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Banking & Finance

Government discusses divestment from 10 SOEs

Released at: 16:42, 17/08/2016

Government discusses divestment from 10 SOEs

Photo: Duc Anh

Meeting on August 17 works on details for divestment of remaining holdings in 10 SOEs.

by Duy Anh

A detailed plan for the divestment of remaining State capital in ten large State-owned enterprises (SOEs) was discussed during a meeting between the government and relevant authorities on August 17.

Vietnam is expected to reap $3-4 billion from the divestments, which are to be conducted shortly.

Ten large SOEs

State holdings

Bao Minh Insurance Corporation (BMI)

50.7%

Vietnam National Reinsurance Company (VNR)

40.36%

Ha Giang Mineral Mechanics Company (HGM)

46.6%

Tien Phong Plastics Company (NTP)

37.1%

Vietnam Infrastructure Investment and Development Company (VIID)

47.6%

Binh Minh Plastic Company (BMP)

29.6%

Vietnam National Dairy Products Company (Vinamilk)

45.1%

FPT Corporation (FPT)

6.0%

FPT Telecommunications Company (FPT Telecom)

45.1%

Sa Giang Import Export Corporation (SGC)

50.17%

The divestment of State holdings was set in October last year under Official Correspondence No. 1787/TTg-DMDN, which required the State Capital Investment Corporation (SCIC) prepare plans to divest all State holdings in the ten entities.

The August 17 meeting is to settle detailed plans for enterprises where SCIC currently has holdings, especially for Vinamilk and BMP, which have reported impressive financial results over a long period.

The divestment has unsurprisingly attracted a lot of attention from both domestic and foreign investors.

According to the Deputy Director of Corporate Finance Department at the Ministry of Finance, Mr. Dang Quyet Tien, the enterprises are “special” and so divestment plans need to be conducted effectively.

“If the State holdings in the ten enterprises were sold at the same time it may overheat the market,” he was quoted as saying. “Prices may be squeezed as a result. Sales need to be held at an appropriate time so the market will not be overheated.”

According to investment insiders, the government will reap between $3 and $4 billion from the divestments.

MobiFone, the second largest mobile network operator in Vietnam, has seen few signs of its equitization process proceeding. In 2014 VNPT transferred ownership of MobiFone to the Ministry of Information and Communication (MIC). MIC said it would be equitized before the expected schedule of July 2016 but that deadline has now passed.

Deputy Prime Minister Truong Hoa Binh officially decided on August 2 to conduct a comprehensive inspection into the deal in which MobiFone purchased 95 per cent of the Audio Visual Global JSC (AVG).

No reason for the inspection was given but three questions have been posed relating to the deal: its value, the transaction method (cash payment or share swap), and why MobiFone chose AVG, given its subscriber numbers are the lowest among the three satellite TV providers in Vietnam - VTC, VSTV and AVG.

MobiFone is now a one member limited liability company, with the State holding 100 per cent of its charter capital of over $703 million. Last year its revenue reached VND36.9 trillion ($1.66 billion), for year-on-year growth of 8.29 per cent, while profits rose 1.1 per cent, to VND7.4 trillion ($333 million).

  • TAGS
  • SCIC
  • SOEs
  • Vinamilk
  • FPT
  • equitization
  • divestment
  • State holdings

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