Either way, the government cannot afford to sit on its hands.

Last October, the government published a list of 10 major state-owned companies and said it would part with all of its shares in them. The list included Vietnam Dairy Products (Vinamilk), the country's largest dairy producer, and Baominh Insurance. Recently, however, a revised list emerged with only two of the companies named as candidates for share sales this year. Vinamilk and Baominh were excluded, dashing investor hopes.

At its shareholders meeting in late May, Vinamilk adopted a clause allowing 100% foreign ownership. This was a first for a state-owned Vietnamese company. In practice, though, full ownership will only be possible if State Capital Investment a government agency that owns a majority 45% stake gives up its shares. The agency agreed to the clause, raising expectations that the government was about to let go of those shares.

One might think the government would be eager to make a tidy profit from its Vinamilk holdings. Weak crude oil prices have squeezed income from the gasoline tax, and free trade pacts including the formation of the ASEAN Economic Community at the end of last year have reduced tariffs. By selling its stake in the dairy company, the government would pocket an estimated 55 trillion dong ($2.46 billion).

So why are the authorities holding back? An official at a Japanese brokerage said they "don't want to kill the goose that lays the golden egg." Others speculate that the government is waiting for the share price to climb higher.

Yet not a single state-owned company has come under full private ownership, and most of the entities' foreign ownership ratios are still less than 10%. Few outsiders hold the 35%-plus stakes they need to wield veto power.

Itochu, a Japanese trading house, owns 5% of Vinatex, the country's dominant textile company. ANA Holdings, a Japanese airline operator, has an 8.8% stake in Vietnam Airlines.

The amount of foreign capital in Vietnam is limited because the government "is not serious about opening up state-owned companies to foreigners," a Japanese government official said.

As a member of the TPP, however, Vietnam is obliged to level its corporate playing field. That means it must eliminate unfair privileges currently enjoyed by state-owned companies. These entities make up less than 1% of Vietnamese companies but control 90% of the information and communications industry and 80% of the electricity sector.

They command large market shares because they have the government's protection. Releasing 10-20% stakes to private and foreign investors will not be enough to change that state of affairs.

And, despite those juicy dividends, the government needs to do something to offset the decline in tax revenue. In the first five months of this year, the revenue shortfall came to 66.4 trillion dong. Without big names like Vinamilk, the privatization list for 2016 will not bring in enough funds to cover the gap.

Warming ties with the U.S. will only increase the urgency for Vietnam to become an "ordinary economy."

U.S. President Barack Obama's visit to Vietnam on May 22-25, and his decision to lift a ban on arms exports to the Southeast Asian country, marked a historic turning point for the former enemies. State-owned enterprise reform would lay a foundation for further progress toward a stronger relationship.

By At sushi Tomyama - Nikkei Asian Review - June 13, 2016

Vinamilk, which effectively pioneered the country's dairy industry, logged a pretax profit of 9.36 trillion dong last year, on sales of 40.2 trillion dong. The profit was up 16-fold from 2005, while the sales increased sevenfold. Over the course of the decade, the company's dividend payout ratio rose from 17% to 60%.

Parting with the shares would boost the state coffers, but it would also strip away dividend income.

Cocooned companies

Vietnam's state enterprise reform has yet to live up to the hype. A government plan calls for having the companies issue shares and team up with foreign partners. The companies are to be floated and the government will release all outstanding shares it owns.