The Vietnamese government plans to cut the number of state-owned companies from 240 to 103 in the next four years following a decision recently signed by Prime Minister Nguyen Xuan Phuc.
The country is determined to continue privatizing state-owned enterprises as the government seeks to spur the economy to counter a widening budget deficit.
However, it will retain control of critical lifeline industries including businesses involved in national security and defense, gold trading and the lottery, according to the decision.
The companies involved in this fresh round of sell-offs include Agribank, the country’s biggest bank by assets, and state coal mining group Vinacomin. The public stakes in these state-owned conglomerates will shrink to 65 percent from the current 100 percent ownership by 2020.
Also according to the plan, the State Bank of Vietnam will hold onto control of troubled lenders Global Petro Bank, Vietnam Construction Bank and Ocean Commercial Bank for the next five years.
In an attempt to shore up the country's fragmented banking sector, the central bank decided to nationalize the three banks in 2015 after they failed to restructure and showed signs of serious risks and weak management.
The country’s latest effort to offload shares in state-owned companies comes after the government divested from major listed companies such as dairy firm Vinamilk, IT giant FPT and insurer Bao Minh, along with the country’s biggest breweries Sabeco and Habeco.
It is estimated that the government could rake in more than $7 billion from successful exits from these companies.
The proceeds from the divestments will be partially funneled into existing state-owned enterprises while the remainder will be used to boost infrastructure and fund social welfare.
Statistics show that SOEs make up nearly 40 percent of total investment in the country but contribute only a third to Vietnam’s gross domestic product.
The World Bank suggested that because Vietnam has “too many” SOEs, the government should only retain its stake in about 20 “parent” companies by 2035.