Decree also limits areas where newly established SOEs can operate
Vietnam will ban state-owned enterprises from making fresh investments in real estate, banks, insurance firms and stock markets from December, according to a government decree issued this week, as the country continues its efforts to reform its troubled state sector.
State-owned businesses wishing to invest in these areas must obtain permission from the prime minister, according to the decree, and will have to divest their current holdings. It said that those SOEs whose core business is real estate will be allowed to invest in developing projects.
Vietnamese authorities have been in the process of reforming state-owned enterprises for several years. They are often inefficient and economists and policy makers view them as a drag on the country’s economic growth. The pace of privatization has fallen behind schedule, however, due to the lack of a private-investor base and the depth of the problems affecting some of the more debt-laden firms.
The decree also defines the areas where newly established SOEs can operate, limiting them to providing essential public services, defense and security, national power grids, nuclear-power plants and money printing.
Separately, the government said on Wednesday it will sell its stakes in 10 local public companies, including the country’s largest dairy company, Vietnam Dairy Products JSC, and the software maker and electronics retailer FPT Corp., in a move that could help it raise billions of dollars.
Deputy Prime Minister Vu Van Ninh said the state-run State Capital Investment Corp., or SCIC, would decide the timing of the sales.
The government, through SCIC, now holds a 45.1% stake in Vinamilk and the sale of that stake alone would reap around $2.4 billion, according to a central bank statement.
“There is a need for the government to sell its stakes in these companies, which operate in the areas where government control is not needed,” said economist and former government economic adviser Le Dang Doanh.
Mr. Doanh said Vietnam is under pressure to speed up the sluggish privatization of SOEs as the country further integrates with the global economy. He noted that the country has recently signed several free-trade agreements and has completed negotiations on the U.S.-led Trans-Pacific Partnership trade agreement.
Vietnam managed to privatize 94 SOEs in the first nine months of this year, one-third of the total it plans to privatize in the entire year, according to the Ministry of Finance.
Source: http://www.wsj.com/
Key words: Vietnam, to Ban, State-Owned Firms, From Investing in Certain Sectors
