The Vietnamese Government aims to complete restructuring state-owned enterprises (SOEs) by 2025.

Production at Rang Dong Company. Photo: The Hanoi Times

The move was revealed in a decision No.360 signed off by Deputy Prime Minister Le Minh Khai on the plan to rearrange SOEs, focusing on major economic corporations, in the 2021-2025 period.

The decision aims at enhancing the efficiency and competitiveness of SOEs, which should operate based on modern and innovative technological platforms, along with a corporate governance model of international standards.

SOEs, especially major ones, should be industry-leading companies to steer those of smaller size operating in the sector for greater efficiency in the allocation of social resources while avoiding loss of public capital.

The SOEs subject for restructuring process is mainly in key economic fields or located in cities/provinces which are strategic in terms of security and defense; or in sectors that draw no interests from the private sector.

The Government also targets to restructure weak and ineffective SOEs, or public projects sustaining losses for a long period.

“The privatization and divestment of state capital at SOEs should be carried out in a transparent, feasible, and effective manner, for which the valuation process should include all variables including resources of capital, land, and brands to avoid losses of state resources,” the decision stated.

Meanwhile, SOEs of large scale and with high potential for development would receive further support from the state to improve their competitiveness in the regional and international markets.

By 2025, Vietnam expects to complete the restructuring process of SOEs, for which a minimum of VND248 trillion ($10.84 billion) in proceeds should be raised from the process for the 2021-2025 period.

To realize the goal, the Government would continue to refine regulations and legal frameworks on SOEs management and improve the corporate governance capabilities among SOEs.

SOEs subject to privatization are requested to strictly follow regulations on public listing once completing the process.

The Government called for drastic measures to stop SOEs from making investments into their non-core business lines, and therefore, should rather focus on their key objectives.

In the upcoming time, the Government would select several SOEs in the post-privatization process for listing them on the regional and global stock exchanges.

During the 2016-2020 period, only 39 were sold on the Government's list of 128 must-be-privatized SOEs in 2020, meeting just 30% of the target.

Last year, only three completed the privatization process, for which the difficult economic environment due to the Covid-19 was seen as a key reason. It was estimated that 18 SOEs divested state capital worth VND4.4 trillion (US$192.4 million) for a combined book value of VND1.66 trillion ($72.6 million) during the period.

Among the remaining SOEs that are required for privatization, those in Hanoi and Ho Chi Minh City make up 54% of the total, including 13 in the capital city and 38 in the country’s southern hub. The others include six supervised 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).