The managements of state-owned enterprises that fail to privatize and divest from non-core businesses as ordered this year will face "strict" action, a government committee on the restructuring of SOEs said at a meeting in Hanoi last week.
Only 61 SOEs have finished selling stakes to private investors in the first six months, accounting for a mere 21.1 percent of the number of businesses slated for privatization this year, the committee said.
But state-owned conglomerates pulled out of five "sensitive" sectors -- real estate, stocks, banking, insurance, and venture funding – selling their stakes for US$176.87 million, or 15 percent of the target.
While policy problems have been the main cause of the tardiness, the economic situation have also made it difficult for SOEs to sell their shares, according to the committee.
While SOEs have sold more than VND11.16 trillion ($511 million) worth of stakes in non-core businesses, it is "nothing" compared to the amount of funding the government needs to provide some others, Deputy Minister of Planning and Investment Dang Huy Dong told the meeting.
For instance, Vietnam National Chemical Group, Vietnam Posts and Telecommunications Group, and Vietnam National Coal and Mining Industries Group alone are now in need of over VND40.45 trillion ($1.85 billion), he said.
Under a decree the government issued in July last year, a “state conglomerate” must have chartered capital of at least VND10 trillion ($457.87 million).
Since it is impossible for many to achieve that, Dong said his ministry has been working with other agencies to either change the definition of state conglomerate or amend the regulation.
A report by the Central Institute for Economic Management earlier this year showed that state conglomerates have been expanding quite quickly and make up an overwhelming majority - 15 out of 20 -- of Vietnam's largest businesses.