the Ministry of Construction (MoC).

“The key bottleneck that slowdown the privatization process was the difficulties in business valuation and the approval of land-use plans to prevent possible revenue loss for the state budget,” noted the report.

Another issue pointed out by the government is the fact that certain enterprises have not adopted corporate governance models in line with the market mechanisms, including the lack of transparency in information declaration which is making it hard to attract potential buyers.

The government acknowledged stronger discipline measures would be needed to ensure enterprises’ leaders to fully commit to privatization.

Along with privatizing SOEs, the government also received VND5.9 trillion ($256 million) in book value by divesting state capital worth VND2.5 trillion ($108.5 million). For the 2016-2020 period, the government recorded an accumulated amount of VND27.31 trillion (US$1.18 billion) in divested capital for VND177.4 trillion (US$7.7 billion) in proceeds.

To accelerate the process, the Ministry of Finance is tasked with finalizing the legal framework for restructuring SOEs in the 2021-25 period, consisting of a stronger monitoring mechanism to ensure a transparent privatization process and avoid losses of the state capital.

A priority in this framework measures to deal with 12 ineffective and stagnant projects in the industry and trade sector, for which the government noted a task force has been set up to work on these projects that have caused accumulated losses of VND26.3 trillion ($1.14 billion) of public funding.