The Ministry of Finance (MOF) is drafting an amended decree on investing state capital in enterprises, and managing the capital and assets of the enterprises. One of the articles MOF wants to revise is related to capital divestment from loss-making enterprises.

According to MOF, it is impossible to divest from loss-making enterprises in which the state holds 50 percent or more charter capital, which seriously affects enterprises’ investment capital.

Vietnam Airlines is a typical example. The nation’s flag air carrier cannot divest from Pacific Airlines.

Under current regulations, divestment can only be implemented if Pacific Airlines makes a profit for two consecutive years before divestment registration, and with no accumulated loss by the year of registration.

Pacific Airlines has been taking a loss since early 2000. Most recently, it reported pre-tax loss of VND2.096 trillion.

After restructuring failures, Qantas Group, a partner in the joint venture, decided to give its 30 percent of shares at Pacific Airlines to Vietnam Airlines for free. At present, Vietnam Airlines holds 98 percent of Pacific Airlines’ shares.

MOF believes that Decree 91 needs an amendment to set a legal framework to pave the way for divestment of capital from loss-making enterprises in which the state holds more than 50 percent of charter capital.

The draft decree says that if enterprises cannot satisfy requirement on making profit for two consecutive years, and the enterprises do not have an accumulated loss by the year of divestment, the agency representing the owner (the state) will appoint a representative of the state capital to choose share transfer in accordance with Article 127 of the 2020 Enterprise Law.

The other problem is with ACV (Airports Corporation of Vietnam). The State Capital Management Commission has proposed allowing ACV to pay dividends in shares to help increase the owner’s equity in order to implement national projects, including Long Thanh Airport, T3 Terminal at Tan Son Nhat International Airport, and T2 Terminal at Noi Bai National Airport.

Referring to current regulations, ACV cannot satisfy the requirement on owner’s equity to ensure the project implementation pace. In this case, it has to borrow money from credit institutions, which will lead to higher risks in investment, and lower efficiency of projects.

MOF wants to add a provision to allow profits left after paying for expenses and funds to be distributed to shareholders in cash or shares.

Manh Ha