State firms get ultimatum
State firms get ultimatum
The Government on Monday officially promulgated a resolution asking State-owned groups and corporations to complete a capital withdrawal from non-core investments by 2015.
Accordingly, these groups and corporations would have to ensure market principles, transparency and retain State-owned capital and assets at the highest level.
The Government said this was considered an important step to restructure State-owned enterprises, especially those invested in risky sectors such as real estate, banking, finance and insurance.
The groups and corporations would have to map out restructuring plans including capital divestment from non-core businesses. They would also have to withdraw investment from joint ventures and associated companies which do not relate to main businesses.
Organisations involved in these risky ventures have been required to promptly submit their plans for approval. Those involved in less risky investments would be allowed to divest gradually.
Ministries and provincial People's Committees have been assigned to consider and approve the capital withdrawal plans after receiving permission from the Ministry of Finance.
The ministry has been asked to send supervisors to State-owned groups and corporations to check their use of State capital and capital withdrawal processes during their restructuring.
Statistics from the Party Committee for Central Businesses Bloc showed that 21 out of 31 State-owned groups and corporations have expanded to non-core business areas, using a total of around VND22.6 trillion (over US$1 billion).
Among those, Song Da Holdings Group invested VND6.94 trillion ($330.47 million), VND2.3 trillion ($109 million) higher than its registered capital; PetroVietnam, around VND5.4 trillion ($257 million), accounting for 83 per cent of its capital and Electricity of Viet Nam (EVN), nearly VND2.1 trillion ($100 million). EVN has suffered a loss of VND10 trillion ($476 million).
Most of the groups and corporations said their non-core investments were at an acceptable rate of 30 per cent lower than their charter capital. The non-core investments of PetroVietnam account for 3.7 per cent of its charter capital, while the rate was 2.8 per cent for EVN.
Viet Nam National Coal and Mineral Industries (Vinacomin) recently decided to withdraw from its non-core investments, equalling VND115.8 billion ($5.5 million) in four companies including Viet Nam National Aviation Insurance Company, BIDV Expressway Development Company, Hai Ha Economic Zone Development and Investment Company and Long Thanh Development and Investment Joint Stock Company.
On the same day, PetroVietnam proposed to retain its holdings from 18-20 per cent in PetroVietnam Finance Corporation and PetroVietnam Insurance Corporation as they said the companies were necessary for its operations.
However, PetroVietnam's chairman Phung Dinh Thuc said the group would withdraw all investment from the companies if the Prime Minister does not approve the proposal
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