Vietnam premier wants to finish privatizing 289 state-run firms by 2015

[Edison Chen]

Transforming state-run enterprises into joint stock companies is now a top priority of the government and it should be done by the end of this year, Vietnamese Prime Minister Nguyen Tan Dung requested Thursday.

Vietnam has targeted to transfer the state ownership in 432 businesses to private investors between 2014 and 2015, and finished doing so at 143 firms last year.

This means there is nine months left for 289 businesses to complete their privatization, the premier said as he chaired a meeting on the country’s plan for reforming state-owned enterprises in Hanoi.

“We should try to reach the target without making any mistakes or hasty decisions,” Dung said, adding that the state-run businesses “should not be bargained away.”

The prime minister said the state-owned enterprise reform plan has been going on the right track, even though there are still issues to solve.

“The performance of some state-run enterprises is still behind their potential, while some others are making losses and have poor productivity,” he elaborated.

The premier used mobile network operator MobiFone and beverage producer Sabeco as good examples of strong companies that will easily find buyers for their stakes.

“Investors are interested in MobiFone and Sabeco even though they were only allowed to acquire small stakes in them, whereas there are companies for which investors are hesitant to open their pockets due to their poor performance,” Dung said.

The Vietnamese government still holds stakes in many businesses which some industry insiders say do not need to be owned by the state.

“We should be brave enough to surmount this obstacle,” the premier said.

He also emphasized that no matter whether a company is owned by the state or private investors, it is in the end a Vietnamese firm.

“So did we lose anything [from the privatization]?” he said. “Everyone should join in developing the economy otherwise we will never be able to achieve victory.”

The premier said the private sector should be considered motivation for economic development and the government’s job is to “create conditions, develop infrastructure, and set the rules” for businesses operating in it.

Seaports, telecom giant to be privatized

Transport Minister Dinh La Thang also told the meeting that some positive results have been gained from privatization in the transportation sector.

Some transport businesses, and even hospitals, have improved performance after privatization, he said.

“Some chief officials worried that they would lose their managerial positions following the privatization, but the results have proven them otherwise,” the minister said.

The transport ministry is considering privatizing the country’s two largest seaports, the Hai Phong Port in the north and Saigon Port in the south.

The plan faces objections from some insiders that these facilities could become privately-owned ports, but Minister Thang said it is not an issue.

“What matters is whether we can have bigger and stronger ports, not whether they belong to the state or private investors,” he said.

Besides the Hai Phong and Saigon ports, the privatization plan for MobiFone, the country’s second largest mobile service supplier, is also receiving special attention from investors.

“The plan will be completed up to five months earlier than expected,” said Minister of Information and Communications Nguyen Bac Son.

The ministry-run MobiFone is slated to work with a consultant agency about the plan next month and will finish the evaluation task by the end of the third quarter of this year, according to the minister.

“Nearly ten foreign investors have shown interest in acquiring a stake in MobiFone,” Minister Son said.

Vietnam PM says need for speed in sluggish privatization drive | Business | Thanh Nien Daily
Vietnam premier wants to finish privatizing 289 state-run firms by 2015
Vietnam Struggles to Achieve Privatization Goals - Frontier Markets News - Emerging & Growth Markets - WSJ

 

[Jlaw]

The article is basically saying Vietnam is for sale.

 

[Edison Chen]

The article is basically saying Vietnam is for sale.

Vietnam is finally selling their national assets which theoretically owned by all her people.

After all the privatization work is done, VCP's prestige and reputation will be undermined by private business and foreign peers, since VCP has lost its control of Vietnam's economy, their orders are no more effective. So what's next? Mutil party system for Vietnam?

Also I suggest China should begin to find her agent in Vietnam.

 

[Skull and Bones]

Good work.

 

[Nike]

Vietnam on the road to became a capitalist country?

@Edison Chen @Shotgunner51 are PRC taking such drastic measure during your economy reformation way back then?

 

[Edison Chen]

Good work.

Capitalism and privatization are nothing wrong for those western countries which established their systems, laws and social beliefs on privatization at the very beginning in 15th century. They have such soils for privatizations to flourish. But they are wrong for countries like Vietnam, which can't handle the social structure changes by privatization, especially without a strong leadership by VCP, its economy size and strength is not strong enough to resist any foreseeable troubles like 1997 financial crisis, and when that happens, all the private agents are thinking how to protect their own interests, they will leave Vietnam betrayed. You know what, the most important thing perhaps is the property right, VCP is depriving its people of their property right over those SOEs, this is disaster.

 

[Nike]

Capitalism and privatization are nothing wrong for those western countries which established their systems, laws and social beliefs on privatization at the very beginning in 15th century. They have such soils for privatizations to flourish. But they are wrong for countries like Vietnam, which can't handle the social structure changes by privatization, especially without a strong leadership by VCP, its economy size and strength is not strong enough to resist any foreseeable troubles like 1997 financial crisis, and when that happens, all the private agents are thinking how to protect their own interests, they will leave Vietnam betrayed. You know what, the most important thing perhaps is the property right, VCP is depriving its people of their property right over those SOEs, this is disaster.

