July 26, 2014
HA NOI — A decision explaining Decree15/ND-CP, which orders the selling of the State’s stakes in non-core businesses at below face value, is expected to be issued this month.
This was announced on the Ministry of Finance’s website. The withdrawal of capital at below face value was among the key resolutions which were taken to accelerate the restructuring of State-owned enterprises (SOE). It was also decided that 432 SOEs must be equitised during the 2014-15 period.
Although Decree 15/NQ-CP was issued in March, allowing the sale of the State’s stakes at discounted rates, the process has been going slow as many SOEs are stuck, especially because of the withdrawal of outside investments which had incurred losses, and due to the lack of detailed instructions.
From 2013 to June 2014, SOEs managed to withdraw around VND1.85 trillion, or US$87.3 million, from their non-core businesses, comprising only 22 per cent of the total non-core investments of VND22 trillion ($1.04 billion) which need to be withdrawn by 2015. There is a huge load of work that needs to be completed by the end of 2015.
However, Deputy Director of the Corporate Finance Department Dang Quyet Tien said the capital withdrawal process was projected to speed up during the second half of the year, with the Government taking measures to accelerate it.
Deputy Prime Minister Vu Van Ninh recently asked ministries and provincial people’s committees to punish leaders of enterprises which failed to implement equitisation or capital withdrawals efficiently.
The Decree 69/2014/ND-CP on the establishment, re-arrangement and operation of State economic groups and corporations, which will come into force on September 1, has banned SOEs from investing in irrelevant sectors.
Restructuring plans
The State Capital Investment Corporation (SCIC) has studied to buy a stake in 12 groups and corporations in non-core businesses such as banking and insurance, according to the Vietnam News Agency.
SCIC’s General Director Lai Van Dao told a press meeting held in Ha Noi on Thursday that the units were big State-owned enterprises including Viet Nam Rubber Industry Group (VRG), Viet Nam National Oil and Gas Group (PVN), the Electricity of Viet Nam (EVN), the Viettel Telecom Group, the Viet Nam National Coal and Minerals Industry Group (Vinacomin) and Viet Nam National Shipping Lines (Vinalines).
Dao said SCIC met with Vinalines and VRG on the issue and would meet with other groups and corporations based on evaluation of the divestment’s effectiveness and progress.
He added that in the first half of the year, the corporation had succeeded in divesting its capital in 31 enterprises. Of these, in 26 businesses the corporation sold its non-core investments while in five other firms it sold a part of such capital.
“The selling of capital was higher than in the same period last year, bringing VND863 billion ($41 million) to the corporation and posting 46 per cent year-on-year increase,” he said.
SCIC gained VND3.35 trillion ($159.5 million) in turnover in the period, increasing 37 per cent over the corresponding period last year and met with 57 per cent of the year’s target. Its after-tax profits reached VND2.6 trillion ($123.8 million), representing 34 per cent year-on-year rise.
By the end of June, its list of businesses included 335 enterprises with total State-owned investment of more than VND15 trillion ($714.2 million) and charter capital of over VND65 trillion ($3.09 million).
According to SCIC’s restructuring plan, it would divest from 376 firms by 2015. However, it would hold long-term capital in Viet Nam Dairy Products Joint Stock Company (Vinamilk), Hau Giang Pharmaceutical, FPT, and Viet Nam National Reinsurance Corporation.
In addition, it would have controlling stakes in more than 20 joint stock companies including Bao Minh Insurance Corporation, the Trang Tien Investment and Trade Company.
(VNS)