Vietnam gov't should retain controlling stake, leaders of SOEs say

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   Cement bags come off the line at a factory belonging to the Ha Tien 1 Cement Joint Stock Company, a subsidiary of the Vietnam Cement Industry Corporation / PHOTO COURTESY OF TUOI TRE

As Vietnam implements plans to privatize 500 of its state-owned enterprises (SOEs) over the next two years, the leaders of many enterprises say the state should hold 51 percent or more of shares.

A representative of the Vietnam Cement Industry Corporation (Vicem) told Tuoi Tre (Youth) newspaper on Wednesday it is “obvious” that the government should continue having control of the company after privatization, or Vietnam’s cement market will be lost to foreign investors.

According to the representative, Vicem is now withdrawing its investment from different projects, including a joint venture with French cement manufacturer Lafarge.

After the divestment, the company will have a self-review and choose a time to make its IPO.

Tran Quang Nghi, director general of the Vietnam National Textile and Garment Group (Vinatex), said that under their plan which is now awaiting the government’s approval, 49 percent of the company’s shares will be sold.

It means that the state will own 51 percent of shares in Vinatex after privatization, he said.

Tran Son Chau, director general of the Vietnam National Tobacco Corporation (Vinataba), said the government is yet to issue decision about the privatization of Vinataba, because it still wants to hold monopoly over tobacco industry.

Even if a decision is made, the government will “definitely” own more than 50 percent of the company’s shares, he said.

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Speaking to Tuoi Tre, economist Le Dang Doanh, former chief of the Central Institute for Economic Management, said it is “understandable” why the SOE leaders want the government to own the majority of shares, because it means that their positions will be unchanged.

However, he said it is not necessary that the government owns 51 percent or more of shares in SOEs in the cement and textile industry after privatization.

Industries that are considered “sensitive” in Vietnam like textile and cement are, in fact, not deemed strategic industries in the world, because they are not related to national security or some special technology, he said.

He said it is important that privatization is strengthened so that the SOEs can attract investment and reform their business administration, which will help boost their competitiveness.

“Vietnam’s state businesses should not miss opportunities to get better, just because they fear being taken over,” the economist said.

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