The Asian Development Bank is helping Viet Nam modernize its state owned enterprises through a program to rationalize their corporate structures, improve management and increase transparency. The second tranche supports ongoing restructuring measures to improve risk management, financial planning, budgetary controls and information technology infrastructure.
| Project Name | SOE Reform and Corporate Governance Facilitation Program - Tranche 2 | ||||||||
| Project Number | 39538-035 | ||||||||
| Country | Viet Nam |
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| Project Status | Closed | ||||||||
| Project Type / Modality of Assistance | Loan |
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| Source of Funding / Amount |
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| Strategic Agendas | Inclusive economic growth |
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| Drivers of Change | Governance and capacity development |
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| Sector / Subsector | Public sector management / Reforms of state owned enterprises |
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| Gender Equity and Mainstreaming | No gender elements | ||||||||
| 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. | ||||||||
| 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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| Impact | improved profitability and transparency of equitized and restructured SOEs, including large general corporations and their subsidiaries. | ||||||||
| Project Outcome | |
|---|---|
| Description of Outcome | participating general corporations are transformed into focused, efficient businesses with strong balance sheets and improved corporate governance. |
| Progress Toward Outcome | Good progress achieved in corporate and financial restructuring of participating SOEs. These SOEs have been equitized. The project was financially closed on 27 March 2018. |
| Implementation Progress | |
| Description of Project Outputs | Debt restructuring implemented, combining financial and corporate restructuring increased operational efficiency and improved corporate governance of general corporations and other SOEs. |
| Status of Implementation Progress (Outputs, Activities, and Issues) | 1. Current ratio and debt-service coverage of participating SOEs have been improved; Participating SOEs have been equitized. 2. Participating SOEs have been restructured to focus on core-business; Line business have been reduced; Divestment from non-core business is on track; Positive progress has been made in strengthening corporate governance in areas of risk management, financial planning, budgetary controls, and IT infrastructure. |
| Geographical Location | |
| Safeguard Categories | |
|---|---|
| Environment | C |
| Involuntary Resettlement | C |
| Indigenous Peoples | C |
| Summary of Environmental and Social Aspects | |
|---|---|
| Environmental Aspects | The project will not involve construction/civil works. The OCR loan will be used to restructure short-term debt of participating SOEs, while the ADF loan will be used to help participating SOEs to refine and implement their respective restructuring plan. The project will not involve any physical work that may cause short-term or long-term impact on the environment which justifies a category "C" for environment. As required by SPS for clients seeking general corporate finance, a corporate audit of the SOE's ESMS and past/present performance was conducted. |
| Involuntary Resettlement | The project will not involve construction/civil works. The OCR loan will be used to restructure short-term debt by converting to long-term debt. The ADF loan is meant to help selected SOEs to refine and implement its restructuring plan. No land acquisition or resettlement is envisaged which justifies a category "C" for IR. Participating SOEs commissioned experts to conduct corporate audit of their ESMS and apst/current performance as per SPS requirement for General Corporate Finance. |
| Indigenous Peoples | The project will not involve construction/civil works. The OCR loan will be used to restructure short-term debt by converting to long-term debt. The ADF loan is meant to help selected SOEs to refine and implement its restructuring plan. No impacton indigenous people is envisaged which justifies a category "C" for IP. Participating SOEs commissioned experts to conduct corporate audit of their ESMS and apst/current performance as per SPS requirement for General Corporate Finance. |
| Stakeholder Communication, Participation, and Consultation | |
| During Project Design | |
| During Project Implementation | The stakeholders' workshops with participations of representatives of MOF, line ministries, and SOEs have been held to share the relevant knowledge and experiences on SOE reform. |
| Business Opportunities | |
|---|---|
| Consulting Services | International and national experts will be engaged. |
| Procurement | IT equipment and software will be procured. |
| Responsible ADB Officer | Dao Viet, Dung |
| Responsible ADB Department | Southeast Asia Department |
| Responsible ADB Division | Viet Nam Resident Mission |
| Executing Agencies |
Ministry of Finance [email protected] 28 Tran Hung Dao Hanoi, Viet Nam |
| Timetable | |
|---|---|
| Concept Clearance | - |
| Fact Finding | 01 Apr 2014 to 09 Apr 2014 |
| MRM | 12 Aug 2014 |
| Approval | 16 Dec 2014 |
| Last Review Mission | - |
| Last PDS Update | 26 Sep 2018 |
Loan 3240-VIE
| Milestones | |||||
|---|---|---|---|---|---|
| Approval | Signing Date | Effectivity Date | Closing | ||
| Original | Revised | Actual | |||
| 16 Dec 2014 | 10 Nov 2015 | 09 Feb 2016 | 31 Dec 2017 | 14 Dec 2019 | 31 Dec 2017 |
| Financing Plan | Loan Utilization | ||||
|---|---|---|---|---|---|
| Total (Amount in US$ million) | Date | ADB | Others | Net Percentage | |
| Project Cost | 325.00 | Cumulative Contract Awards | |||
| ADB | 310.00 | 16 Dec 2014 | 129.01 | 0.00 | 100% |
| Counterpart | 15.00 | Cumulative Disbursements | |||
| Cofinancing | 0.00 | 16 Dec 2014 | 129.01 | 0.00 | 100% |
Loan 3242-VIE
| Milestones | |||||
|---|---|---|---|---|---|
| Approval | Signing Date | Effectivity Date | Closing | ||
| Original | Revised | Actual | |||
| 16 Dec 2014 | 10 Nov 2015 | 09 Feb 2016 | 31 Dec 2017 | 14 Dec 2019 | 27 Mar 2018 |
| Financing Plan | Loan Utilization | ||||
|---|---|---|---|---|---|
| Total (Amount in US$ million) | Date | ADB | Others | Net Percentage | |
| Project Cost | 10.00 | Cumulative Contract Awards | |||
| ADB | 10.00 | 16 Dec 2014 | 0.45 | 0.00 | 100% |
| Counterpart | 0.00 | Cumulative Disbursements | |||
| Cofinancing | 0.00 | 16 Dec 2014 | 0.45 | 0.00 | 100% |
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
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Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.
None currently available.
Evaluation Documents See also: Independent Evaluation
| Title | Document Type | Document Date |
|---|---|---|
| Viet Nam: State-Owned Enterprises Reform and Corporate Governance Facilitation Program (Tranche 2 and Multitranche Financing Facility) | Validations of Project Completion Reports | Sep 2020 |
Related Publications
None currently available.
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Tenders
No tenders for this project were found.
Contracts Awarded
| Contract Title | Approval Number | Contract Date | Contractor | Contractor Address | Executing Agency | Contract Description | Total Contract Amount (US$) | Contract Amount Financed by ADB (US$) |
|---|---|---|---|---|---|---|---|---|
| CONTRACT NUMBER: 0007 | Loan 3240 | 25 Dec 2017 | SAIGON HANOI COMMERCIAL JOINT STOCK BANK | 34-36 LIEU GIAI STREET, CONG VI WARD BA DINH DISTRICT, HANOI VIET NAM,SOC REP OF | Ministry of Finance | OTHERS | 5,000,000.00 | 5,000,000.00 |
Procurement Plan
| Title | Document Type | Document Date |
|---|---|---|
| SOE Reform and Corporate Governance Facilitation Program - Tranche 2: Procurement Plan | Procurement Plans | Mar 2017 |