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SOEs urged to divest from non-core sectors in 3 yrs
The state-owned enterprises, or SOEs, have been given three years to completely divest from non-core sectors, or those that have little relation to their main businesses.
Most SOEs in Vietnam have expanded their operations into the four main non-core sectors, including banking, realty, insurance, and securities.
Petrolimex, Vietnam’s largest fuel wholesaler, is currently running a namesake bank, while oil and gas giant PetroVietnam also invests in the transportation sector via its Dau Khi (oil and gas) Taxi brand. EVN, the country’s power monopoly, is infamous for its loss-stricken EVN Telecom.
But the Prime Minister has ordered that state-run enterprises submit their divestment plans by the end of the third quarter of this year.
As the PM has approved a list of the main and supporting industries that an SOE is allowed to operate in, any sectors that are not included in the guideline are considered non-core businesses, according to Dang Quyet Tien, deputy head of the Business Finance Agency under the Ministry of Finance.
For instance, he said: “If an SOE which mainly operates in the mechanic sector invests in the construction steel manufacturing and real-estate industries, it will have to divest from the said businesses.”
The official added that there are many divestment methods, including privatization, trading debts, acquisition and merger, or transferring capital to the State Capital Investment Corporation -- the agency in charge of managing and optimizing the use of state capital in SOEs.
“A recent example is that the government last year ordered EVN Telecom to merge with the military-run network operator Viettel,” he said.
Under this SOE restructuring plan, even those that are gaining profits from non-core sectors are forced to divest.
“Who knows if their operations will encounter trouble in the next three to five years?” said Tien.
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