'Interest groups' stifle stocks at Vietnam's state-owned brewers: investor association

By Anh Minh October 5, 2016 | 08:20 pm PT

An image of a can of 333 beer is seen at the Sabeco office in Ho Chi Minh city, Vietnam October 5, 2016. Photo by Reuters/Stringer

The slow crawl to the stock market cost Vietnam an estimated $15 billion.

“Interest groups” allegedly put the brakes on the listing of several state-owned enterprises following their initial public offerings, costing the government of Vietnam an alleged $15 billion.

Two of those companies are key beer producers -- Saigon Beer, Alcohol, Beverage Corp. (Sabeco) and Hanoi Beer Alcohol and Beverage Joint Stock Corp. (Habeco), the Vietnam Association of Financial Investors (VAFI) said in a letter sent to Prime Minister Nguyen Xuan Phuc on Wednesday.

The letter attributed the delay to the limited capacity of the individuals appointed to the brewers' boards, a lack of transparency in their corporate management and interference in the listing of public shares.

“Many interest groups have maliciously attempted to conceal company information in order to seize control of equitized state-owned enterprises. In doing so, they manage to seize assets from private shareholders and the State, despite the fact that they do not hold a majority of shares in the companies,” said VAFI.

VAFI alleged that the “interest groups” achieve this feat by lowering the price of company shares and then buying out the state's stake through brokered transactions or auctions.

Unlike most other countries, Vietnam treats initial public offerings (IPOs) and listings as two separate processes that are sometimes separated by years.

Legally speaking, companies are required to list shares on the local market within a year of an IPO. However, the maximum fine for violating that rule is a mere VND150 million (roughly $7,000). The country also prohibits the listing of "unqualified" stocks, a rule that may be used to legitimize delays.

In its recent letter to the Prime Minister, VAFI listed several signs that leaders at government ministries sought to postpone the listings. The group said certain officials had appointed unqualified relatives to key positions in targeted companies, doing serious damage to the trust investors placed in the enterprises.

The association called on the government to punish any state representative or ministry leader involved in delaying the listings.

This isn't VAFI's first such letter.

Another correspondence posted on the group's website, dated June 13, asked former Minister of Industry and Trade Vu Huy Hoang to explain why he appointed his son Vu Quang Hai to key positions at Sabeco, Vietnam's biggest brewer.

Former Minister of Industry and Trade Vu Huy Hoang at a National Assembly meeting in 2013. Photo by VnExpress/Hoang Ha

The ministry managed to hold onto the government's stake in Sabeco eight years after its IPO.

In its June letter, VAFI alleged that former minister Hoang delayed transferring the government’s shares in Sabeco to the State Capital Investment Corporation (SCIC), a fund created in 2005 to manage state assets.

VAFI also claimed Hoang had delayed Sabeco's listing on the stock market, enabling him to appoint his son and his secretary to senior positions at the brewing company.

Hoang once served as a cabinet member in former Prime Minister Nguyen Tan Dung’s government and stepped down in April. He was Minister of Industry and Trade for two tenures, from August 2007 to April 2016.

During a briefing held on Tuesday, Chairman of the Office of the Government Mai Tien Dung announced that the current prime minister ordered the Ministry of Industry and Trade to list the two brewers on the stock markets by the end of this year.

On Wednesday, Sabeco's CEO Le Hong Xanh told Reuters that the company's listing could come as early as late November. Vice Minister of Industry and Trade Hoang Quoc Vuong added that the ministry will submit a report on the Sabeco appointment to the prime minister during the same month.

Xanh's comments come a day after Deputy Industry and Trade Minister Hoang Quoc Vuong said listings of Sabeco and smaller brewer Habeco could be delayed until the first quarter of 2017.

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