Slow Progress in Corporate Reform in 2024

State Divestment in Vietnam Update

In Vietnam, the State divestment in Vietnam or the process of restructuring and privatizing state-owned enterprises (SOEs) has faced significant delays, especially in the first four months of 2024. Despite plans laid out for the 2022-2025 period to privatize 19 companies and withdraw state investment from 141 enterprises, only a meager 150 billion VND was realized from divestments by April 2024.

As of April 2024, the State divestment in Vietnam plans for 85 state-owned enterprises have been approved. However, the actual implementation of privatization is virtually stagnant, with no new approvals for privatization strategies in the observed period. The total revenue from these efforts is surprisingly low, especially considering the ambitious targets set by the government.

The Ministry of Finance reports that the bulk of the State divestment in Vietnam—nearly 139 billion VND—came from just one major transaction by the Ministry of Construction, underscoring the sluggish pace across other sectors and ministries. Despite the approved State divestment in Vietnam for numerous enterprises, including prominent ones, the expected financial returns and strategic shifts have yet to materialize effectively.

This slow pace highlights several challenges, including the complex regulatory environment, and possibly the lack of attractive terms for potential investors. The situation underscores the necessity for a more dynamic approach to manage and execute state divestment and privatization processes, aiming to enhance transparency, efficiency, and accountability in the management and sale of state assets.

The government’s strategic objective remains to enhance the operational efficiency of SOEs through modern governance practices and technological integration, aiming to safeguard and grow state capital while ensuring essential services like energy and telecommunications meet public and economic demands.

Moving forward, Vietnam must address these challenges by streamlining processes, ensuring rigorous compliance with legal standards, and fostering a competitive, transparent market environment to attract investment and achieve the desired outcomes of its SOE reform initiatives.

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