The Ministry of Finance is devising regulations for state owned enterprises (SOEs) auctions, which, once approved, will offer two methods of SOE sale, including bidding and auctioning.
Dau tu talked with Nguyen Duc Tang, Deputy Head of the Enterprises’ Finance Department under the Ministry of Finance (MoF).

Two thousand SOEs have been equitised among 3,200 SOEs restructured over the last four years. Does it mean that the methods of enterprise assignment, sale, contracting and leasing are not efficient?
Equitisation has always been the priority solution in restructuring enterprises. In the past, when developing regulations for sale by bid, the MoF focused on enterprises with favourable positions, especially restaurants, hotels and trade firms. There were only a few enterprises of this kind and therefore the number of enterprises open for bids was modest.
Do you think that Decree 103 (1999) on SOE assignment, sale, contracting and leasing that limited the SOEs, limited the number of firms for sale?
Under the decree, the method of assignment, sale, contracting and leasing applies only to SOE with total book capital below VND5bil ($333,000). They also have to have been posting a loss for some time. Decree 80 (2005), which replaced Decree 103, expanded the subjects for assignment, sale, contracting and leasing.
All SOEs in which the state does not need to hold a stake, can be assigned, sold, contracted or leased, with no regard to the enterprises’ capital scale. As such, in order to implement Decree 80, it is necessary to set new regulations on SOE auctions.
What is the difference between the bid and auction sale of SOEs?
Bidding or auctioning sales apply only when two or more investors register intention to purchase an SOE. Bidding occurs when the buyers must take on responsibilities for the enterprises staff pre-sale, including any redundant labourers. In cases where responsibility for such matters is not demanded by law, then the SOE in question will be auctioned off.
In a word, the SOEs that cannot be equitised, will be offered for sale. Those SOEs that cannot be sold through a regular bidding process will be auctioned off after settlement of employee issues. In case the auction cannot be implemented, the SOE will be sold wholesale.
What will happen if an SOE can find only one buyer?
It will be sold directly. The buyer will negotiate with the seller to define solutions for enterprise staff, the selling price and other issues. In none of these three cases does the buyer take on responsibility for the enterprise’s debts.
Do you think that the new regulation on SOE sales will create a breakthrough in the restructuring process?
I’m not optimistic enough to predict a major breakthrough, but I think there will be big changes. In the past, only local individuals and institutions have had the right to buy SOEs. Now foreign invested enterprises or financial institutions established under foreign law, either operating in Vietnam or abroad, can buy Vietnamese SOEs.

Source: Vietnam Investment Review