Vietnam. The government delays Sabeco shares sale, while the company’s profits fell by 27% in four month of 2016

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In mid2015, the Ministry of Industry and Trade of Vietnam proposed the government to sell the state share stock of company Sabeco in an open auction. It is planned to cut the state share portfolio from 89.59% to 36%. Though the proposal was put forward nearly a year ago, the decision is still not taken.

According to economists’ view this footdragging is caused by the state’s intention to profit from such a large business.

However, in case of further delaying of open auction for Sabeco share sale, there is a risk that the deal will yield much less money than expected.

The point is that in 2016 is thought to be very difficult for Sabeco. For one thing, a considerable tax pressure is experienced due to the higher excise as it has been increased to 55% this year. For another thing, the competition over the market is growing ever fiercer, especially from the transnational companies such as AB InBev. Decreasing import duty to 0% for beer is making the risks of Vietnamese brewers on the domestic market significantly higher. At the same time, the export potential of the local beer is far from being strong.

Besides, such factors as fluctuations of the exchange rate leading to price of import raw materials as well as joining Trans-Pacific Partnership Agreement and FTA are also fraught with dangers for the brewing business of Vietnam.

This year, the company is planning to heighten the level of beer realization and to increase the revenue by 4% against 2015, though expecting the profit after tax fall by 5%.

After 4 months of 2016, Sabeco’s turnover is estimated at 10.494 billion dong which is 17% up versus the same index last year. Yet, the company’s profit over this period fell by 27% to 1.215 billion dong.