Vietnam pushes divestment plan in state owned enterprises

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Nguyen Tung 15:06, 2017/10/01

According to the Ministry of Finance, one of the objectives in the remaining months of 2017 is to cooperate with related ministries to push up with the divestment plan in state owned enterprises.

At the annual meeting of the Ministry of Finance, which discussed the status of divestment and equitization of state owned enterprises in the first 9 months of 2017. As such, representatives of the Ministry of Finance said, in the first 9 months, the divestment process has resulted in 195 billion VN revenue.

The divestment of Sabeco and Habeco, the two biggest local brewers in Viet Nam, has attracted significant attention in the market.

In overall, for the first 9 months, state owned enterprises have withdrawn more than 3.8 trillion VND, with revenue of nearly 16 trillion VND (including divestment in 2016 which has recently been reported in the first 9 months of 2017). In which, divestment in 5 sensitive fields is 105 billion VND, with revenue of 105 billion VND. Divestment in other enterprises (excluding 5 sensitive fields) is 2,2 trillion VND, with revenue of 3,5 trillion VND.

At the State Capital Investment Corporation (SCIC), the company has sold its shares at 28 enterprises with value of 1,5 trillion VND, with revenue of 12,4 trillion VND (including the divestment in 2016 of Vinamilk with the value of 783.7 billion VND, with revenue of 11,2 trillion VND).

According to representative of the Ministry of Finance, in the first 9 months of 2017, Vietnam has 34 enterprises qualified for equitization. The total value of 34 enterprises approved for equitization is 80.6 trillion VND. In which the total value of state’s shares at these enterprises is 20,8 trillion VND. With regard the equitized enteprises, which have not listed in the stock exchang market, the Ministry of Finance will review and propose appropriate measures to speed up the process.

Besides preliminary achievements in the equitization process, according to the Ministry of Finance, the divestment process is not up to expectation compared to the plan. Main reason for this is leaders of some state owned enterprises still reserve concern and lack of responsibilities with regard to implementing the divestment plan and equitization. Target for equitization and divestment in this period is mainly large scale enterprises with diversified operating fields, businesses, complicated financial situation, which require the participation of large investors with high capabilities of finance and management. As such, it is necessary for state accountant to thoroughly review and evaluate the value of enterprises before announcing the divestment plan and equitization.

To speed up the divestment process in the remaining months of 2017, representative of the Ministry of Finance said, the Ministry will recommend the Ministry of Industry & Trade (MoIT) responsible for divestment of the state fund in two brewers, Saigon Alcohol Beer Beverage JSC (SABECO) and Hanoi Alcohol Beer Beverage JSC (HABECO) to be completed and transferred the state fund to the Support Fund for Enterprise Reorganization and Development before December 1, 2017. In case MoIT cannot announce the prospectus for divestments in the two companies by that deadline, the ministry should seek the Prime Minister’s instruction on handing over the State capital ownership to SCIC.

The divestment of Sabeco and Habeco, the two biggest local brewers in Viet Nam, has attracted significant attention in the market. MoIT holds 89.59 per cent of Sabeco’s charter capital and is expected to sell 53.59 per cent. In Habeco, the ministry plans to offload its entire holding of 81.79 per cent. Sabeco is the leading beer producer in terms of market share, holding 40 per cent of local beer consumption. Heineken came second, with a 25 per cent market share, followed by Habeco, with 18 per cent.

Carlsberg is a strategic shareholder in Habeco, with a holding of 17.51 per cent. The Danish beer maker has shown interest to purchase 51 per cent of Habeco’s stakes. After nine negotiations, the two sides have yet to reach an agreement on the selling price but Carlsberg still retains priority over the right to negotiate with Habeco when the State makes the divestment.

Meanwhile, many foreign investors are keen on Sabeco’s stakes, including Japan’s Asahi Group, Thailand’s Singha, Kirin, Heineken and Anheuser-Busch InBev.

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