Viet Nam: Strengthening Support for State-Owned Enterprise Reform and Corporate Governance Facilitation Program

Sovereign Project | 39538-034

Summary

This TA aims to provide support to the MOF and other implementing agencies in this regard through support for the refinement of the institutional and policy framework to allow for an effective generalizable approach to SOE restructuring and reform, drawing on lessons learned from the implementation of the pilot restructurings under the MFF.

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Project Name Strengthening Support for State-Owned Enterprise Reform and Corporate Governance Facilitation Program
Project Number 39538-034
Country Viet Nam
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8016-VIE: Strengthening Support for State-Owned Enterprise Reform and Corporate Governance Facilitation Program
Technical Assistance Special Fund US$ 1.20 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Private sector development
Sector / Subsector Public sector management - Economic affairs management
Gender Equity and Mainstreaming No gender elements
Description This TA aims to provide support to the MOF and other implementing agencies in this regard through support for the refinement of the institutional and policy framework to allow for an effective generalizable approach to SOE restructuring and reform, drawing on lessons learned from the implementation of the pilot restructurings under the MFF.
Project Rationale and Linkage to Country/Regional Strategy

To date, efforts at SOE reform in Viet Nam have largely focused on equitization and divestment of small and medium-sized SOEs. While this has resulted in a marked reduction in the number of SOEs, remaining SOEs many of them large in size, complex in operation, and weak in performance continue to account for some 40% of assets in the enterprise sector. Reform and restructuring of large SOEs will be crucial to reducing the dominance of inefficient state production, promoting private sector development, and supporting economic growth. Such reforms, however, will be inherently complex in both design and implementation, involving a disparate range of stakeholders and interests.

The government clearly recognizes the necessity as well as the complexity of these reforms and has undertaken a step-by-step approach in partnership with ADB through the implementation of a multitranche financing facility (MFF) in support of SOE reform (State-Owned Enterprise Reform and Corporate Governance Facilitation Program). The MFF supports the corporate, operational, and financial restructuring of selected individual SOEs on a pilot basis with a view to supporting the development of a generalizable approach to reform and restructuring of large SOEs.

The MFF became effective in 2011 and has a projected implementation period of about 5 years. The overall MFF amount is for $630 million ($600 million ordinary capital resources; $30 million Asian Development Fund), with the first tranche (periodic financing request [PFR 1]) amounting to $130 million ($120 million ordinary capital resources; $10 million Asian Development Fund) currently under implementation. Earlier project preparatory TA approved in 2007 supported the preparation of the overall MFF design as well as PFR 1. It closed in 2009 following completion of these objectives. Additional resources will be needed to support implementation of the MFF (including the design and preparation of remaining tranches) and development of a generalizable approach to SOE reform that builds on lessons and experience gained from the pilot restructurings.

Impact Improved profitability and transparency of restructured SOEs
Project Outcome
Description of Outcome Participating general corporations are transformed into focused and efficient businesses.
Progress Toward Outcome In progress
Implementation Progress
Description of Project Outputs

1. Enhanced decision making for further processing of MFF based on assessments of the adequacy and effectiveness of the approach adopted under pilot restructurings.

2. Stronger design and preparation of subsequent tranches

3. Institutional and policy framework developed that allows for an effective generalizable approach to SOE reform

4. Selected SOEs better prepared for participation in PFR 2

Status of Implementation Progress (Outputs, Activities, and Issues)

Almost all of the activities under the TA have been completed. Most of the consultants engaged, including the firm UNICON has completed their tasks and contracts have been closed except for one. Final report and other deliverables have been submitted.

CDTA implementation has commenced, and a number of international and national experts have been deployed. Most of the experts have been engaged under a consulting firm UNICON. As per work plan, the firm is almost complete on its due diligence of SOEs under the project. They have also conducted various workshops and trainings for the EA and other stakeholders on ADB requirements of due diligence. Final report is under finalization.

