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Sabeco sale to fund infrastructure

Released at: 19:35, 25/12/2017

Sabeco sale to fund infrastructure

Photo from sabeco.com.vn

Government decides to put proceeds into infrastructure investment rather than debt repayments.

by Duy Anh

Vietnam will not use the $5 billion gained from selling 54 per cent of Saigon Alcohol Beer Beverage Corp. (Sabeco) this month for debt repayment but investment and development spending instead, according to an official from the Ministry of Finance (MoF).

Mr. Dang Quyet Tien, Head of the Enterprise Finance Department at MoF, told a press conference on December 25 that Vietnam will transfer all the gains from the Sabeco sale to a State-owned enterprise (SOE) equitization fund managed by the ministry.

The fund, which is put in an open account at the State Treasury that belongs to the State budget, ensures the money will be used for the right purpose. “The funds will be used following the National Assembly’s resolutions on infrastructure and development and be audited by State Audit of Vietnam and supervised by the State Bank of Vietnam (SBV),” he said. “All the interest generated when the fund becomes idle will be added in to increase its size.”

This is confirmation that divestment from SOEs in recent times is a way for Vietnam to partly fund its huge demand of infrastructure after it graduated to middle-income status and is no longer eligible for many of the low-cost loans it once qualified for as a lower middle-income country.

According to the Asian Development Bank (ADB), Vietnam already spends 5.7 per cent of its GDP on infrastructure - the highest figure in Southeast Asia and ahead of India - but still falls short of China’s 6.8 per cent. The bank estimates that emerging economies in the region will need to invest as much as $26 trillion to 2030 to build transport networks, boost power supplies, and upgrade water and sanitation facilities.

Vietnam needs about $480 billion to 2020 for infrastructure, including eleven power plants with total capacity of 13,200 MW, and about 1,380 km of highways, according to the government.

Last week, a unit of Thai Beverage (ThaiBev) outlaid nearly VND110 trillion ($4.8 billion) on acquiring nearly 54 per cent of Vietnam’s largest brewer. Vietnam Beverage emerged as the only institutional buyer for a majority stake as global brewing groups stayed out of the auction.

The State, with a 36 per cent holding in Sabeco - enough to retain veto rights - will entirely divest from the brewer at a suitable time. “The government has declared it will not hold any stake in Sabeco,” Mr. Tien said.

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