SOEs facing divestment to be made public soon

In late August, Vietnam Posts and Telecommunications Group (VNPT) and Electricity of Vietnam (EVN) will divest their capital in three major companies with a total charter capital amount of VND1 trillion ($44 million). RELATED CONTENTS: EVN banned from investing in property, banking sectors VNPT to divest capital from Maritime Bank Free wifi at festival spots in major cities SK Telecom to lose rights to coveted bandwidth PM tells VNPT to get ready for equitisation EVN divests from non-core businesses Saigon Postel Corporation On August 29, VNPT will sell all 10.26 million of its shares, equal to 8.53 per cent of all outstanding shares in Saigon Postel Corporation (SPT), at the starting price of VND12.487 ($0.55) per share. SPT was founded in 1995 and operates mainly in telephone, internet, and postal services. SPT’s direct business units includes Saigon South Telephone Centre (SST), S-Telecom, and Saigon Post (SGP), among others. SPT’s charter capital is currently VND1.2 trillion ($52.8 million), with seven major stakeholders controlling 77.08 per cent of the total stakes. Reports showed that SPT has made profit in recent years, however debts from the S-Fone mobile network project (which ceased operations in 2012) has kept the company short on capital for operation as well as expansion. By the end of…... [read more]

Despite disconcerting global political events causing turmoil and affecting capital flows around the world, Vietnam remains an attractive investment destination-albeit in need of a greater push to overtake last year’s stellar performance. Le Viet Anh Phong, head of Financial Advisory Services at Deloitte Vietnam, talked with Khanh Linh about what could provide this much-desired push and how domestic companies can increase their chances of bagging mergers and acquisitions. What do you think about the mergers and acquisitions (M&A) trends in Southeast Asia and particularly Vietnam in the future? 2016 was peppered by unsettling global developments, with Brexit, the US election, and the slow recovery of oil prices. In the first six months of 2017, we have witnessed the return of many investors from Europe and North America into Southeast Asia. Together with investors from other Asian developed countries, such as Japan, South Korea, and China, among others, they have made Southeast Asia one of the most vibrant M&A markets in the Asia-Pacific region. Vietnam, in particular, continues to be an attractive M&A destination. Though transaction values in the first six months show no signs of a breakthrough, the market is still very busy with a myriad of M&A transactions focusing on small- and medium-sized enterprises. If the larger deals, such as Sabeco, Habeco, Vinamilk, Airports  Corporation of Vietnam, and PV Oil, “detonate” as scheduled, the Vietnamese M&A market in 2017 may completely overtake the record of…... [read more]

While a renewed focus on equitizing State-owned enterprises (SOEs) has been exhibited following the leadership transition in April last year, equitization alone is not a short-term solution to reducing the government’s fiscal deficit. Rather, meeting the government’s 3.5 per cent deficit target for 2017 would have to come on the back of reduced government expenditure, which HSBC in its latest report believes is unlikely, given the government’s growth targets. It has been consistently framed in recent statements by policy makers that the sale of SOEs is viewed as a means to both increase fiscal revenues and reduce government expenditures.  One of the highlights, Decision No.58, signed by Prime Minister Nguyen Xuan Phuc on December 28, 2016, pushed for further divestment of State capital in existing SOEs by eliminating or reducing the minimum level of ownership that the government holds in certain industries. What makes Decision 58 a positive move and deserving of full recognition is the fact that it provides a clearer roadmap for equitization by announcing a total rate of State ownership in specific companies (not just broadly by sectors) that are set to be equitized. As the new sense of urgency in SOE equitization is mainly driven by rising public debt, increased equitization leading to greater revenues and alleviating the government’s fiscal burden is no easy task given the remaining challenges in SOE reform and the recent trends in government expenditure. SOE reform has primarily focused on targeting the sale of minority stakes, while the government retains majority…... [read more]

