#Ministry of Finance #SCIC #State-owned Enterprise #Vietnam Economy #National Investment Fund #Restructuring #Temasek #PVN #EVN #Viettel #BloombergBusinessweekVietnam
A proposal is attracting great attention in the financial and business world as the Ministry of Finance studies a plan to reorganize more than 857 state-owned enterprises belonging to 45 owner representative agencies according to the group-led model. Instead of scattered management as currently, businesses in the same industry will be gathered into large focal points, while many other units can be transferred to SCIC for management.
What is worth noting is that this is no longer a simple equitization story.
The new goal is to form corporations large enough to compete in the region, and at the same time build SCIC into a national investment fund similar to Singapore's Temasek Holdings or Malaysia's Khazanah Nasional.
The current picture of state-owned enterprises
Scale Index
Enterprises with state capital 857
Owner representative agency 45
SCIC enterprises once received 1,086
Proceeds from divestment Nearly 56,000 billion VND
Future SCIC capital target is 150,000 billion VND
New role National Investment Fund
Visualize target capital size
ββββββββββββββββββββββ
150,000 BILLION VND
NEW SCIC GOAL
TOWARDS THE NATIONAL INVESTMENT FUND
ββββββββββββββββββββββ
If successful, this will be one of the government's financial institutionsThe worst in Vietnam.
Why does the State want to consolidate businesses?
Over the years, state capital has been allocated to many enterprises belonging to many ministries and localities.
This leads to a number of problems
β’ Dispersed investment
β’ Difficult to coordinate industry strategies
β’ Slow decision making
β’ Capital use efficiency is not uniform
According to the new direction, large enterprises will become the leading centers.
For example
β‘ Energy can revolve around PVN or EVN
Telecommunications may concentrate around Viettel or VNPT
β½ Petroleum can revolve around Petrolimex
οΈ Infrastructure and logistics can form larger-scale business groups
Compare international models
National Institutions lead
Singapore Temasek Holdings
Malaysia Khazanah Nasional
Indonesia Danantara
Vietnam SCIC new version
The interesting point is that the Ministry of Finance affirms that it does not propose separate incentives for taxes, land or market access for state-owned enterprises.
This is to avoid creating too great an advantage over the private sector.
The question makes the market debate
If a series of large businesses in the same industry are gathered into one focal point, their financial strength will increase very quickly.
But with that comes risk
β’ Too much concentration of economic power
β’ Reduce intra-industry competition
β’ Difficult to control governance if there is a lack of transparency
β’ Risk when a corporation encounters problems
This is the problem that Singapore, Malaysia and Indonesia have all had to solve.
What is Vietnam aiming for?
Many experts believe that the ultimate goal is not just business managementunion.
What Vietnam wants to build is a "national investment machine" capable of pouring capital into strategic areas such as
AI
Semiconductor
β‘ Energy conversion
Large-scale infrastructure
βοΈ Data center
Green economy
SCIC will then not simply be a place to hold state capital but become a strategic investment tool for the country.
The most surprising thing
Currently, the amount of state capital SCIC manages is only equivalent to about 2% of total state capital at the enterprise.
In other words, if the project is implemented aggressively, the market could witness a huge transfer of state assets in the next few years.
The question that is causing the most debate right now
Should Vietnam build a Vietnamese version of Temasek with huge financial power to compete globally, or should it continue to maintain a decentralized model to avoid the risk of concentration of economic power?
#Economy #SCIC #Temasek #Khazanah #State-owned Enterprise #Public Investment #PVN #EVN #Viettel #Petrolimex #National Investment Fund #Finance #Vietnam #BloombergBusinessweekVietnam #Economic Development
