Plan of budget collection from equitization and divestment for 2022

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Bao Viet is the company which has the top asset scale in the insurance market. Photo: ST

Failing to achieve the revenue target from equitization and divestment in 2021

According to the report of the Corporate Finance Department (Ministry of Finance), from January to September 2021 this unit received a report on the approval of the equitization plan of three enterprises under the Vietnam Northern Food Corporation and the Industrial Corporation Vietnam National Coal and Mineral Industries Group (not on the list of enterprises subject to equitization approved by the Prime Minister).

Director of the Corporate Finance Department Dang Quyet Tien said slow equitization and divestment was due to the Covid-19 pandemic, preparations for equitization and divestment such as: corporate valuation, bidding consultancy and organization of conferences of enterprises and local authorities are entangled by mandatory requirements on pandemic prevention and control.

He also said, although the stock market grew and investment demand was greater than supply, the divestment of State capital was behind expectations, some units failed in divestment of state capital such as the EVNGENCO 2 (Power Generation Corporation 2) sold less than 1% of shares in the initial public offering session in early 2021.

In addition to the objective cause of the pandemic, the slow equitization and divestment was because 2021 is the first year of the 2021-2025 period, so ministries, agencies, local people’s committees, capital committees and leaders of enterprises and corporations have not boosted equitization and divestment.

As a result, revenue from divestment and equitization to the Enterprise Development and Arrangement Support Fund only reached VND366 billion, which is not projected to meet the requirements of revenue from the divestment of state capital in 2021 according to Decision 1950/QD-TTg dated November 28, 2020 of the Prime Minister.

In the remaining months of 2021, if the pandemic is brought under control, it will still have a influence on the progress of equitization and divestment. The Corporate Finance Department said that it is unable to balance this revenue to remit to the state budget according to the revenue target of VND40,000 billion from equitization and divestment of state capital in central enterprises in 2021.

Expected to collect VND20 trillion from divestment in six large enterprises

For the 2022 plan, the Department of Corporate Finance is expected to remit VND10,000 billion to the local budget from revenue from equitization and divestment in the previous period that has not been paid to the state budget or retained in localities.

Accordingly, the department has submitted to the Ministry to report to the Prime Minister to direct the Chairmen of the People's Committees of the provinces and cities that have remaining revenue from equitization and divestment in the period from 2020 and earlier that has not yet been paid to the State budget or retained at the localities according to the National Assembly's Resolution, to remit this revenue to the local budget.

It is estimated that the remittance to the local budget in 2022 is about VND10,000 billion. Of which the amount collected from equitization and divestment of state capital of the enterprises in Hanoi is about VND7,000 billion, Ho Chi Minh City is about VND1,700 billion and other localities is about VND1,700 billion.

For centrally-managed enterprises, equitization takes time to follow the process, from corporate valuation to the initial public offering and remittance of collected amount to the state budget, the revenue from the equitization and divestment in central enterprises in 2022 shall depend on the divestment in enterprises managed by the State Capital and Investment Corporation (SCIC) (with the pandemic lasting until the end of 2021).

Given the above situation, the Corporate Finance Department has developed a plan to divest capital in 2022 (after the Covid-19 pandemic is controlled) for six enterprises on the list according to Notice 281/TB. -VPCP dated September 7, 2016 of the Government’s Officer and is expected to remit VND20,000 billion to the central budget from divestment of state capital in these six enterprises.

Accordingly, the Corporate Finance Department submitted to the Ministry of Finance to report to the Prime Minister to assign the Commission for the management of State Capital at Enterprises to require the SCIC to divest state capital in five enterprises, namely FPT Corporation; Bao Minh Joint Stock Corporation; Tien Phong Plastic Joint Stock Company; Vietnam Infrastructure and Real Estate Joint Stock Company and Bao Viet Group with the value of State capital at par value of VND1,858 billion and expected revenue of VND8,400 billion; and divest capital in Hanoi Beer - Alcohol - Beverage Corporation (Habeco) with the value of State capital at par value of nearly VND1,900 billion and expected revenue of more than VND12,000 billion (according to share value listed on the stock exchange on September 16, 2021).

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It is expected that the revenue from equitization and divestment to the central budget will reach about VND20,000 billion if the divestment of the above enterprises is successful.