Vietnam is dramatically accelerating sales of stakes in state-owned enterprises (SOEs) to boost revenue and ease a strained budget, while seeking to exceed its economic growth target this year.
The government plans to sell 6.5 times more shares than it offered last year, Vietnamese Deputy Prime Minister Vuong Dinh Hue said in an interview with Bloomberg Television.
The state raised 135.6 trillion dong (US$5.97 billion) from these sales last year.
“We need more foreign investment, but also want to lure good investors who can help our companies improve corporate governance,” Hue said in his office in Hanoi on Friday.
The assets the government plans to sell “will include leading companies in energy, power and petroleum,” he said.
Vietnam, which last year had one of the world’s fastest-growing economies at 6.8 percent, is saddled with high public debt levels that constrain the government’s ability to boost spending.
The state next year could come close to breaching its 65 percent constitutional debt limit, HSBC Holdings PLC said in a report this month, singling out Vietnam as the nation facing the greatest need for fiscal consolidation in Southeast Asia.
SOEs in the communist nation were once the biggest employers, the largest revenue earners and the main growth drivers, but the government is now pressing for greater support for private-sector businesses, decades after the 1986 “Doi Moi” reforms brought market-oriented change to Vietnam.
The government is banking on an expanding middle class and its youthful population to attract investors.
Stakes in 245 state companies are up for grabs this year, including four scheduled in the first quarter: Binh Son Refining and Petrochemical Co, which operates the only oil refinery in the country, as well as PetroVietnam Oil Corp, PetroVietnam Power Corp. and Hanoi Beer Alcohol & Beverage JSC.
Among the assets disposed last year was a majority stake in the nation’s top brewer Saigon Beer Alcohol Beverage Corp (Sabeco) to Thai Beverage PCL and its partner last month, which sold for US$4.8 billion.
Vietnam has struggled to privatize state companies, with many of them finding it difficult to value their shares.
The government is working on plans to allow more foreign ownership in certain sectors, including banks, Hue said.
Public debt and publicly guaranteed debt are to increase to 64.2 percent of GDP by next year from an estimated 62.6 percent last year, the World Bank estimated.
The government plans to cap the budget deficit at 3.7 percent of GDP this year from 3.5 percent last year.
Economic growth this year might match last year’s pace of 6.8 percent — slightly higher than the 6.7 percent target set by the government — despite risks of rising trade protectionism around the world, Hue said.
“There are some risks and challenges remaining in the Vietnamese economy, but the biggest challenge will be that we want to grow faster, but also in a sustainable manner at a time when there are unpredictable movements in the world economies,” Hue said.
The economy, which last year posted a total trade value that was 1.93 times bigger than its GDP, is susceptible to global turbulence that can “quickly have a direct impact on Vietnam in terms of trade, investment, currency,” Hue added.
The benchmark VN Index has risen 9.3 percent this year after increasing 48 percent last year.
The government is to focus on strengthening the banking system and will “try to bring down lending interest rates for businesses” as it looks to manufacturing and tourism to be the main drivers of the economy, Hue said.
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