Group Interest Hinders SOE Privatization: Prime Minister

Privatization of state-owned enterprises is a must in 2017, said Prime Minister Nguyen Xuan Phuc.


      A worker of PV Maritime Shipyard, a subsidiary of PetroVietnam. Photo: pvshipyard.com.vn

To quicken the sluggish privatization process of state-owned enterprises (SOEs), Prime Minister Nguyen Xuan Phuc has asked ministries and agencies to clear obstacles, the biggest of which is group interest.

“Local interest is the biggest hurdle to the equitization process and undermines the motivation for speeding up equitization and stake divestment,” the prime minister said at a conference on reshuffling SOEs in the 2016-2020 period on December 6. 

Tran Quang Nghi, chairman of Vietnam National Textile and Garment (Vinatex) – which undertook privatization in 2014, admitted that the delay in SOEs equitization is attributable to a lack of resolve on the part of executives themselves.

SOE leaders tend to resist privatization as they sit on state assets and they just need to safeguard them. “This is an easy task,” Nghi added.

                                                  PM Nguyen Xuan Phuc. Photo: VGP

PM Nguyen Xuan Phuc stressed the need to make a proper roadmap and methods for the equitization of SOEs for better business management as well as creating a level playing field for the growth of private enterprises. The participation of more shareholders also helps reduce corruption.

SOEs now manage over 5,000 trillion dong ($220.3 billion) in assets. Selling shares in SOEs will also raise funds for major infrastructure works amid tight budget and high public debt, he said.

Among the tasks for next year, the PM stressed the need to define sectors such as national defense, power and food in which the government needs to keep control while withdrawing entirely or partly from the remaining fields.

According to the Steering Committee for Business Renovation and Development, as many as 4,460 companies were privatized between 2001 and 2015, adding to 48 in the first ten months of this year.

The number of SOEs fallen notably over the past 15 years, from some 6,000 in 2001 to 1,369 in 2011 and 718 as of October this year.

The state-owned corporate sector accounts for 0.67% of the total number of companies in Vietnam, but contributes 28.8% of the country’s GDP, compared to 17.9% of foreign-invested firms and 11.8% on the non-state sector.

Tuan Minh / BizLIVE