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Description |
This is Periodic Financing Request 2 (PFR2) of the multitranche financing facility (MFF) which was approved in December 2009. The overall MFF amount is $630 million, of which $600 million is OCR and $30 million is ADF. The MFF supports the corporate, operational, and financial restructuring of selected state-owned enterprises (SOEs) on a pilot basis with a view to developing a general approach to guide the reform and restructuring of Viet Nam's remaining large SOEs. The pilot programme is expected to successfully transform the selected SOEs and thereby strengthen the government's resolve to push ahead with further SOE restructuring. PFR2 is now proposed to be extended to three SOEs - Construction Corporation No. 1 Company Limited, Song Da Corporation (SDC), and Vietnam National Textile and Garment Corporation. The total cost of the proposed PFR2 is estimated at $320 million equivalent, comprising a $310 million lending facility from OCR loans to the government to on-lend to the participating SOEs, and $10 million from ADF. |
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Project Rationale and Linkage to Country/Regional Strategy |
Strategic Context and Policy Framework for SOE Reforms since 2009. SOE restructuring is a strategic goal of the 2011 -2015 Socio-Economic Development Plan. A number of key legislative and policy initiative (decrees, decisions and circulars) have been introduced and adopted to improve the governance, oversight and management of SOEs. Prime Minister's Decision (PM Decision) 929 of July 2012 provides the strategic direction for SOE reforms and sets a deadline for preparing restructuring plans and for initiating divestment of non-core investments. To support this effort, as of December 2013, about 60% of state economic groups and general corporations have had their restructuring plans approved. PM Decision (339/QDD-TTg) of 19 February 2013 also put restructuring of SOEs as one of three pillars of economic restructuring alongside banking sector restructuring and public spending restructuring to transform the economy and improve its competitiveness for the period 2013- 2020. As the lead agency for coordination and oversight of the restructuring process, the Ministry of Finance (MOF) has finalized the SOE Reform Roadmap which highlights the key roles of line ministries/owners and enterprises to facilitate an enabling environment and to undertake specific structural reforms. A comprehensive monitoring and evaluation framework that provides key performance indicators to monitor the overall progress of the restructuring and support performance management at individual SOE and line ministry/owner level is under finalization, and its implementation is likely to commence from the 3rd quarter of 2014.
ADB support. ADB's Country Partnership and Strategy 2012- 2015, and the Country Operational Business Plan 2012 -2014, underline SOE reform as central to its strategy for business development and private-sector-led employment growth. Within this framework, ADB has been supporting economic reforms and private sector developments through a number of programs focused on SOE restructuring, development of microfinance, SME development, and financial sector reforms. ADB has committed significant investments to the pilot restructuring of selected SOEs and is also providing capacity-building support to the management of pilot SOEs being restructured. Continuing support and sustained engagement in these sectors will be essential to continuing progress in the SOE sector.
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