HCMC - The Asian Development Bank (ADB) and the Vietnamese Government have signed a US$630 million multi-tranche financing facility to support the nation’s efforts to accelerate reforms of state-owned enterprises (SOEs).
The transformation of SOEs started in 1992, aiming at increasing their efficiency and reducing the role of the state in their management. However, the process has been slow and confined mainly to smaller enterprises.
Nguyen Quang A, a local economist, shared the same view at last week’s workshop held by the National Assembly Economic Committee, saying SOE reform had been moving at a snail’s pace since 2006.
As the Government is planning to equitize and transform large general state corporations to unlock their subsidiary companies’ potential, ADB assistance will support some SOEs to become more efficient, profitable and transparent with better corporate governance.
“Enhancing corporate governance at SOEs is key for Vietnam to enhance the efficiency of its economy and achieve higher economic growth through reducing inefficient state production and promoting private sector development,” said ADB country director for Vietnam Ayumi Konishi.
“With this facility, we hope to help restructure several general corporations to become subgroups of companies that can operate independently, secure financial resources from the capital markets on their own without relying on the Government, and meet all the conditions for eventual listing.”
With ADB financial support, training and other assistance will also be provided to government institutions involved in the SOE reform process, such as the Debt and Asset Trading Corporation.
The first tranche of US$130 million will also support the transformation of the Song Da group of companies, which are involved in several different business segments related to infrastructure, and the Southern Waterborne Transport Corporation providing logistics services.
ADB will provide US$600 million from its ordinary capital resources to strengthen the balance sheets of selected corporations through debt restructuring, and US$30 million from its highly concessional Asian Development Fund to support improvements in their operations and corporate governance, as well as their and related institutions’ institutional capacity.
The financing facility, signed by State Bank of Vietnam Governor Nguyen Van Giau ADB country director Ayumi Konishi, will be utilized by December 2015.
