Vietnam rakes in nearly $200 million from state firm sell-offs

By An Hong   June 7, 2016 | 01:57 pm GMT+7

Vietnam divested VND2.1 trillion from state-owned enterprises during the first five months of the year, the Finance Ministry said on Monday, adding approximately VND4.2 trillion ($187 million) to government coffers.

The government’s State Capital Investment Corporation (SCIC) has posted earnings of VND2.8 trillion so far this year by selling VND985 billion worth of shares at above book price.

Vietnamese authorities have been attempting to privatize state-owned enterprises (SOEs) for several years because they are seen as a drag on the country’s economic growth.

The government announced last year its plan to sell its stakes in 10 large SOEs, eight of which are listed on the Hanoi and Ho Chi Minh City stock exchanges, without giving a specific timeframe.

vietnam-records-187-million-from-selling-stakes-in-state-firms-during-jan-may

Investors have recently become more interested in buying stakes in state-owned companies mainly because they have long-term leases on “golden land plots” in some of the most sought-after locations in major cities. Photo by Reuters

FPT, the country’s leading IT firm, is among the state-owned companies that the government aims to fully divest from this year, according to a list released by the SCIC last week.

An SCIC official said the government’s investment arm will gradually divest from SOEs and save the best-performing companies for last.

The SCIC was set up in 2005 to manage state-owned enterprises. Its portfolio comprised 197 companies by December 2015, worth a combined VND20 trillion.

Last year, the SCIC divested from 120 enterprises, earning some VND4.4 trillion following initial investments of VND1.6 trillion.

Deputy Prime Minister Vuong Dinh Hue recently said the government plans to cut its stakes in state firms further by expanding the stock market and simplifying privatization procedures.

He added that more than 90 percent of SOEs have already sold off part of their stakes.

Vietnam is trying to accelerate share sales in SOEs that began in the 1990s as the government seeks to spur economic growth, which has shown signs of slowing down so far this year, and to counter the state budget deficit which has extended to $3 billion in the first five months of this year.