NDO – Deputy Prime Minister Vuong Dinh Hue has requested that the Ministry of Planning and Investment (MPI) promptly submits a decision publicising the list of State-owned enterprises (SOEs), whose State capital is to be sold during the 2017-2020 period, to the Prime Minister for signing. On Wednesday morning, Deputy PM Hue hosted a working session with the MPI, along with the Ministries of Finance and Justice and the Steering Committee for Business Renovation and Development, to collect comments on the construction of the list. MPI Deputy Minister Dang Huy Dong said that the PM’s Decision No. 58/QĐ-TTg on criteria for classifying SOEs and Decision No. 707/QĐ-TTg on restructuring SOEs with a focus on State economic corporations during 2016-2020, all assigned the MPI to build a list of enterprises with State capital that need to be sold in the 2017-2020 period. In the past few years, the sale of State capital was implemented by the relevant ministries and localities in accordance with current regulations. To date, the preparation by the PM for a comprehensive list of SOEs that will make divestment during 2017-2020 is a necessity in order to secure the proceeds from divestment to be distributed to medium-term investment projects, acting as a tool to monitor and facilitate the selling of State capital carried out by the concerned ministries and localities, thus accelerating the pace of divestment. Since the beginning of the year, the MPI has reviewed and consulted numerous ministries and localities to make a list and determine…... [read more]

As State Capital Investment Corporation gets ready to sell 3.3 per cent of its shares in Vinamilk, the market expects to see a different outcome from last year’s unsuccessful bidding. Investors expect improvements in Vinamilk's upcoming share sale         (Photo: Le Toan) This October, State Capital Investment Corporation (SCIC) will divest 3.3 per cent of its stake in Vinamilk, the largest Vietnamese dairy firm ruling over more than half of the market. The state investor wants to earn at least VND7 trillion ($308 million) from the withdrawal. The announcement has set the market abuzz, not only thanks to Vinamilk’s appeal as a fast-growing firm, but also due to lingering concerns about SCIC’s auction style. Last December, the state investor offered 9 per cent of Vinamilk’s shares and garnered significant interest from investors. However, at the end, only Thai-owned Fraser & Neave (F&N) joined the auction and bought 5.4 per cent of the shares. The rest remained unsold. According to experts at the time, SCIC made a number of mistakes that led to the poorly arranged offer. First, the auction took place near the Christmas and New Year holidays, which made it difficult for global investors to join. Second, the offering price was VND144,000 ($6.33), much higher than Vinamilk’s market price at the time. Moreover, advisors in the deal reckoned that they were not given sufficient time to carry out the book-building, which is vital…... [read more]

Deputy PM Vuong Dinh Hue on August 15 in Ha Noi received Chief Executive and President of AIA Group Limited Ng Keng Hooi. Deputy PM Vuong Dinh Hue receives Chief Executive and President of AIA Group Limited Ng Keng HooiHa Noi,  August 15, 2017 At the reception, Ng Keng Hooi hailed the Vietnamese Government’s efforts to improve local investment and business climate over the past years and described Vietnam as a promising market for financial investors. AIA will continue to invest in Viet Nam’s long-term G-bonds and pay heed to life insurance in the country, he said. AIA is the largest independent publicly listed pan-Asian life insurance group – with a presence in 18 markets across the Asia-Pacific region. In turn, Deputy PM Vuong Dinh Hue highlighted opportunities for AIA Group Limited to invest in Viet Nam’s potential life insurance market. He told his guest that the Vietnamese Government will adopt more proper policies to make it easier for businesses, including AIA, to become involved in the local insurance market.  Mr. Hue also called on AIA and other life insurance companies to diversify their products so as to meet demands of Vietnamese customers.  The Deputy PM suggested the group participate in Viet Nam’s derivatives market, saying AIA will have more changes to expand their financial investment in the country as the Vietnamese Government will take a score of measures to restructure the financial and banking sectors and equitise State-owned enterprises. Source VGP ... [read more]

Prime Minister Nguyen Xuan Phuc has called for an increase in credit growth to 21 per cent this year to help the country hit its economic growth target, potentially adding to concerns over the pace of new lending. The Prime Minister told a government meeting last weekend of the goal, emphasizing the importance of hitting the 6.7 per cent GDP growth target for the year. Data from the General Statistics Office showed that credit growth during the first half was 7.5 per cent compared to a year ago; the highest in six years. Meanwhile, State Bank of Vietnam (SBV) Governor Le Minh Hung said that credit growth at a pace of 9.06 per cent was seen as at June 30 compared to the end of 2016. In February, the central bank set a 2017 credit growth target of 18 per cent, and there has been no announcement that the official target has been increased. In July, the SBV sprang a surprise on markets by reducing the refinancing rate, rediscount rate, overnight electronic interbank rate, and the rate of loans to offset capital shortages in clearance between the central bank and domestic banks by 25 basis points. The cuts, which come three years after the previous move, reduced the refinancing rate to 6.25 per cent and the rediscount rate to 4.25 per cent and was aimed at stimulating the pace of economic growth towards the 6.7 per cent target for the year. Few would question whether there was room to cut…... [read more]

