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Government to speed up divestment in last months of the year

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 The government is moving ahead with the plan to reduce its ownership ratios in large state-owned banks, including BIDV and Vietcombank. 

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A report of VnDirect Securities showed that in the first half of 2018, the state collected VND28.1 trillion from equitization and divestment from state-owned enterprises (SOEs). This included VND22.5 trillion from IPOs and VND5.6 trillion from the divestment of shares in equitized enterprises.

The total amount of money collected from SOE IPOs in the first half of the year was four times higher than the same period last year. Since 2016, the state has earned VND198 trillion from SOE equitization and divestment (VND30 trillion in 2016 and VND140 trillion in 2017). Of this, the divestment of Sabeco shares alone brought turnover of VND110 trillion.

As such, the total money earned from SOE equitization and divestment since 2016 is 3 times higher than that in the whole period 2011-2015.

However, big challenges are still ahead.

Regarding equitization, of 85 SOEs scheduled to be equitized in 2018, only 19 enterprises have equitization plans approved. Meanwhile, the state’s divestment from the enterprises equitized before has been going slowly.

To date, the state has successfully withdrawn capital from 17 out of total 135 enterprises it plans to divest from in 2017. The divestment of the other enterprises needs to continue in 2018.

The total number of SOEs to divest in 2018 was expected to be 181, but less than 15 have done so.  

Deputy PM Vuong Dinh Hue, at Vietnam M&A 2018 held in early August, repeated several times that the government will accelerate the divestment from equitized enterprises, where the state’s ownership ratio remains high.

According to Hue, the government has withdrawn 8 percent of its capital in these enterprises so far, a very modest figure compared with the plan.

Regarding divestment from state-owned banks, Hue said Agribank plans to have an IPO in 2019, while the government will continue divesting BIDV and Vietcombank shares, while allowing banks to increase their capital to satisfy credit demand and meet Basel II’s requirements.

The government will transfer weak banks  to potential investors. Vietnam will, in the immediate time, restrict licensing to foreign bank branches or 100 percent foreign owned banks. 

However, it is encouraging foreign investors to pour capital into existing banks, offering the foreign ownership ratio in some certain banks of up to 100 percent.

The list of SOEs to be equitized in 2018 and 2019 comprises many well known names, such as Binh Son oil refinery (BSR), OIL and POW in the energy sector.

US$1=VND22,000

 

Source: VNN

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