VietNamNet Bridge - Vietnam has never given up its automobile dream, even though it has failed to implement an auto industry strategy in the last two decades, and the Ministry of Transport (MOT) has decided to sell Vinamotor, the core of the industry.

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The Ministry of Transport has decided to sell Vinamotor

After failing to divest 51 percent of Vinamotor’s shares in early 2014, the government decided to sell Vinamotor. In October 2015, MOT approved the divestment plan under which Vinamotor’s shares would be sold in lots. 

The sale of Vinamotor, analysts say, means the state has admitted failure in implementing the automobile industry development strategy, because Vinamotor was built with the hope of it becoming the core of the industry.

However, Nguyen Khac Trai from the Hanoi University of Technology commented the state has made the correct decision to divest Vinamotor’s shares, because it does not need to invest in business fields which do not relate to national defence or public security. 

The State once failed to sell Vinamotor’s shares, but this does not mean it will fail again. The sale of 51 percent of Vinamotor’s stakes could not attract investors who wanted to obtain share proportions large enough to join the company’s management board. However, things will be quite different as Vinamotor will be sold whole.

Former head of the Trade Research Institute Nguyen Van Nam also thinks it would be better to sell unprofitable state-owned enterprises. Vinamotor is 50 years old, and it has spent much money, but the operation has never been effective.

When asked about the role of Vinamotor in the Vietnam’s automobile industry and the possible effects the sale of Vinamotor may have on the national economy, Nam said the job of policy makers is to review the entire industry to discover whether Vinamotor is important.

MOT announced that both domestic and foreign investors could be buyers. However, they must operate in fields which have relations with Vinamotor’s major business field. 
He said that Vinamotor’s status as the core of the automobile industry appeared to have more political than economic significance, noting that Vinamotor was a state-owned enterprise.

MOT announced that both domestic and foreign investors could be buyers. However, they must operate in fields which have relations with Vinamotor’s major business field. 

Trai noted that by setting up requirements, the state tries to prevent investors from turning Vinamotor into a real estate developer.

“The state might fear that investors, after taking over Vinamotor, will not continue making automobiles, but will use the land it has for real estate business,” Trai said.

Also according to Trai, no matter who buys Vinamotor, the Vietnamese automobile dream will still exist. It is just unclear when the dream can be fulfilled.