Vietnam orders state companies to submit restructuring plans

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Vietnam's Prime Minister Nguyen Tan Dung told state-owned companies to submit restructuring plans, stepping up a drive to bolster the economy by raising efficiency and competitiveness.

Detailed proposals involving steps such as selling stakes to private investors and disposing of non-core businesses must be submitted by each company in the first quarter, the premier said in an order posted on the government's website on January 18.

Vietnam has sought to restore investor confidence after facing Asia's fastest inflation, pressure on its currency and risks in the banking sector.

The default on foreign-currency borrowings by the nation's largest shipbuilder, a state-owned enterprise, has raised doubts about asset quality at Vietnamese lenders, according to Moody's Investors Service.

"If Vietnam wants to position itself well in what is a globally gloomy context, they have to deal with the inefficiencies in the economy," Victoria Kwakwa, the World Bank's Vietnam country director, said in an e-mail on January 19. "There need to be some fundamental changes."

The company restructuring plans must include development strategies for 2011 through 2015, Dung said in his order.

The government will improve the legal framework to facilitate the process and the State Bank of Vietnam will amend regulations governing foreign investment into Vietnamese banks, according to the instruction.

More than 1,300 state-owned companies will be restructured by 2015, the government said in December.

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Vietnam Shipbuilding Industry Group's failure to make payments on a dollar-denominated loan in 2010 jeopardized the country's access to credit markets and added pressure for an overhaul of state-owned businesses.

The nation's inflation rate in December moderated to 18.13 percent from 19.83 percent in November. It remains the fastest in a basket of 17 Asia-Pacific economies tracked by Bloomberg.

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