PM calls for faster privatization of state-owned firms

By Anh Minh July 12, 2016 | 05:03 pm PT

Vietnam’s Ministry of Industry and Trade is considering proposals to sell state ownership in two leading state-owned beverage firms.

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Prime Minister Nguyen Xuan Phuc in a meeting on Tuesday asked Industry and Trade Minister Tran Tuan Anh to speed up the sales of state ownership in state-owned enterprises (SOEs) which are under the management of the ministry.

“State ownership in big companies like Vinamilk, Habeco and Sabeco must be sold on a transparent basis to gain money for the State,” Phuc said. He added that the sales of government’s shares in state-run companies in sectors other than power and food should be accelerated in the coming time.

Private companies should be given priority for development, along with the divestment of government’s shares in the state-run firms, the prime minister said.

The plans to sell state ownership in Saigon Beer, Alcohol and Beverages Corporation (Sabeco) and Hanoi Beer, Alcohol and Beverages Corporation (Habeco) are being weighed by the Ministry of Industry and Trade. The government may reduce its ownership in the two companies to 50 or even zero percent, Minister Anh said at the meeting.

The Vietnam Association of Financial Investors (VAFI), a local non-profit organization, in June this year also urged the Ministry of Industry and Trade to speed up the sales of state ownership in the two leading beverage firms.

Beer production in Vietnam. Photo by VnExpress

In May this year, a report by the Vietnam Beverage Association showed that Sabeco accounted for 46 percent of the domestic market share. Sabeco said state ownership in the firm will be reduced to 36 percent from 89.59 percent if the government approves its scheme.

The state ownership, represented by the Ministry of Industry and Trade, in Habeco is currently at 82 percent of the company’s charter capital.

The board of directors of Vietnamese dairy firm Vinamilk has formally approved the removal of its 49 percent foreign ownership cap, paving the way for an expected flood of interest from overseas investors in a local company valued at $7.85 billion.

The decision to open up Vinamilk is made more significant by the planned divestment of the government's 45 percent stake, held by the State Capital Investment Corporation (SCIC) and worth $3.5 billion.

Vietnam’s public debt nearly doubled from 2011 to 2015 to reach VND2,608 trillion ($116 billion), or 62.2 percent of gross domestic product (GDP). Meanwhile, the National Assembly has set a ceiling for public debt at 65 percent of GDP.

Ongoing privatization of SOEs is among the measures expected to ease lingering public debt pressure.

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