Vietnam privatization efforts bogged down in new rules

The equitization of state-owned enterprises (SOEs) has reached only 27.5 percent of the government’s 2017-2020 plan, according to a report by the Steering Committee for Enterprise Renewal and Development.

Divestment of state capital from enterprises is also way behind, at 88 of 403 enterprises planned for the 2017-2020 period, or 21.8 percent of plan in the last two and a half years.

One of the problems cited by the enterprises is that they have to adapt to the Ministry of Finance's new regulations which require companies to make clear the usage of all land plots they and their subsidiaries possess as well as plans to use them in the future before equitizing. As such, it would not be possible to reach government targets this year.

Tran Manh Hung, chairman of Vietnam Posts and Telecommunications Group (VNPT), said the group's evaluation should have been completed last year. However, it has completed only 95.8 percent of dispositions of 4,270 land lots across the country as planned, so VNPT cannot get approval to equitize.

Without the approval, VNPT cannot hire consultants to value the business or costs of the equitization process. "Consultants’ work usually takes nine months, so the company will at best complete its valuation in December 2020, equitization will take place in 2021," Hung said.

Bui Thi Thanh Tam, general director of Northern Food Corporation, said that her company had virtually completed land and debt procedures by the end of the first quarter of 2019. 

However, a new regulation was enacted by the Ministry of Finance, requiring the enterprise to process an additional 248 pieces of land. "We are not sure we can even finish the required land dispositions by the end of 2019," said Tam.

At a recent meeting on the issue, Deputy Prime Minister Vuong Dinh Hue admitted that the state has issued more stringent regulations in equitization, such as directing the State Audit to inspect SOEs. He said this was needed to ensure transparency and compliance, so it took longer for enterprises to equitize.

Additionally, the deputy PM pointed out that so far, 796 SOEs have been equitized but not listed on the stock market. According to Pham Hong Son, deputy chairman of the State Securities Commission, many SOEs are not listing because they have large debts and are afraid to go public. 

Last month, National Assembly members criticized several companies, saying group interests had interfered with the equitization process, and authorities were slow to penalise violations.