Vietnam sovereign fund sees big picture, to invest in companies

Thanh Nien News

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Finance Minister Dinh Tien Dung meets with leaders of the state-run investment firm SCIC in November, 2013 Finance Minister Dinh Tien Dung meets with leaders of the state-run investment firm SCIC in November, 2013

Vietnam's sovereign fund plans to step up investment activities this year after being panned for depositing hundreds of millions of dollars in banks to earn interest.

The State Capital Investment Corp. (SCIC) said in a recent statement that it plans to target strategic industries like telecom, mining, healthcare, and pharmaceuticals, according to news website Saigon Times.

It also plans to help state firms divest from non-core businesses by buying out their stakes.
The economy is undergoing a reform involving privatization of state firms and their withdrawal from non-core activities.  

As stipulated in a government decree issued late last year, at least 70 percent of SCIC’s  investments must be in major industries where state ownership is dominant and in sectors mandated by the government.

The decree came after analysts complained about the ineffectiveness of the fund, which was launched in 2006 and expected to replicate the success of other sovereign funds like Singapore’s Temasek.

Instead of financially assisting businesses during the economic meltdown through portfolio investments, the SCIC has put its money in banks for the past several years, they said.

At the start of 2013 it had VND19 trillion (US$901.1 million), or 38 percent of its assets, lying idly in banks.

In 2012 more than 40 percent of its $186-million profits came from interest and a mere 4 percent from privatizing state firms, one of its main mandates.

Last year its pretax profits rose to VND4.5 trillion ($213.4 million).

But this was thanks to a few major listed firms it has in its portfolio.

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