SABECO & HABECO sales: Vietnam’s biggest news in years, if they come to pass
Today’s announcement from the Vietnamese government that it will sell out entirely its stakes, by 2017, in leading state-owned beer companies SABECO and HABECO is exciting news indeed, if the plan is implemented. Seasoned Vietnam watchers will of course question the likelihood of follow-through, but this development has an air of credibility about it that government proclamations on the subject of privatisation normally lack. For one, there is an element of precision: it states that all shares will be sold via auction. The italicised word represents an important first for a major state owned enterprise. Vietnamese major SOE privatisations have almost always to date involved only minority stake sales, often very small minorities. This means a minimal impact on efficiency, transparency, and overall competency of the given business, which is (or should be) the main raison d’etre for privatisation in the first place. A full sale of these major businesses – which could raise USD 1.8bn for the state’s 89.6% SABECO stake and 400m for its 82% HABECO stake – are pathbreaking in their proportions sold and the amounts raised. For years, we and other commentators have lamented the paltry minority stakes on offer, and the inconsequential amounts raised. This would represent an important new direction for privatisation in the country.
We have remarked repeatedly in the past that the poor fiscal situation of the country – a 6.5% budget deficit on average in recent years (on the IMF measure) and public debt to GDP nearing the government’s own limit of 65% – is a positive in the sense that it should force a more proactive programme of privatisation, with SOEs still accounting for some 30% of GDP. This news today reflects precisely this.
Proof of the pudding (beer) will be in the eating (quaffing), not these words. But with the implementation to match, this news could in time be seen to be the most important news out of Vietnam since it joined the World Trade Organisation in 2007. Investor sentiment in the stock market would respond accordingly.