Could you give us an update on the divestment process so far?

So far this year, we have sold stakes of 31 SOEs, earning the state VND863 billion ($41 million), reaching 65 per cent of our plan and up nearly 47 per cent on-year.

The SCIC’s general director Lai Van Dao

The SCIC has a portfolio of around 1,000 businesses and has divested capital from 683 of those enterprises bringing VND5.1 trillion ($242.8 million) to the state coffers, compared to VND2.341 trillion ($111 million) in initial capital. We have not only preserved state capital, but actually helped to grow equity.

However, we are still behind our target as many firms are slated for divestment but the economy is making it difficult for us to carry out this process.

Given that, what is the SCIC’s expectation for fulfilling its targets?

In light of the SCIC restructuring plan to 2015, we need to divest from 376 businesses during 2014-2015. This year we plan to complete state capital divestitures at more than 290 businesses. This goal, however, may be difficult to achieve as the market is still struggling, but I think we can surpass our divestiture target in terms of value.

What about the current legal framework?

In this regard I see no major issues. Thanks to Decree 151/2013/ND-CP, the SCIC’s functions, tasks, and operational guidelines are clear and we can take the initiative in selling state capital at businesses in which the state does not need to have such a large position. The SCIC also has the right to sell capital via diverse methods such as order-matching, public auctions, competitive bidding, negotiation and stock swaps.

Besides, the government has also allowed us to lower the starting price of shares in case auctions are not successful or to sell below par value in the case that firms are operating at a loss and it is more effective to recover the capital now, even at a loss, than to wait for a further depreciate of a company’s value.

From what we know, the SCIC has not yet used its ability to lower the starting price after an unsuccessful auction, which means fewer firms are being divested from. Is that the case?

It depends on a case-by-case basis. Under the current law, the SCIC could drop prices by up to three times, each time 10 per cent of the top value and the reductions must be two-months apart. To successfully apply this, it would be at least six months after the first auction.

We just decided to lower the starting price of one business in its second round of holding an auction, and we will decide on further reducing the price of other firms if they fail at auctions. We will also consider selling below par value for firms sustaining regular losses.

Under these measures, we expect to achieve state capital divestment, as per the target, at 376 businesses and retain a controlling stake in 26 businesses.

VIR/VNN