Proposed Capital Divestment Plan for Nearly 40 State-Owned Enterprises

10% Starting Price Reduction, Capped at 3 Times

According to the Ministry of Finance, the divestment process of state capital in the State Capital Investment Corporation (SCIC) has revealed that many underperforming enterprises fail to attract investors. Despite multiple attempts, these companies remain unsold. Continuing individual sales for each investment poses significant challenges.

In the draft Decree on operational and financial management mechanisms for state-owned investment enterprises, the Ministry proposes a more proactive capital transfer method. The drafting agency suggests that selling in batches (combining both strong and weak stocks, including debt) enhances the chances of divesting inefficient enterprises and accelerates restructuring.

The draft Decree stipulates that when transferring capital with receivable debts, investors must complete payment for shares and settle the enterprise’s debts before finalizing ownership transfer. This regulation addresses SCIC’s challenges, where financially strained enterprises unable to pay dividends or debts hinder the divestment process.

For unlisted or off-exchange traded enterprises, the draft allows a 10% reduction in the starting price per subsequent sale, up to three times, with a maximum two-month interval between adjustments.

Loss-making enterprises or those failing three or more auctions may further reduce the starting price. However, this price must not fall below the book value (post-provision) or the 30-day average reference price for listed enterprises. Unlike previously, this reduction is not bound by the six-month valuation certificate validity.

The Ministry of Finance notes that SCIC holds nearly 40 “hard-to-sell” enterprises valued at approximately VND 433 billion. Despite their modest scale, their unsold status stalls capital, preventing reinvestment in priority sectors. Previous sales at valuation prices failed, necessitating a more flexible mechanism.

For Loss-Making Enterprises

For equitized enterprises awaiting state capital valuation confirmation, while facing losses and capital risk, the draft empowers SCIC’s Board of Members/Chairman to initiate capital sales.

Previously, such cases required approval from the owner’s representative and the Prime Minister. Legal valuation hurdles often delayed resolutions for years. Meanwhile, enterprises, restricted from capital increases due to divestment plans, risked state capital loss.

Empowering the Board of Members aims to swiftly address struggling enterprises, preserve state capital, and alleviate approval burdens on authorities.

As of June, SCIC manages 112 enterprises with a total book value of VND 56,284 billion. From 2014 to June 2023, SCIC divested from 396 enterprises, raising VND 47,990 billion. By September, SCIC invested VND 55,086 billion. Its chartered capital remains modest compared to expansion needs.