BTW, China should taking this chance to acquire strategic business holding firms in Vietnam, like their communication company, shipping company, freeway company, construction business company and so on. Use third hands party like Singaporean investment boards to pave the way

 

[Edison Chen]

Vietnam on the road to became a capitalist country?

@Edison Chen @Shotgunner51 are PRC taking such drastic measure during your economy reformation way back then?

China literally transferred some state run business ownership to the private, but most of them were enterprises that do not represent the interest of core industries. Actually before 1978 almost everything in China was state running, from a little store to huge groups like defense industry, telecom, banking, oil and grid what is vital to CPC's control of China. So, leave those not so important industries to the market, keep those essential ones, this is CPC's policy.

 

[Nike]

China literally transferred some state run business ownership to the private, but most of them were enterprises that do not represent the interest of core industries. Actually before 1978 almost everything in China was state running, from a little store to huge groups like defense industry, telecom, banking, oil and grid what is vital to CPC's control of China. So, leave those not so important industries to the market, keep those essential ones, this is CPC's policy.

almost sound like Indonesian, except we made some blunder in the past when selling our largest Telecommunication company (Telkom) to foreign entity (Singtel), but then through buy back efforts, the Indonesian government can bought back some large percentage of the share but still it's the grave mistake in which most of Indonesian politics trying to avoid till today.

China literally transferred some state run business ownership to the private, but most of them were enterprises that do not represent the interest of core industries. Actually before 1978 almost everything in China was state running, from a little store to huge groups like defense industry, telecom, banking, oil and grid what is vital to CPC's control of China. So, leave those not so important industries to the market, keep those essential ones, this is CPC's policy.

almost sound like Indonesian, except we made some blunder in the past when selling our largest Telecommunication company (Telkom) to foreign entity (Singtel), but then through buy back efforts, the Indonesian government can bought back some large percentage of the share but still it's the grave mistake in which most of Indonesian politics trying to avoid till today.

 

[Edison Chen]

BTW, China should taking this chance to acquire strategic business holding firms in Vietnam, like their communication company, shipping company, freeway company, construction business company and so on. Use third hands party like Singaporean investment boards to pave the way

We hope so!

almost sound like Indonesian, except we made some blunder in the past when selling our largest Telecommunication company (Telkom) to foreign entity (Singtel), but then through buy back efforts, the Indonesian government can bought back some large percentage of the share but still it's the grave mistake in which most of Indonesian politics trying to avoid till today.

It's a good move when Indonesian government is trying to repurchase the ownership. Even for some western countries, their government have some important companies kept in control.

 

[Shotgunner51]

Vietnam on the road to became a capitalist country?

@Edison Chen @Shotgunner51 are PRC taking such drastic measure during your economy reformation way back then?

That's the only correct direction, the state should back out from competitive markets, and focus on infrastructures. Nothing wrong on Vietnam's move, the devils are in the details, here are a few:

• What is critical infrastructure? An expressway is a critical infrastructure (natural monopoly) and hence should be state-owned, but the trucks and buses running on it are competitive markets. Other than that, an expressway can involve the private-sectors in many different ways, from gas stations, convenience stores to road maintenance, even the initial construction of it. Power grid is critical infrastructure, a power plant isn't. You may apply that analogy to seaports, or telecom.
• SOE's are not supposed to be efficient, they are supposed to be conservative, and safeguards macroscopic national interests. Involvement of private capital will change the culture, from macro-oriented to business-oriented. Private capital cares only financial reward, the upside is their presence will encourage financially-sound business decisions, the downside, well, don't expect any "patriotism" even if they are domestic.
  
• Shall the state retain control? Well ultimately it shouldn't, or don't start the process. However it will be applicable when the economy/sector is undergoing a timely transition, retaining control during the intermediate stages could stablize the transition process.
• SOE's usually enjoy monopolistic status, that's OK, but not after they become privatized. Ensure adequate preparations are made for anti-monopoly e.g. legislation, legal environment, contingency plans.

That pretty much sums up China's experience.

 

[Aepsilons]

Transforming state-run enterprises into joint stock companies is now a top priority of the government and it should be done by the end of this year, Vietnamese Prime Minister Nguyen Tan Dung requested Thursday.

Vietnam has targeted to transfer the state ownership in 432 businesses to private investors between 2014 and 2015, and finished doing so at 143 firms last year.

This means there is nine months left for 289 businesses to complete their privatization, the premier said as he chaired a meeting on the country’s plan for reforming state-owned enterprises in Hanoi.

“We should try to reach the target without making any mistakes or hasty decisions,” Dung said, adding that the state-run businesses “should not be bargained away.”

The prime minister said the state-owned enterprise reform plan has been going on the right track, even though there are still issues to solve.

“The performance of some state-run enterprises is still behind their potential, while some others are making losses and have poor productivity,” he elaborated.

The premier used mobile network operator MobiFone and beverage producer Sabeco as good examples of strong companies that will easily find buyers for their stakes.

