Vietnamese Tiếng Việt | Monday, May 21, 2018 | Advertise with Us
Text Size

Equitized SOEs not attractive to strategic investors

(0 votes, average 0 out of 5)

Many investors have been reluctant to buy a stake of equitized SOEs (state owned enterprises) because of problems in current regulations and the internal weaknesses of the enterprises.

vietnam economy, business news, vn news, vietnamnet bridge, english news, Vietnam news, news Vietnam, vietnamnet news, vn news, Vietnam net news, Vietnam latest news, Vietnam breaking news, Vietnam Airlines, SOEs, equitization

Vietnam Airlines, however, stands out as a success story. It sold a 8.77 percent stake to Japanese ANA in a deal worth VND2.431 trillion after two years of negotiations. 

Analysts commented that the deal was carried out in a very professional way. It used international consultants, offered valuations of the enterprise in accordance with international practice, and opened a Dataroom for potential investors to access information. 

Investors had the time to assess Vietnam Airlines and had many direct meetings before deciding to spend more than $100 million on the deal.

However, the case of Vietnam Airlines is an unusual one. In most others, the sale of a stake to strategic investors encounters many problems, according to the Central Institute of Economic Management (CIEM).

The research institute, in a report about SOE equitization, said it is necessary to be patient in negotiations so as to harmonize the benefits of the two parties and ensure mutual interests, as was done in the Vietnam Airline sale. 

According to the State Securities Commission (SSC), the goal of reducing the state ownership ratio and attracting private capital still has not been reached. 

The state still holds 81 percent of enterprises’ capital, while strategic investors only hold 7.3 percent, lower than the targeted 15.8 percent.

CIEM, which conducted a survey on 46 economic groups and general corporations which were equitized in 2011-2016, found that of VND28.369 trillion worth of shares approved to be sold to strategic investors, only VND12.762 trillion were sold, or just half of the plan.

The proportion of a stake sold to foreign investors was even lower, just accounting for 8.7 percent (4/46 general corporations). Most foreign investors bought a stake at a low proportion (20 percent was the highest figure).

CIEM commented that the proportion reserved for strategic investors is small, so it is difficult to attract investors, especially foreign ones. 

Only six out of 46 corporations (13 percent) decided to sell more than a 50 percent stake to strategic investors and five out of six enterprises sold the shares offered. 

The result shows that a high offered proportion makes it easier to attract investors.

Another problem is profitability. The ROE of SOEs is 15-17 percent on average. This is a relatively high level and higher than that of private businesses, but the figure doesn’t reflect the common situation of most SOEs.

A report found that the profits of PetroVietnam and Viettel alone accounted for 72.4 percent of total profits made by the 12 largest state-owned economic groups and general corporations in 2014.



Source: VietNamNet

Maybe You Also Interesting :

» Hanoi launches interactive tourism website

Hanoi’s downtown district of Hoan Kiem on May 20 launched its tourism website at different addresses of , ,...

» Vietnam Airlines to build logistic hub in Cần Thơ

The Vietnam Airlines Corporation plans to build a logistics centre in the southern city of Cần Thơ this year, said Deputy General Director Trịnh Hồng...

» Vietnam Airlines flight fails to take off twice due to glitch

Passengers were very angry because Vietnam Airlines flight from Danang to Hanoi in the evening of May 14 was delayed several times, after which they were...

Popular News Categories:

- Asia & Asian  |  EU & Russia  |  America & US

- Facts  |  Urban  |  Faculty  |  Environment

- Business  |  Finance  |  Market Health

- Destination  |  Cuisine  |  Arts Music

- Cinema  |  Soccer  |  Sports  |  IT & Internet

Culture & Tourism:

-> About Vietnam  |  Things To Do

-> Destinations  |  Events Calendar

-> Visa Online  |  Flights & Transport

-> Accomodation  |  Tours & Cruise

-> Find more go to Travel.VN...