Economic Analysis - Centralised Control Positive For Privatisation Drive - MAY 2018

BMI View: The equitization process in Vietnam has picked up pace since the current administration took office in April 2016, but results remain sub-optimal. We expect the establishment of the Committee for State Capital Management at Enterprises to speed up the process as control will be more centralised.

The Vietnamese government announced in February that it has set up a committee to manage and oversee around VND5,000trn (USD220bn) worth of government assets in state-owned enterprises (SOEs). This is the latest in a series of efforts by policymakers to speed up the divestment of its stake in hundreds of public companies to improve their efficiency and to pare back public debt levels, which is near the national assembly mandated ceiling of 65% of GDP. Although details about the functions and mission of the new committee have yet to be fully announced, we believe that this is a further step in the right direction and reiterates the government commitment to improving its fiscal position. We are forecasting Vietnam public debt as a share of GDP to decline further to 61.9% in 2018, from an estimated 63.4% in 2017, but note that risks are now slightly weighted to the downside, given the potential for the equitization process to accelerate over the coming months.

Slow But Improving

Public Debt Level Likely To Decline Further In 2018
Vietnam - Public Debt By Components, % Of GDP
BMI, Ministry of Finance

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