“Investors are interested in MobiFone and Sabeco even though they were only allowed to acquire small stakes in them, whereas there are companies for which investors are hesitant to open their pockets due to their poor performance,” Dung said.

The Vietnamese government still holds stakes in many businesses which some industry insiders say do not need to be owned by the state.

“We should be brave enough to surmount this obstacle,” the premier said.

He also emphasized that no matter whether a company is owned by the state or private investors, it is in the end a Vietnamese firm.

“So did we lose anything [from the privatization]?” he said. “Everyone should join in developing the economy otherwise we will never be able to achieve victory.”

The premier said the private sector should be considered motivation for economic development and the government’s job is to “create conditions, develop infrastructure, and set the rules” for businesses operating in it.

Seaports, telecom giant to be privatized

Transport Minister Dinh La Thang also told the meeting that some positive results have been gained from privatization in the transportation sector.

Some transport businesses, and even hospitals, have improved performance after privatization, he said.

“Some chief officials worried that they would lose their managerial positions following the privatization, but the results have proven them otherwise,” the minister said.

The transport ministry is considering privatizing the country’s two largest seaports, the Hai Phong Port in the north and Saigon Port in the south.

The plan faces objections from some insiders that these facilities could become privately-owned ports, but Minister Thang said it is not an issue.

“What matters is whether we can have bigger and stronger ports, not whether they belong to the state or private investors,” he said.

Besides the Hai Phong and Saigon ports, the privatization plan for MobiFone, the country’s second largest mobile service supplier, is also receiving special attention from investors.

“The plan will be completed up to five months earlier than expected,” said Minister of Information and Communications Nguyen Bac Son.

The ministry-run MobiFone is slated to work with a consultant agency about the plan next month and will finish the evaluation task by the end of the third quarter of this year, according to the minister.

“Nearly ten foreign investors have shown interest in acquiring a stake in MobiFone,” Minister Son said.

Vietnam PM says need for speed in sluggish privatization drive | Business | Thanh Nien Daily
Vietnam premier wants to finish privatizing 289 state-run firms by 2015
Vietnam Struggles to Achieve Privatization Goals - Frontier Markets News - Emerging & Growth Markets - WSJ

Privatization will bring unprecedented benefits to the Vietnamese economy. The country will experience diversification in its industrial sector , and will align itself to the TPP apparatus , which will enable Vietnam to grow long term. There is nothing bad about privatization.






Potential Benefits of Privatisation
1. Improved Efficiency.

The main argument for privatisation is that private companies have a profit incentive to cut costs and be more efficient. If you work for a government run industry, managers do not usually share in any profits. However, a private firm is interested in making profit and so it is more likely to cut costs and be efficient. Since privatisation, companies such as BT, and British Airways have shown degrees of improved efficiency and higher profitability.

2. Lack of Political Interference.

It is argued governments make poor economic managers. They are motivated by political pressures rather than sound economic and business sense. For example a state enterprise may employ surplus workers which is inefficient. The government may be reluctant to get rid of the workers because of the negative publicity involved in job losses. Therefore, state owned enterprises often employ too many workers increasing inefficiency.

3. Short Term view.

A government many think only in terms of next election. Therefore, they may be unwilling to invest in infrastructure improvements which will benefit the firm in the long term because they are more concerned about projects that give a benefit before the election.


4. Shareholders

It is argued that a private firm has pressure from shareholders to perform efficiently. If the firm is inefficient then the firm could be subject to a takeover. A state owned firm doesn’t have this pressure and so it is easier for them to be inefficient.

5. Increased Competition.

Often privatisation of state owned monopolies occurs alongside deregulation – i.e. policies to allow more firms to enter the industry and increase the competitiveness of the market. It is this increase in competition that can be the greatest spur to improvements in efficiency. For example, there is now more competition in telecoms and distribution of gas and electricity.

However, privatisation doesn’t necessarily increase competition, it depends on the nature of the market. E.g. there is no competition in tap water. There is very little competition within the rail industry.

6. Government will raise revenue from the sale

Selling state owned assets to the private sector raised significant sums for the UK government in the 1980s. However, this is a one off benefit. It also means we lose out on future dividends from the profits of public companies..


Advantages and Problems of Privatisation | Economics Help

 

[mike2000 is back]

Vietnam on the road to became a capitalist country?

@Edison Chen @Shotgunner51 are PRC taking such drastic measure during your economy reformation way back then?

Yes China did same thing during the 1990s. Even though some of them are now trying to laugh at/mock Vietnam.

 

[Aepsilons]

Yes China did same thing during the 1990s. Even though some of them are now trying to laugh at/mock Vietnam.

In actuality, the Vietnamese economic model is a direct copy of the Chinese model post open-door policy.

It is almost identical.

 

[mike2000 is back]

In actuality, the Vietnamese economic model is a direct copy of the Chinese model post open-door policy.

It is almost identical.

I know VCP alays folows their big bro to the north.loo Though the two country might dislike each other, they always remind me of the type of relation between a big brother and his junior brother. Quite trouble some, but very much alike in almost every aspect. LOVE-HATE relationship.