TA activities have been concluded (except some remaining activites of few experts individually contracted under the TA) , and final report the consulting firm (UNICON) has been approved. Wrap up mission was held on 14 February 2014. TA undertook due diligence of three SOEs for consideration under PFR 2, and contributed to the formulation of selection criteria and finalized seven key knowedge products. TA also supported an assessment of PFR 1 implementation, and underlines lessons learned for designing the subsequent PFR series. TA also formulated a Monitoring and Evaluation Framework for monitoring the restructuring efforts of SOEs. TA also supported the government in providing support to MOF in undertaking corporate audit as required under ADB safeguard policies to ensure that the SOEs being supported under PFR2 are in compliance with the required Envirionmental and Social safeguard measures. TA also supported MOF in carrying out a gender assessement of 3 SOEs and also in faciltating the preparation of gender action plans. Lastly, but not in the least, TA experts provided high level policy and technical advice to the government and MOF in implementing SOE reforms, and TA efforts brought the regulatory constraints in divesting state capital into the forefront, and provided a platform for major legal reforms in management of investments of state capital

Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services

The project will require the folllowing consultancy services:

State-owned enterprise reform/corporate restructuring expert (team leader) (international, 8 person-months).

Corporate operational/financial restructuring specialist (international, 3 person-months).

State-owned enterprise legal and regulatory expert (international, 2 person-months)

State-owned enterprise reform/corporate restructuring expert/project coordinator (national, 5 person-months)

Legal and regulatory expert (national, 1.5 person-months)

National financial expert (one, minimum 15 person-months) and interpreter (one, 24 person-months)

State-owned enterprise reform and corporate governance specialist (international, 5 person-months)

State-owned enterprise reform/corporate restructuring expert/project coordinator (national, 5 person-months)

Legal and regulatory expert (national, 1.5 person-months)

National financial expert (one, minimum 15 person-months) and interpreter (one, 24 person-months)

State-owned enterprise reform and corporate governance specialist (international, 5 person-months)

Corporate restructuring specialist (international, 3 person-months)

Financial restructuring specialist (international, 2 person-months)

State-owned enterprise legal and regulatory expert (international, 1 person-months)

State-owned enterprise reform and corporate restructuring specialist (national, 5 person-months), corporate finance specialist (national, 3 person-months), and SOE legal and regulatory expert (national, 1 person-months).

Procurement tbd
Responsible ADB Officer Prasanna Kumar Jena
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SERD
Executing Agencies
Ministry of Finance28 Tran Hung Dao
Ha Noi, Viet Nam
Timetable
Concept Clearance 28 Oct 2011
Fact Finding 12 Dec 2011 to 29 Dec 2011
MRM -
Approval 22 Dec 2011
Last Review Mission -
Last PDS Update 11 Sep 2014

TA 8016-VIE

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
22 Dec 2011 12 Jan 2012 12 Jan 2012 31 Jan 2014 31 Dec 2014 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
1,200,000.00 0.00 0.00 0.00 0.00 0.00 1,200,000.00 22 Dec 2011 1,192,734.33
Title Document Type Document Date
Strengthening Support for State-Owned Enterprise Reform and Corporate Governance Facilitation Program: Final Report Consultants' Reports Feb 2014
Strengthening Support for State-Owned Enterprise Reform and Corporate Governance Facilitation Program: Knowledge Product 4 - Comment on the Draft of the Law on Management and Use of State Capital Invested in Enterprises Consultants' Reports Oct 2013
Strengthening Support for State-Owned Enterprise Reform and Corporate Governance Facilitation Program: Knowledge Product 5 - Corporate Governance in SOEs in Viet Nam Financial Information Disclosure Consultants' Reports Sep 2013
Strengthening Support for State-Owned Enterprise Reform and Corporate Governance Facilitation Program: Knowledge Product 6 - Lessons Learned from Restructuring of SOWATCO Consultants' Reports Mar 2013
Strengthening Support for State-Owned Enterprise Reform and Corporate Governance Facilitation Program: Knowledge Product 7 - Selection Criteria Consultants' Reports Feb 2013
Strengthening Support for State-Owned Enterprise Reform and Corporate Governance Facilitation Program: Knowledge Product 2 - Comparative Report on International Experience of Managing State Capital Consultants' Reports Jan 2013
Strengthening Support for State-Owned Enterprise Reform and Corporate Governance Facilitation Program: Knowledge Product 1 - Input Submitted to Ministry of Finance on Legal Framework for Management of State Capital at SOEs Consultants' Reports Dec 2012

Safeguard Documents

See also: Safeguards

No documents found.

Evaluation Documents

See also: Independent Evaluation

No documents found.


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