Vietnam’s Equitization Plans: Opportunities and Challenges for Investors
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- The Vietnamese government has a plan to restructure its economy through privatizing SOEs by equitizing and divesting state capital in more than 400 enterprises by 2020.
- To incentivize FDI in the SOEs, the government has been making several regulation changes, creating exciting opportunities for foreign investors.
On August 15, the Prime Minister issued Decision No. 26/2019/QD-TTg, approving a new list of state-owned enterprises (SOEs) that should be equitized by the end of 2020. The list adds 93 new SOEs to the original plan of 406 SOEs to be equitized by the end of this year.
Since 2016, only 162 SOEs have been equitized with a total value of over US$8.8 billion
Major Divestments in 2020
The new additions to the list include new SOEs from the agriculture and forestry sectors. In particular, the Vietnam Bank for Agriculture and Rural Development (Agribank) and Vietnam National Coal – Mineral Industries Holding Corporation Limited (Vinacomin) are included in the list of SOEs to be equitized by the end of 2020. Along with these two major SOEs, the list also includes the Vietnam Northern Food Corporation and the Mineral One Member Co., Ltd. With all four of these enterprises, the government has decided to hold at least 65 percent of the charter capital.
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Other major divestments planned by 2020 include at least 35 percent in Vietnam Post and Telecommunications Group (VNPT), MobiFone Corporation (MobiFone) and Vietnam National Chemical Group (Vinachem).
In the energy and electricity sector, the state plans to divest at least 50 percent in Vietnam Electricity Power Generation Corporation 1 (EVN Genco 1) and Vietnam Electricity Power Generation Corporation 2 (EVN Genco 2).
Under this decision, ministers and chairpersons of provincial people’s committees and council members of the SOEs will be responsible for designing equitization plans. The progress will be reported to the Ministry of Planning and Investment, the Ministry of Finance and the Steering Committee for Enterprise Innovation and Development before submission to the prime minister.
This is an article appearing in Vietnam Briefing, a subsidiary of Dezan Shira & Associates. For the latest economic, regulatory and business news from Vietnam, visit vietnam-briefing.com.