Efficiency and contribution of the State-owned enterprises are still lower than the investment resource

	Consulting on IPO and transfer of State capital in the form of book building
	Lack of transparency, the bane of SOE equitisation
	Tightening management of State assets in enterprises, equitisation

The forum “"Promoting Innovation and Enhancing Effectiveness of State-owned enterprises”. Photo: H.A

There are over 500 enterprises with 100% State capital

According to Deputy Minister of the Planning and Investment, Nguyen Van Hieu, the context of strong economic integration together with limitations in economic growth in the country has posed urgent requirements, the economic structure and institution need to be reviewed to establish new momentum and promote future growth. In particular, the innovation and restructure of SOEs is one of 3 tasks of economic restructuring.

The promulgation of Decision 929/QD-TTg dated 17th July 2012, now as Decision 707 /QD-TTg dated 25th May 2017 of the Prime Minister, approving the project on “restructuring SOEs, focusing on economic groups and state-owned corporations for 2016-2020” has shown the great determination of the Government and Prime Minister in promoting innovation and improving efficiency of SOEs’ operation.

Also, the Deputy Minister of Planning and Investment said that over 20 years of continuous reform, the number of SOEs reduced from more than 12,000 enterprises in the early 1990s, to 5,600 enterprises in 2001, and now to only about 500 enterprises with 100% State capital in 11 economic sectors. It was expected that by 2020, there will only be about 100 State-owned enterprises in the country.

"We are not satisfied with the results achieved, the efficiency of performance of SOEs compared with other economic sectors is always a concern," Deputy Minister Nguyen Van Hieu said. .

Accordingly, enterprises with 100% State capital were assigned to manage and use a large amount of assets, but the efficiency of production and business and the contribution of some SOEs were still insignificant and inconsistent with the State investment; a number of SOEs' projects also suffered from large capital losses.

The restructuring, equitization and divestments of SOEs is still slow and do not achieve the target in Official Letter 991/TTg-DMDN and Decision 1232/QD-TTg of the Prime Minister.

In the coming time, the equitization and divestments is considered as the key task to restructure SOEs, including equitization of big corporations such as Vietnam National Coal-Mineral Industries Holding Corporation Limited, Vietnam National Chemical Group, Vietnam Posts and Telecommunications Group and corporations of Hanoi and Ho Chi Minh City ...

"In the context of the Industrial Revolution 4.0 and the establishment of the State Capital Management Committee, the task of reforming and enhancing the efficiency of operation of SOEs in the coming time is extremely difficult," the Deputy Minister of Planning and Investment said.

Promptly review all land fund under the management

At the forum, Mr. Dang Quyet Tien, Director of Department of Corporate Finance Ministry of Finance) said that in 2016, 66 enterprises were equitized with total value of VND 40,206 billion, of which the State capital was VND 27,328 billion. In 2017, 69 enterprises were equitized with total value of VND 365,953, of which the State capital was VND 160.156 billion.

In the period of 2016 to September 2018, Vietnam divested VND 16,463 billion and collected VND 154.306 billion. In the first 9 months of 2018, enterprises divested VND 3.770 trillion and collected VND 9,140 billion.

However, Mr. Dang Quyet Tien also pointed out limitations of SOEs such as the efficiency of production and business was insignificant and inconsistent with the State investment, the renovation of the administration mechanism of SOEs was slow and did not match with international standards and the transparency was limited.

In addition, Mr. Dang Quyet Tien emphasized that one of the difficulties in equalization of SOEs was the the arrangement of land.

"The SOE equitization process takes time to solve the problems on finance, land and labor before the equitization, which prolongs the equitisation time. Especially, the legal dossier on land were made by the local People's Committee more slowly than the limited time, so enterprises must adjust their equitisation progress,” Mr. Tien said.

New regulations on land valuation will speed up the equitization of SOEs VCN- With many new regulations on enterprise valuation, especially land valuation, share selling method ... in Decree ...

Among the proposed solutions, Mr. Tien emphasized that State-owned enterprises subject to equitization should urgently review the entire land fund being managed and use to make plans on using land in accordance with the regulations on land law to submit to the People's Committees of the provinces and centrally run cities for comments on the plans and land price for the approval before valuation of equitized enterprises.

According to Mr. Hoang Truong Giang, Deputy Director of General Economics Department, Central Economic Committee, equitization and capital divestment in some localities was still low and faced difficulties (for example, under the plan in 2018, Ho Chi Minh City must equitize 39 enterprises, Ha Noi must equitize 11 enterprises but currently there have no any enterprises to be equitized).

Some enterprises did not successfully equitize (such as the Maritime Corporation sold 1% of shares). The listing and registration of shares on the stock exchange has not been implemented much (as of 15th August, 747 companies have not registered trading and listed shares). The handling of 12 loss-making projects of the Industry and Trade sector was still difficult and faced challenges.

Accordingly, Mr. Hoang Truong Giang recommended that the economic corporations, state-owned corporations, projects and investment projects of SOEs that ineffectively operated and suffered from long losses, needed to be strictly handled. It is necessary to have a unified legal framework to handle loss-making enterprises and projects, especially loss-making projects of the Industry and Trade sector, and loss-making corporations and groups.