Vietnam Directs Divestment of State-Owned Enterprises

by Jones Day
Contact

Jones Day

In Short

The Situation: Vietnam, like other developing countries, is challenged by the prominence of state-owned enterprises throughout its economy.

The Development: The Vietnamese government has directed that state ownership in a variety of state-owned enterprises be divested.

Looking Ahead: Vietnam is an attractive emerging market economy in many respects with the World Bank and the Asian Development Bank projecting Vietnam's GDP growth to be 6.3 percent in 2017. This state-directed divestment program offers opportunities for investors wishing to enter or grow their presence in Vietnam.  


In August 17, 2017, the Prime Minister of the Socialist Republic of Vietnam issued Decision No. 1232/2017/QD-TTg approving a list of state-owned enterprises to be divested from 2017-2020 ("Decision No. 1232/2017").

Decision No. 1232/2017 is the latest in a series of decrees and decisions issued by the Prime Minister aimed at restructuring and divesting state ownership in a variety of state-owned enterprises ("SOEs") across multiple sectors. Commentators have identified a need to address the increasing gap between Vietnam's state revenue and expenditures as well as a push to integrate Vietnam into the global economy as key driving factors behind this move towards divestment of state ownership.

Prior decrees and decisions that affect the divestment process include:

  • Decrees No. 59/2011/ND-CP, No. 189/2013/ND-CP, and No. 116/2015/ND-CP, which relate to the conversion of wholly state-owned enterprises into joint-stock companies.
  • Decision No. 58/2016/QD-TTg ("Decision No. 58/2016"), which specified certain categories of enterprises to be restructured from 2016 to 2020 and state ownership ratios in various SOEs and sectors.
  • Decision No. 707/QD-TTg issued on May 25, 2017, which approved the restructuring scheme for SOEs and required the relevant SOEs to provide equitization plans.

Decision No. 1232/2017 approves a list of 406 SOEs to be divested and specifies divestment targets for those SOEs at various points in time in an effort to expedite the divestment process. There are 135 SOEs with divestment targets in 2017, 181 in 2018, 62 in 2019, and 28 in 2020 across multiple sectors, including agriculture, airlines, construction, electronics, engineering, finance, food, infrastructure, industry, manufacturing, natural resources, oil and gas, pharmaceuticals, rubber, technology, tourism, trading, and transportation. We have a full list of the relevant SOEs in Decision No. 1232/2017 with English translations and can supply this list to any interested readers.

In addition to specifying targets and timelines that need to be met, Decision No. 1232/2017 also requires various parties to, among others, actively expedite the divestment process and provide timely and regular reporting to the steering committee and ministries responsible for monitoring the divestments. This appears to be aimed at improving the efficiency of the divestment process and addressing concerns regarding delays and lack of clarity that have been raised by investors.

In the oil and gas industry, Decision No. 58/2016 specifies that the state is to retain its 100 percent ownership in the Vietnam Oil and Gas Group ("Petrovietnam"). It also states further that certain subsidiaries of Petrovietnam are to have their state ownership reduced, including the following subsidiaries:

  • Petrovietnam Oil Corporation—state to hold less than 50 percent ownership
  • Petrovietnam Power Corporation—state to hold less than 50 percent ownership
  • Binh Son Refining and Petrochemical Company Limited—state to hold less than 50 percent ownership
  • Dung Quat Shipyard—state to hold less than 50 percent ownership
  • Petrovietnam Exploration and Production Corporation—state to hold more than 65 percent ownership

Decision No. 1232/2017 further states that there is a divestment target of 24.86 percent by 2018 for Vietnam National Petroleum Group. Press reports are following some of these processes and further developments could be expected.

There will obviously be questions around the ability of the Vietnamese government to fully realize a project of this ambitious nature. Further, there are many important factors for investors to consider, including investment structuring, capital requirements, governance arrangements, restrictions on future divestment, and other due diligence matters. Nevertheless, there are clearly opportunities for those with attractive proposals for any of the assets identified in the divestment program.

Three Key Takeaways

  1. A movement to assimilate Vietnam into the global economy is a key driving factor behind the coming divestment of state ownership of certain enterprises. 
  2. Hundreds of state-owned enterprises across multiple sectors are targeted for divestiture through 2020. 
  3. The state will retain complete ownership of the Vietnam Oil and Gas Group but will reduce its ownership in some of its subsidiaries.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Jones Day | Attorney Advertising

Written by:

Jones Day
Contact
more
less

Jones Day on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.