Government stake sale needs regulations to prevent corruption

Deputy Prime Minister Vu Van Ninh speaks at a meeting (Source: VNA)

Deputy Prime Minister Vu Van Ninh said the draft on selling Government stakes as share packages must include strict regulations to prevent corruption, while still encouraging those who seek long-term investments.

Ninh said, during the August 24 meeting with involved ministries, that selling Government stakes in packages was considered a good measure to hasten the privatisation of State-owned enterprises (SOEs).

However, many problems might arise, such as corruption or causing losses to State capital if the draft failed to anticipate those problems, Ninh warned.

According to the Ministry of Finance, the draft decision stipulated that the sale of Government stakes at joint stock companies which had not been listed or registered trading on UpCoM, included State capital withdrawals from 100-percent State-owned corporations.

State stakes could be divided into many packages for auction, but each package must be worth less than 5 percent of the charter capital. Meanwhile, appointed sales of share packages must be carried out following the Prime Minister's decision.

Both domestic and foreign investors could hold unlimited stakes, except in sectors with caps on holdings of foreign investors.

Ninh said that the auctions must be transparent.

The draft was expected to be submitted to the Prime Minister for approval this month.

According to Dang Quyet Tien, Deputy Director of the Corporate Finance Department under the Ministry of Industry and Trade, the draft would be developed into a decree and include a set of comprehensive solutions to hasten the progress of SOEs' privatisation, which had slowed since the beginning of this year.

Besides selling State stakes in packages, there would be regulations allowing SOEs to be transferred to joint stock companies when they did not have conditions to immediately implement IPO's.

Tien said that coupled with the regulation on increasing foreign holdings in the Law on Securities, which would take effect from the beginning of this month, the draft would help stimulate market demands and hasten the privatisation process.

This year, Vietnam planned to privatise 289 SOEs as part of an ambitious plan to privatise 432 SOEs during 2014-15. Last year, 143 SOEs were privatised, along with 61 SOEs in the first six months of this year.-VNA