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Sacking of EVN chief a good sign for reforms   2012-02-13 - VNS

Prime Minister Nguyen Tan Dung recently sacked Dao Van Hung, the chairman of the State-owned Electricity Viet Nam for the corporation's poor performance on his watch due to heavy investment into non-core areas like telecom, securities, and real estate even while facing a shortage of funds for investing in power generation.

It is for the first time that such action has been taken in Viet Nam. It shows that the Government is determined to restructure, even allow chronically loss-making State-owned enterprises (SOEs) to dissolve or go bankrupt.

Pham Viet Muon, deputy head of the Government Office, says the Government wants SOEs to make transparent their investments, financial management, asset purchase, and expenditure.

By the first quarter authorities in each industry will have to work out SOE restructuring plans for the Prime Minister's scrutiny.

"In the first quarter the Ministry of Planning and Investment will be responsible, along with related organisations, for submitting to the Prime Minister a proposal to improve the operational effectiveness of State-owned groups and corporations and consider setting up an agency that will represent State ownership in SOEs," Muon says, adding that the Ministry of Finance will submit to the PM financial restructure plans for SOEs.

The ministry also has to draft a plan for setting up a new department to oversee State-owned companies' financial perfomance and management to improve transparency.

SOE equitisation is the most important aspect of the restructure. More than 570 of the current 1,300 SOEs will equitise by 2015. The State's stake in SOEs will be reduced considerably in sectors in which it does not need to hold a major share.

Others will be dissolved or have their ownership pattern changed through mergers and acquisitions. By 2015 there will be 692 wholly State-owned firms, which will be reorganised into 44 groups and corporations.

By 2020 the country will be left with 17 State-owned groups and corporations and around 200 companies operating in areas like national defense, security, and forestry.

ASEAN highlights stocks

The State Securities Commission is eyeing international co-operation to boost the country's stock market. It recently said that 15 companies each from the country's two stock exchanges in Ha Noi and HCM City have been chosen for posting on the website, a collaboration between seven exchanges in the ASEAN member countries of Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam.

This exchange targets promoting the growth of ASEAN members' capital markets by functioning as an information clearing house to attract more investment to these countries. It will comprise 180 blue chips, 30 from each market.

Viet Nam hopes this will help attract the interest of investors in and outside the region to the 30 companies as well as to the others listed on the two exchanges.

This year the SSC plans to continue with its international co-operation activities, including consultancy from the US and Luxembourg on improving the stock market-related legal framework and working out a development strategy for Viet Nam's stock market by 2020.

The two partners are also expected to assist with IT applications in the management and supervision of the stock market.

Improving listed companies' awareness of responsible investment is also targeted under the co-operation programme with foreign stock exchanges.

Stock exchanges from countries like the UK, Korea, and Malaysia have organised seminars in Viet Nam on their listing procedures and benefits, but there are no regulations yet on Vietnamese companies issuing shares overseas and foreign companies doing so in Viet Nam.

It is a major obstacle to the fund-raising plans of many large companies.

A circular guiding capital mobilisation through issuance of global depository receipts (GDR) in foreign markets is expected to be issued this quarter.

Property giant-turned diversified company Hoang Anh Gia Lai Group managed to raise almost US$57 million from a GDR issue via London Stock Exchange last year.

Dong firms against dollar

Last week the Vietnamese dong appreciated on both the official and unofficial markets against the US dollar.

Last Friday Vietcombank sold the greenback at VND20,880, and VietinBank at VND20,895, though the ceiling was VND21,036. The rates were down from the previous week's levels of VND21,036 and VND21,000 respectively.

On the black market, the dollar was bought and sold at VND20,820 and VND20,920 last Friday, VND30 down from the previous day.

The situation is quite different from the same period last year when the rate was close to VND22,000.

The dong's strength is attributed to several factors, including the country's trade surplus in January of more than US$170 million, last year's remittance topping $9 billion – up from $8 billion in 2010 – and State Bank of Viet Nam's efforts to keep it strong.

According to Nguyen Hoang Minh, deputy head of the central banks HCM City office, remittances to the city increased by 10 per cent last month compared to the corresponding period in 2011, and banks had increased foreign currency purchase by 7-8 per cent, helping meet market demand.

Meanwhile, businesses with revenues in dollars are selling the currency for dong to enjoy the much higher interest rates on the local currency.

Others with access to dollar loans are also doing so.

Pham Hong Hai, HSBC Viet Nam's head of global markets, said commercial banks were sold foreign currency for dong for the same purpose.

With several banks now allowed to trade gold globally, the bullion market has become less volatile, also contributing to weaker demand for the dollar.

SBV Governor Nguyen Van Binh's recent statement that this year the dong would not depreciate by more than 3 per cent has helped engender public confidence in the currency.

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