Vietnam - SOEs restructuring is costly: experts

Policy makers and economic experts are concerned that the Government’s program for restructuring State-owned enterprises will be more difficult, costly and time-consuming than expected.

Speaking at a seminar titled “Restructuring the economy” in Hanoi last Friday, Minister of Finance Vuong Dinh Hue said the SOEs restructuring program is very difficult and complicated given its large scale.

The ministry is considering setting aside over 50 trillion dong to restructure debts and inject capital to SOEs under the program. “Money is needed for the project. As reported to the Government, enterprises are like patients with high fever. They need rest before taking antibiotics to cure the disease,” Hue said.

Song Da Corporation will pioneer the program but their expenditure is expected at up to US$10 million, which will be borrowed from the Asian Development Bank (ADB).

Hue said he would weigh raising the role of the SOEs restructuring support fund to help facilitate the program. The return-on-asset ratio of SOEs has never surpassed 6% during the last ten years, Hue added.

The Government also has plans to establish the General Department of State Capital Management and the ministry is making a draft. Accordingly, other ministries have to set up State capital managing boards in SOEs.

Pham Viet Muon, deputy head of the Government Office and deputy chief of the Steering Committee for State-owned Enterprise Reform and Development, meanwhile, said that the biggest challenge is unanimity in thinking.

The nation now has 102 SOEs with capital of under 2 billion dong each while only 30 SOEs went public last year, proving that the equitization progress is facing more difficulties, Muon added.

Vu Tien Loc, chairman of Vietnam Chamber of Commerce and Industry (VCCI), said citizens are expecting the State to speed up the SOEs renovation program.

A survey of VCCI showed that 87% of suggestions urged a strong SOEs restructuring program, 87% said it was necessary to make operation of the State-run sector transparent and 83% said strict regulations were needed for the management of SOEs.

The first thing is to create a fair business environment for SOEs to compete with each other and with private enterprises, Loc said.

Mergers and acquisitions (M&A) is also a tendency in restructuring as the market obtained up to US$2.7 billion in the January-September period. However, more and more Chinese enterprises are plotting to swallow local firms with financial problems, Loc said.

“The Government needs to release policies to help local firms actively join M&A deals to maintain their companies. Otherwise, they will fall into foreign enterprises’ hands, especially Chinese firms,” Loc added.

Saigon Times

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