Thailand
Missed opportunities for Vietnam due to slow privatization pace
As of the second quarter of 2019, 35 out of 127 enterprises subject to privatization per instruction by the Prime Minister has completed the process, said Dang Quyet Tien, director of the Corporate Finance Department under the Ministry of Finance (MoF), leaving other 92 enterprises without being privatized or 72% of the plan unfulfilled.A report at a conference discussing the result of privatization process of SOEs in the first six months of 2019 on August 5 showed that regarding the divestment process, 62 SOEs are planned to conduct divestment of state stakes in 2019. However, as of the end of second quarter, only 9 have reazlied this task for returns of VND1.65 trillion (US$71.12 million) with book value of 759 billion (US$32.72 million).From 2017 to the end of the second quarter in 2019, a total of 88 SOEs have completed the divestment process under the PM’s request, raising VND8.76 trillion (US$377.57 million) with book value of VND4.55 trillion (US$196.11 million). Meanwhile, divestment activities outside the PM’s request have resulted in proceeds of VND110.39 trillion (US$4.75 billion) from book value of VND3.78 trillion (US$163 million), including the Sabeco deal from ThaiBev.
According to Tien, on August 15, 2017, the MoF disclosed the list of 747 privatized SOEs which have not listed shares on the stock market.
As of the end of the second quarter, there remain 622 companies subject to the listing, while further review made by the MoF revealed other 158 companies, resulting in a total of 780 not having gone public as required.
Nevertheless, Tien said the quality of the privatization process has been improved as transparent privatization schemes are based on market mechanism and the process has gone through public auction, resulting in profits for the state budget.
Tien attributed the lack of commitments from ministries, provinces and executives at SOEs to the slow privatization progress of SOEs.
Meanwhile, problems in finance, land and laborers from periods prior to the privatization also hindered the process at targeted SOEs, added Tien.
A high proportion of state capital in the privatization schemes has made SOEs less attractive to investors, causing negative impact on the success of the process.
For the remaining months of the year, the MoF recommended government agencies to review a number of laws, including the Law on Enterprises, Law on Management and Utilization of State Capital invested in the Enterprise’s Manufacturing and Business activities, Law on Cadres and Civil Servants, and Law on Bankruptcy, among others, with the aim of facilitating the privatization and divestment processes.
The SOEs subject to divestment and privatization in the 2018 – 2020 period are urged to speed up the process and to seek the PM’s endorsement if necessary.