Companies like Vinamilk may help boost the stock market
The ministry said the move would allow the enterprises to raise desperately needed capital and expand their operations.
Among the companies suggested in the proposal was Vinamilk, 76.8 per cent of which is owned by the state, and which has VND1.59 trillion (over $100 million) in chartered capital.
A source from the ministry, who asked not to be named, told Vietnam Investment Review last week that the ministry had suggested state ownership of Vinamilk be reduced to 51 per cent, still a majority, so that the company could list on the domestic stock market.
Under current regulations, 15 per cent of a firm must be controlled by entities other than the state in order to list on the stock market.
Only 4.8 per cent of Vinamilk is controlled by non-state entities, making it ineligible.
“The government, therefore, should allow Vinamilk to sell more state holdings to the public so that it can get listed on the stock market,” said the source.
Market observers believe that allowing Vinamilk to sell state holdings would give a much needed boost to the fledgling stock market.
“Vinamilk is a highly profitable business. Listing its shares will provide more goods for the country’s hungry stock market and attract more foreign investors into the market,” said an analyst from the Saigon Securities Inc (SSI).
Vinamilk is the country’s largest dairy producer, exporting its products to the US, Australia, the Middle East and Cambodia, among others.
Mentioned in the proposal alongside Vinamilk were other consumer goods makers like Hai Ha Confectionery Company, Vifon, Binh Minh Plastic Company, Tan Tien Plastic Packaging Company (Tapack), Thanh Hoa Brewery Company, Hanoi Battery Production Company. (See full list in table below).
According to statistics from the Ministry of Finance (MoF), the state controls a majority stake in 46.6 per cent of Vietnam’s equitised companies.
Many entrepreneurs complained that the proposal does not go far enough, allowing still far too much state control of the enterprises.
Tran Van Long, deputy general director of Saigontourist, which was not included in the proposal, said his corporation had proposed limiting state holdings in the five enterprises it plans to equitise this year, saying that majority ownership in these enterprises would constrict their operations and make it difficult for them to operate under the Enterprise Law.
The companies that Saigontourist plans to equitise are Eden Trading Service Company, Tan Dinh Travel and Trading Service Company (Fiditourist), Saigontourist Car Rental Company, Givral Confectionery Enterprise, and Liberty hotels.
“Companies will find it difficult to operate under the Enterprise Law if the state holds a controlling stake,” Long said, explaining that such companies would be perceived as state-owned enterprises and would have limited business flexibility.
Nguyen Manh Tien, senior executive of the Petro Vietnam, said his company would ask the government to break up the state’s majority control of its enterprises.
Petro Vietnam has equitised 17 of its 70 member companies. All of its equitised companies are developing strongly, raking in total profits of VND200 billion ($12.8 million) per year, he said.
Previously, the Vietnam Association of Financial Investors (VAFI) proposed that state holdings at Petro Vietnam’s two affiliates – Chemical Petrolimex and Gas Petrolimex – be lowered to 51 per cent from their current levels of 85 per cent and 70 per cent, respectively.
The MoF said it asked the government to issue criteria classifying which state-owned enterprises the state should maintain a controlling stake in.
According to the ministry, the state should hold its controlling stake in major or “sensitive” sectors related to security and national defence, while those involved in key industries such as electricity, telecommunications, banking, insurance and chemistry should be equitised.