State-owned firms divest from non-core businesses
State-owned firms divest from non-core businesses
State-owned enterprises (SOEs) have divested nearly VND2.3 trillion (US$108 million) from non-core businesses in the first nine months of 2014, the Ministry of Finance has revealed.
The figure was 3.7 times higher than that of 2013 but accounted for only 10.2 per cent of the total proposed divestment of VND22.5 trillion ($1 billion) by 2015.
Sectors for divestment include securities, for $22.2 million to VND473 billion; banking, for $699.5 million to nearly VND14.9 trillion; insurance, for $72.3 million to VND1.54 trillion; and real estate, for $234.7 million to more than VND5 trillion.
Most of the divestment activities took place in the banking sector. However, since bank stocks had lost their previous attraction, SOEs had to forego profits by selling at prices lower than or equal to the initial purchase prices for these stocks.
For example, Viet Nam National Shipping Lines is trying to sell its 2.52-per cent stake in Maritime Bank for VND15,650, approximately the buying price several years ago.
After deducting initial investment costs, divesting costs and taxes, proceeds from SOEs' divestments will be recorded in their profits, the ministry said.
Meanwhile, proceeds from dividends made in 2013 will be added to the State budget. According to the State Capital Investment Corporation, the proceeds are worth VND19 trillion ($892 million), of which about 80 per cent will go to the State.
Under the sovereign schedule of equitising SOEs, a total of 432 corporations shall be privatised in 2014 and 2015. However, only 71 SOEs have been equitised so far this year.
The ministry explained that the remaining SOEs were large corporations with complex financial operations and large investors, and therefore divestments there required lengthy preparations.
"The major reason for the lateness is the unstable stock and real estate markets, causing unfavourable conditions for divestment and equitisation," the ministry revealed in a report. It added that the economy grew slowly, so the SOEs had failed to improve their operations and financial status.
The ministry said the total profit of SOEs in 2013 reached VND171.67 trillion ($8 billion), a 17-per cent year-on-year increase. However, parallel to that are doubtful debts that increased by 15.8 per cent to VND10.3 trillion ($483.5 million).
