July 13, 2010

Vietnam's agricultural firms see future merging

The Vietnam Ministry of Agriculture and Rural Development has plans of forming large agri-businesses by merging several joint-stock companies to increase scale and boost exports.

Deputy Chief Nguyen Phu Hung of the ministry's business management and renovation department said, however, that the individual businesses must be financially strong enough for the process to go ahead.

Since most state-owned agricultural companies are in the process of privatisation and need time to shore up their finances, the programme cannot be carried out immediately.

Vietnam, a major agricultural economy, has an annual output of 40 million tonnes food crops, from which it exports 10 million tonnes.

The Ministry of Agriculture and Rural Development will further study the project before submitting it to the government for approval next year.

On the other hand, the process of privatising agricultural businesses remains stuck due a plethora of problems. For instance, each business has on average charter capital of VND20 billion (US$1.05 million) with 15% of them having less than VND1 billion (US$52,493).

Consequently, only two of the 16 businesses run by the Ministry of Agriculture and Rural Development have been privatised, whereas 12 have been transformed into parent-subsidiary limited-liability companies; two others have merged.