In the first 11 months of this year, state-owned enterprises (SOEs) have divested a total of VND979 billion (US$42.47 million) in book value for VND2.03 trillion (US$88.08 million) in proceeds.

Production at Vietnam National Textile and Garment Group (Vinatex).

This resulted in an accumulated amount of VND25.74 trillion (US$1.11 billion) in divested capital for VND173.1 trillion (US$7.48 billion) in proceeds from 2016 to November 2020, stated a recent report from the Ministry of Finance (MoF). Of the sum, 103 SOEs in the divestment list of Prime Minister  during the 2017-20 period raised VND4.96 trillion (US$215.17 million) in book value for VND9.64 trillion (US$418.27 million) in proceeds, or 30% of the number of enterprises and 8% of value under the plan.

Along with the slow divestment of capital at SOEs, the MoF also expressed concern at delay in the privatization process, with only seven SOEs having completed their respective processes so far during the January-November period.

From 2016 to November 2020, 178 SOEs had their privatization schemes approved with a total asset value of VND443.5 trillion (US$19.1 billion), of which the state capital was estimated at VND207.1 trillion (US$8.91 billion).

However, of these 178 SOEs, only 37 are from the list of 128 firms expected to be privatized by the end of this year under the instruction of Prime Minister Nguyen Xuan Phuc, or 28% of the target, which means that the remaining 90 should complete the process in the final month of the year.

Given such low pace in privatization, the MoF said it is highly unlikely that SOEs would realize the target set by the PM.

SOEs subject to privatization in Hanoi and Ho Chi Minh City make up 54% of the total, including 13 in Hanoi and 38 in Ho Chi Minh City. 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).

Due to complicated financial situations, some large SOEs are facing difficulties in determining their own values, including Vietnam Posts and Telecommunications Group (VNPT), Vietnam National Chemical Group, Vietnam National Coal – Mineral Industries (Vinacomin), telco MobiFone, the Vietnam Bank for Agriculture and Rural Development (Agribank), among others.

To speed up the privatization process, the MoF said it is vital to perfect the legal framework for the operation of SOEs which are subject to privatization and divestment. More importantly, provinces/cities and SOEs involved in the process must show stronger commitment to realize the PM’s instruction for SOE restructuring, it added. 

The MoF is in the process of drafting a proposal on SOE restructuring in the 2021 – 2025 period, with a focus on major state corporations to ensure greater efficiency in operation.