State divestment leads to 16-fold increase in revenue
Last year, Vietnam raised a total of VND140 trillion (US$6.1 billion) from divesting VND8.9 trillion (US$392 million) in book value.
The divestment processes in Saigon Alcohol Beer and Beverages Corp (Sabeco) and Vietnam Dairy Products (Vinamilk) attracted large attention from foreign investors and brought in VND110 trillion (US$4.8 billion) and VND9 trillion (US$396 million), respectively, according to Nguyen Hong Long, Deputy Head of the Steering Committee for Enterprise Innovation and Development on January 31.
2018 is considered to be the turning point in the government’s equitization process.
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Total revenue from the equitization process and divestment in 2017 is estimated at VND144.6 trillion (US$6.3 billion), 2.4 times higher than the original target of VND60 trillion (US$2.6 billion) set by the National Assembly. Specifically, revenue from equitization process and divestment is VND5.2 trillion (US$229 million) and VND139.4 trillion (US$6.1 billion), respectively.
From 2016 to 2017, equitization schemes in 124 state-owned enterprises (SOEs) were approved with the actual value of state funds at VND185 trillion (US$8.1 billion). In 2017, state funds in SOEs subject to the equitization process were revalued at VND160 trillion (US$7 billion),or 6.34 times higher than the number in 2016.
Difficulties in the equitization process, according to Long, are mainly due to inefficiency in calculating enterprises’ total assets. As such, enterprise’s valuation must be completed before starting the equitization process to prevent state fund losses, per request of Deputy Prime Minister Vuong Dinh Hue.
The successful sale of 343.66 million Sabeco shares or 53.59% with value of US$4.8 billion was due to its share listing in the stock market, said Hue. By the end of 2016, Sabeco was valued at US$3 billion; however, its value soared afterwards.
The Sabeco deal could amount to as much as US$10 billion in case the government decides to sell the remaining stakes.
“The company’s value has increased by US$6 billion–US$7 billion, which was impossible without the stock market”, Hue said, adding that "revenue from the state divestment process will be allocated for the mid-term plan of the public investment for development”.
The number of SOEs has been reduced 24 times compared to 20 years ago, from 12,000 enterprises in 1986 to 500 in 2017, holding 11 key sectors and providing essential public services and social and security needs. The number is expected to decrease to 150, mainly from lottery companies, public services, and 3 leading SOEs: Electricity Vietnam (EVN), PetroVietnam (PVN) and Viettel.
2018 is considered to be the turning point in the government’s equitization process, Hue stressed. “Related ministries and agencies have to speed up the equitization process of enterprises for the best possible result”.
The average number of enterprises posting profits in 2017 accounted for 47.3%, an increase of 17% compared to 2016. The figures for SOEs, foreign direct investment (FDI) sector and private sector are 83.5%, 54.4% and 47%, respectively.
For corporate taxes, SOEs contributed the largest share in 2017 with 83.9%, followed by the FDI sector with 75.2% and the private sector with 73.3%.
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Read The Hanoi Times to stay up to date on developments in Vietnam.
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