NDO/VNA – Deputy Prime Minister Vuong Dinh Hue has stressed opportunities for AIA Group Limited to invest in Vietnam’s potential life insurance market. Deputy PM Vuong Dinh Hue Hue told Ng Keng Hooi, Chief Executive and President of AIA Group Limited, in Hanoi on August 15 that the Vietnamese Government will work harder to raise public awareness of life insurance and issue more relevant policies to make it easier for businesses, including AIA, to participate in the local insurance market. The Deputy PM also called on AIA and other life insurance companies to diversify their products in order to meet demands of Vietnamese customers. He suggested that the group join Vietnam’s derivatives market, expressing that AIA will have more changes to expand their financial investment in the country as the Vietnamese Government will employ an array of measures to restructure the financial and banking sectors and equitise State-owned enterprises. Appreciating AIA’s engagement in Vietnam’s Government bond market with tenures ranging from 20-30 years, Deputy PM Vuong Dinh Hue noted his hope that the group will pour more capital resources into the market. For his part, Ng Keng Hooi applauded the Vietnamese Government’s efforts to improve local investment and business climate over the past years and described Vietnam as a promising market for financial investors. AIA will continue to invest in Vietnam’s long-term G-bonds and pay attention to life insurance in the country, he said. AIA is the largest independent publicly listed pan-Asian life insurance…... [read more]

There is a new sense of urgency in Vietnam to equitize state-owned enterprises (SOEs) and use the money raised from public offerings to alleviate the government’s fiscal burden, HSBC said in a new report on the country's economic prospects for August. Equitization is the term Vietnam uses to describe the process of issuing shares to partially privatize state-owned businesses in which the government will still hold the majority stake. Vietnam’s policymakers, in recent statements, have framed the sale of SOEs as a means to both increase fiscal revenue and reduce government expenditure, the London-based lender said. Late last year, Prime Minister Nguyen Xuan Phuc signed off on a decision which pushes for further divestment of state capital in existing SOEs by eliminating or reducing the minimum level of ownership that the government holds in certain industries. The decision provided a clearer roadmap for equitization by saying that the state will equitize 137 SOEs and sell its entire stakes in 103 firms. The Ministry of Finance said in June that the country’s public debt, which includes central government debt, government-backed loans and local government debt, may reach the ceiling set by the legislative National Assembly of 65 percent of gross domestic product (GDP) from 2017-2018. Assuming that economic growth hits 6.7-7 percent this year, public debt will account for 64.8 percent of GDP, the ministry projected. Vietnam has set an economic growth target of 6.7 percent this year, but many experts call it too ambitious. Deputy Prime Minister Vuong Dinh…... [read more]

Vinamilk is one of the divested enterprises this year (Photo: tapchitaichinh.vn) Hanoi (VNA) - Seven State-owned enterprises’ (SOEs) equitisation plans were approved in July, bringing the total number for the first seven months of 2017 to 26. The Corporate Finance Department under the Ministry of Finance reported that the total real value of these 26 enterprises is 71.88 trillion VND (3.16 billion USD), of which 18.3 trillion VND belongs to the State. As per the approved plans, the 26 enterprises have a combined charter capital of around 22.63 trillion VND, of which the State holds 11.06 trillion VND, shares worth 6.5 trillion VND will be sold to strategic investors, 156 billion VND to the enterprises’ workers, 16 billion VND to trade unions, and 4.87 trillion VND will be put up for auction. During the reviewed period, SOEs divested almost 3.7 trillion VND, bringing in around 15.77 trillion VND. According to the department, the equitisation process of SOEs has yet to meet expectations. [Equitisation of State-owned enterprises remains sluggish] To speed up equitisation for the rest of the year, the Ministry of Industry and Trade has to accelerate the sale of State-owned capital in Hanoi Beer Alcohol and Beverage Joint Stock Corporation (Habeco) and Saigon Beer-Alcohol-Beverage Corporation (Sabeco), and ensure that it is complete before December 1.-VNA ... [read more]




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