Four equitised SOEs may get the right to sell some of their remaining state-owned shares if the prime minister approves a proposal from the Ministry of Finance.The proposal, Document 4839, suggests Vinamilk, Binh Minh Plastics, Petrolimex chemical company and Petrolimex gas company be permitted to sell an undecided portion of their state-controlled shares.
The proposal was submitted to Prime Minister Phan Van Khai earlier this month, however it is unclear when his decision will be released.
“These four companies were chosen because investor interest in them is high,” Finance Minister Nguyen Sinh Hung said last week.
Vinamilk has chartered capital of VND1,500 billion ($99.7 million) and is still 80 per cent state-owned. The Binh Minh joint stock plastics company has chartered capital of VND107 billion ($7 million) and is 64.6 per cent state-owned.
Joint stock petro-chemical company under Petrolimex has chartered capital of VND150 billion ($9.8 million) of which the state holds 85 per cent. The joint stock gas company under Petrolimex, which has chartered capital of VND150 billion, ($9.8 million) is still 87 per cent state-owned.
The ministry has also proposed that the government allow these companies to list on the bourse, to help expand the volume of the securities market.
Hung said listing on the bourse and a government permit to sell these state shares would benefit the economy and the enterprises themselves.
“These are enterprises which are drawing special attention from investors, so listing on the bourse will create confidence in the stock market and increase the prestige of these enterprise in the eyes of investors.”
He said there would be no problem for the State if these SOEs were allowed to sell some of their state-owned shares.
“These SOEs are not ranked as equitised SOEs in the sectors in which the state should have controlling interest.”
“Money obtained from selling state-controlled shares will be used to concentrate on enterprises of other economic sectors, given that the state budget is unable to add capital for the activities of enterprises.”
Hoang Nguyen Hoc, head of the Financial Department of Enterprises, said the number of state-owned shares to be sold had not been decided.
“We are investigating the specific steps necessary to define the appropriate percentage of state-controlled shares that should be sold. We will submit this information to the Finance Ministry and the government.”
Tran Thanh Ha, deputy president of the Vietnam Securities Commission, said the scale of the stock market had the potential to increase considerably by the end of this year with the presence of large equitised enterprises like the four SOEs
So far 24 equitised enterprises have listed on bourse, with the total value of listed shares estimated to be VND1,184 billion ($77 million).
The value of the 121 kinds of government bonds is currently worth more than VND10,000 billion ($660 million).
Hung said if such enterprises were listed on bourse, they were likely to create a huge volume of attractive commodities, which would stimulate the development of the securities market.
“So, the target of creating around VND15,000 billion ($980 million) of commodity value on the bourse by the end of this year is possible,” he said.
The Finance Ministry has also proposed the government immediately allow the equitisation and listing of four more large SOEs.
They are the Vietnam National Construction Export and Import Corporation (Vinaconex), Vietcombank, Bao Minh insurance company and Vinh Son Hydroelectric plant under Electricity of Vietnam.