Vietnam - 150 SOEs must be equitized every year

In the first four months of 2012, only four State-owned enterprises (SOEs) were equitized, said a report of the Steering Committee for Enterprise Reform and Development. This is a slow progress given an urgent need for SOEs equitization.

Pham Viet Muon, deputy chief of the steering committee, who also serves as vice chairman of the Government Office, talks about this issue.

Could you comment on the progress of the SOEs equitization process so far?

SOEs equitization began in 1992, and since 2001 has been accelerated. By the end of 2011, we have equitized nearly 4,000 enterprises. The number of SOEs dropped from the original 12,000 to 5,655 in 2001. Now, there are only 1,309 enterprises wholly owned by the State nationwide.

Basically, most SOEs are turning into joint stock companies, attracting more resources from the society. More importantly, the management of these enterprises has been publicized.

Some data show that in 2011 and the first quarter of 2012, the number of equitized SOEs is very modest. Why does the process slow down?

In 2011, the number of equitized SOEs was very small, only 60 enterprises. In the first four months of 2012, only four enterprises were equitized. These are the enterprises whose equitization processes are carried over from 2011.

The slowdown this year is because ministerial and local agencies, as well as the State groups and corporations, only focus on the initial stage of equitization in the beginning of the year. The first quarter is often the time for preparation. Corporate values are announced in the second quarter and not until the third and fourth quarter do results show up. This is one of the reasons.

Another reason is that policies, typically Decree 59/2011/ND-CP, only address some issues, while others are arising such as corporate value assessment, which requires making land management schemes that meet the prevalent regulations in order to reorganize and handle properties in accordance with the Government’s decision, and then submitting to the local authorities before carrying out corporate value assessment.

This is yet to mention review of liabilities, audit of value assessment results, and financial processing as for enterprises with capital scale of over 500 billion dong active in the fields the insurance, banking, post and telecommunications, aviation and exploitation of coal, oil, gas and rare minerals. Administering agencies of the State economic groups and corporations spend much time and run into many problems when trying to meet such requirements.

There are other reasons such as the equity market yet to recover. Sluggish demand discourages enterprises to offer stakes for sale. In 2011, for example, an enterprise offered a 20% stake but only 3-10% was acquired.

Apart from the aforesaid reasons, the decisive factor is the guidance of ministerial and local agencies, State groups and corporations is not drastic enough.

What is the target of equitization in the coming time?

The Government has approved most of the reorganization schemes. Only the Ministry of National Defense, HCM City and Dak Nong have yet to submit their schemes for SOEs reorganization and reform.

According the reorganization schemes, there are only 1,309 wholly SOEs left. In the period from now to 2015, 692 enterprises will remain their State wholly-owned status, and 573 will be equitized.

Of these 573 SOEs, the State will hold dominant stakes of over 75% in 30 enterprises, over 65% in 45 enterprises, over 50% in 108 enterprises and below 50% or no stake in 391 enterprises, while 44 enterprises will be dissolved or restructured.

In order to equitize 573 SOEs by 2015, some 150 enterprises must be equitized every year from now. It is necessary to timely revise Decree 59 on land, audit, statistics, inventory, financial processing, and handling redundant laborers.

Of the 573 SOEs to be equitized, only a few are under management of local authorities. Most of them belong to the six ministries, together with the two cities HCM City and Hanoi. These ministries and cities are milestones in SOEs reorganization and equitization. If they failed to give proper guidelines, the goal of equitization in the coming times would be hard to achieve.

For instance, there are as many as 91 wholly SOEs in HCM City. From now to 2015, 22 enterprises will remain unchanged and 69 enterprises will be equitized. To equitize all of them is far from simple. It requires strong determination. Equitization of SOEs in HCM City is processing at slow pace.

Saigon Times

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