Vietnam: Collecting tax arrears from Sabeco may create bad precedent for next divestments by Vietnamese government

Vietnam’s authorities’ collecting VND2.5 trillion ($109.8 million) in tax arrears from Saigon Beer, Alcohol and Beverage Corporation (Sabeco) made foreign investors concerned about taking part in later divestments of state-owned firms, VietNamNet Bridge reported on March 23.

Recently, the State Audit Office of Vietnam proposed collecting VND2.5 trillion ($109.8 million) in tax arrears from Sabeco. The lion’s share of this is undeclared profit of VND2.8 trillion ($123.01 million) from 2016.

Besides, the state audit asked Sabeco to explain its losses from investing in banking, stocks, as well as pouring money into financial investment funds.

Responding to this incident, a director of a foreign investment fund said, “We are a small shareholder in Sabeco, thus we are waiting for ThaiBev’s opinion, who hold 53 per cent stake in the corporation. We believe that ThaiBev will have a proposal to the government so that the incident can be handled fairly.”

The director wondered that if the VND2.5 trillion ($109.8 million) had not been included in Sabeco’s assets, investors might not have paid as high a price at the auction as the corporation's charter capital would have been significantly lower.

Furthermore, when the government issued divestment plans from Sabeco, they committed not to conduct tax arrears in Sabeco, excluding the special consumption tax mission.

“In case Sabeco was forced to pay VND2.5 trillion ($109.8 million) in tax arrears, the government should scrutinise accounting standards, the legality of the divestment deal, as well as the state’s commitments made when it offered Sabeco’s stakes to investors. Otherwise, foreign investors will be alarmed that after acquiring stakes in state-owned firms, a part of their ownership will be affected by previously undisclosed financial obligations,” the director stated.

In case Sabeco was forced to pay VND2.5 trillion ($109.8 million) in tax arrears, foreign investors will be alarmed that after acquiring stakes in state-owned firms, a part of their ownership will be affected by previously undisclosed financial obligations.

A director of another foreign investment fund stated that in the past two years, foreign investors have been buying stakes that the authorities divested from state-owned enterprises, instead of buying shares on the stock exchange.

However, if Sabeco has to comply with the state audit’s allegations, it will create a bad precedent for next divestments.

Returning to Sabeco, after plunging to VND214,600 ($9.43), a record low since July 2017, the company’s share reported a slight increase to VND226,000 at 15:00 PM of the transaction session on March 21.

However, the figure is still low compared to the record of VND334,500 ($14.69) on the transaction session of November 29, 2017.

Reacting to Sabeco’s falling share value, on March 15, seven foreign investment funds managed by Dragon Capital completed the purchase of 15.3 million shares, equalling 2.3 per cent of Sabeco’s charter capital, for VND3.27 trillion ($143.6 million).

Thereby, to date, Dragon Capital owns 2.3 per cent stake in Sabeco, while ThaiBev, through its subsidiary Vietnam Beverage Company Limited, currently holds 53 per cent.

25 March, 2018