VietNamNet Bridge – Agricultural enterprises saw the withdrawal of State capital from non-core businesses in the first half of this year difficult as both share prices and demand were low, according to a review report on restructuring of agricultural firms in the period.

Do Van Nam, head of the enterprise management department under the Ministry of Agriculture and Rural Development, told a review meeting in Hanoi last week that capital divestments from none-core operations and the sale of State capital at joint stock companies had fallen far behind schedule.    

Under the ministry’s Decision No. 916/QD-BNN-QLDN, 13 corporations under the ministry should withdraw some VND3.27 trillion (US$150.3 million) but they registered to divest around VND5.02 trillion. However, as of June 30, they had taken back nearly VND1.72 trillion on book value, meeting 52% and 34% of the targets respectively. Therefore, they will have to withdraw over VND3.3 trillion in the coming time.

Nam explained that share prices of agricultural businesses were attributable to the low divestment process. Shares offered for sale were lower their face value but found no buyers.

In addition, there were many challenges when SOEs divest capital from loss-making enterprises in the period though the Government issued Decree 15/NQ-CP in June last year to support boosting State capital divestments from non-core businesses.

Le The Chi, deputy general director of Vietnam National Coffee Corporation, said the enterprise planned to let two subsidiaries go public and withdraw capital from six other firms in the third and fourth quarters of this year.

He said the firms had State capital of some VND40 billion each and the corporation had announced the sale of State shares at these firms but no investors had registered to buy.

Tran Thoai, deputy general director of Vietnam Rubber Group, said the enterprise had to divest over VND3.7 trillion from banking and hydropower firms and those in other sectors, but it had withdrawn only VND1.1 trillion by June 30. Therefore, the corporation must divest over VND2.5 trillion left by the year-end.

“Vietnam Rubber Group may withdraw around VND1.7 trillion from hydropower projects and it is hard to get the remainder due to small transactions,” Thoai said.

Vietnam Rubber Group makes up half of the SOEs under the agriculture ministry have to divest from non-core operations.

Phan Xuan Que, chairman of Vietnam Northern Food Corporation (Vinafood 1), said the firm had trouble withdrawing State capital from businesses thought it offered prices below book value. Vinafood 1 completed procedures to sell capital at six businesses and cut prices to 80% of book value but attracted no investor.

Experts said capital withdrawal would be tougher in the coming time as it was difficult for SOEs to pull capital from unprofitable businesses.

Minster of Agriculture and Rural Development Cao Duc Phat called on enterprises to speed up and implement their restructuring, equitization and divestment plans effectively as they were not allowed to delay them.

He said SOEs under the ministry would have to divest a huge amount of capital in the remaining months of 2015. Therefore, businesses have to move on with their restructuring schemes approved by the Government.

The ministry also proposed the Government work out measures to remove more hurdles during the equitization process at SOEs, especially on finance and corporate value issues.