State-owned corporations lingering long over disinvestments
State-owned corporations lingering long over disinvestments
State-owned corporations have cited many reasons for delaying the sale of stakes to withdraw their capital from non-core business fields.
More profitable than unprofitable deals reported
The corporations have been requested by the government to reclaim the investment capital they injected into other businesses as soon as possible.
The enterprises have reportedly become bogged down in investment deals in business fields about which they have no deep knowledge. Therefore, they need to extract themselves from these investments and gather their strengths to focus on their core businesses.
Electricity of Vietnam (EVN), for example, has been urged to divest itself from a telecom company and real estate projects so as to focus on its main task of ensuring enough power for the national economy.
Vietnam Airlines, an air carrier, and PetroVietnam, an oil and gas company, have also been requested to withdraw capital from banks and other financial institutions.
However, the capital withdrawal process has been going very slowly. This has been blamed on the gloomy stock market and the weak liquidity of shares. Managers of the state-owned corporations have warned that the State would suffer a loss if selling stakes right now because of weak demand in the market.
Economists, however, have suggested that this was just an excuse the corporations cited to delay their sales of stakes. In fact, many corporations have succeeded with their divestiture efforts.
The 11 subsidiaries of the Vietnam Textile and Garment Group (Vinatex), for example, have earned VND248 billion from their sale of stakes in non-core enterprises, VND45.8 billion higher than they paid. The sale of ACB bank shares brought the biggest profit: the revenue was VND63 billion, while the purchase price was VND29 billion.
EVN also made a fat profit when transferring 1 million shares of Global Insurance Company to International ERGO at a price double its cost (VND26,000 per share vs. VND13,924 per share).
The Vietnam Post and Telecommunications Group (VNPT) reportedly made a profit of VND26.8 billion from its sale of stakes so far, while the Vietnam Rubber Group made a profit of VND23.5 billion from the sale of the 28 percent stake it held in Saigon Investment Corporation.
To date, the Southern Food Corporation remains the only enterprise reporting a loss for the shedding of its investments. The company sold off its stakes in three businesses at a loss, including a write down of VND34.7 billion from the sale of a bank’s shares.
Investments in non-core business fields still attractive
The fact is that many state-owned corporations have deliberately dragged their feet on the capital withdrawal process, because they still can make a profit with their investments in non-core business fields.
The government has released an “ultimatum”, mandating that the capital withdrawal process be completed no later than December 31, 2015. However, some corporations’ CEOs are asking for extensions.
Nguyen Ngoc Bao, President of Petrolimex, a petroleum product importer and distributor, said divestiture would badly affect the operations of its subsidiaries and lead to job cuts, which would have serious social consequences.
The rubber group has also cited this reason to ask for an extension of the deadline.
vietnamnet
