Land issues slow privatization bid to a crawl

By Nguyen Ha   November 22, 2018 | 09:59 am GMT+7
Land issues slow privatization bid to a crawl
Labourer of a state-owned bridge building company works at a construction site of a bridge in Hanoi. Photo by Reuters/Kham

The privatization of state-owned enterprises is happening at snail’s pace over determination of land ownership.

From early this year to September 10, Vietnam finished privatizing only 11 state-owned enterprises (SOEs), and it is most likely that the whole year's privatization target will be missed, Dang Quyet Tien, head of the Corporate Finance Agency under the Ministry of Finance, told a recent meeting in Hanoi.

Prime Minister Nguyen Xuan Phuc in July last year said Vietnam should finish privatizing at least 85 this year. These included 21 that had been left over from last year’s list.

Tien blamed the extremely sluggish pace on the long process of determining and building legal records of land owned by state firms.

Tien said that in order to privatize an SOE, its parent ministry needs to determine all assets of the firm including land.

However, many companies have already undergone several transitions in the past, followed by changes in papers, seals, and asset certificates, and sorting through them is a complicated task.

There are some land lots for which ownerships is identified simply on a handwritten sheet of paper, and there is no other record, he said, citing the case of Vietnam Investment Construction and Trading Joint Stock Corporation (Constrexim Holding), which the Ministry of Finance has not been able to privatize since 2007.

Speaking at a meeting on SOEs in Hanoi Wednesday, PM Phuc highlighted the delay in the privatization process, saying that SOEs have failed to lead the economy and be part of the high-tech revolution.

He stressed that inspectors should keep tracking the SOEs as he was well aware that many of them have invested in a wide pool of non-core businesses and are not willing to change themselves.

The PM said that many SOEs have "completely transformed" after privatization, like the Vietnam National Seed Joint Stock Company (Vinaseed), which saw its revenue and profit increased by 20 times and 40 times respectively, while dairy giant Vinamilk’s revenue and owner's equity rose by 10 and 13 times respectively.

He said he wanted the government to divest from all SOEs that the state does not actually need to be involved in by 2020, and strictly handle SOEs that have already been privatized but have not listed themselves on the stock exchange.

By December 31 this year, all ministries and departments should prepare a roadmap for SOE privatization, he noted.

In February, the government had set up set up a committee to manage around $220 billion worth of government assets in companies as part of efforts to boost privatization.

The Committee for State Capital Management at Enterprises would have more comprehensive tasks than the State Capital Investment Corporation (SCIC), Vietnam’s main state investment arm that holds shares in firms like dairy giant Vinamilk, the country’s biggest listed firm.

Many state shares, especially in SOEs, are under the management of different ministries, causing further complications and delays in selling stakes.

Data compiled by Bloomberg earlier this month showed the privatization of SOEs has slowed down with the government unable to attract buyers.

Seventeen auctions worth around $401 million have been cancelled this year.

Bloomberg pointed out it was not a case of investors no longer being interested in Vietnam, but that they find private firms much more attractive, with greater transparency in the process.

As of September 10 this year, Vietnam finished privatizing only 11 state-owned enterprises (SOEs), and it is most likely that the whole year's privatization target will be missed, Dang Quyet Tien, head of the Corporate Finance Agency under the Ministry of Finance, told a recent meeting in Hanoi.

 
 
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