The National Assembly had issued the Resolution No. 54/2017/QH14 dated 24 November 2017, i.e. provides Ho Chi Minh City (HCMC)’s administrators with authority to collect and use the monies derived from divestment of State-owned enterprises (SOEs) under HCMC management for funding city infrastructure projects. These provisions have highlighted the outstanding difficulties which HCMC is facing, inter alia, the slow progress of SOEs’ equitisation, the shortage of financial resources when launching key socio-economic development projects. Apart from that, since established by 2010, HCMC Financial Investment Company (HFIC) has been an effective tool for city budget, which helped to gather and manage the State assets. By 2017 the Prime Minister had approved HFIC to maintain the role of owner’s representative in such enterprises under the management of HCMC People’s Committee. The question is whether HFIC could facilitate the SOEs equitisation process and be a pipeline for project financing, and which proper mechanism would be for its new role.
This paper will initially provide the overall of such challenges, including the reasons and adverse impacts on the sustainable development of the city. Secondly, it will assess the experiences of developed countries, particularly Swedish and Singaporean models in regards of establishing the sovereign wealth fund (SWF) to effectively manage the the State assets, as well as the lesson learnt from the 10-year experience on building and operating of the State Capital Investment Corporation (SCIC). Finally, two group of recommendations are indicated: the first group focuses on how to improve the efficiency of State assets governance in SOEs, particularly HFIC’s performance of owner’s representative functions in such equitized firms; and the second is aimed to foster infrastructure projects, by calling the investment from non-State sectors under the form of Public-Private Partnership (PPP), with the proactive role of HFIC to provide financial measures for such projects.
Reference: Nguyen, T.H. The mechanism to finance infrastructure projects by using funds from divestment of state-owned enterprises in Ho Chi Minh City. International Conference on specific regulations for Ho Chi Minh City development. Ho Chi Minh City University of Law (14 December 2018)
About author: Ha Nguyen (LLB, LLM), a partner of Huy&Partners LLC., is interested in cross-border trade and investment, energy, infrastructure construction, competition and State-owned enterprises. He has participated in energy megastructure projects in Vietnam and other ASEAN countries (Nghi Son Refinery & Petrochemicals Plant, Song Hau 1 coal-fired power plant, petroleum production platforms in Vietnam offshore, Petronas RAPID project, Southern Johor, Malaysia) and airport projects in Vietnam (T3 Terminal – Tan Son Nhat Airport, Long Thanh international airport (phase 1)). He has also published a few articles on Vietnam oil and gas sector, renewable energy, State-owned enterprises privitisation and competition.
Comments