Equitisation and divestment are “treading water”

VCN  - Only 36 of 128 enterprises have implemented equitisation, while VND4,704 billion of VND60,000 billion has been divested. There is one year left to finish the plan, but some units have implemented just 10 percent of the plan. This is an alarming situation.
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equitisation and divestment are treading water
The delay is mostly due to the responsibility of the implementing agencies, related to the political determination of the businesses, the responsibility and the close supervision of the representative agency. Photo: ST.

Divestment only reached 7.8 percent of the plan

According to the Prime Minister's approval, the equitisation plan for the period of 2017-2020 is 128 enterprises. In fact, in 2019, there were 9 enterprises approved by the competent authorities, but only 3 of them were on the list of equitised enterprises approved by the Prime Minister. Therefore, in the period 2016 - 2019, 168 enterprises have been approved by the competent authorities for equitisation plans, with a total enterprise value of VND443,056 billion, of which the value of state capital is VND206,694 billion. However, only 36 of 168 enterprises were in the list of 128 enterprises, meaning that equitisation under the direction only reached 28 percent of the plan. The number of enterprises still subject to equitisation according to the plan by the end of 2020 is 92.

Notably, many enterprises must carry out equitisation until 2020 (especially Hanoi and Ho Chi Minh City), which are doing it very slowly, even "treading water". Statistics from the Ministry of Finance show that Hanoi has equitised 13 enterprises (4 corporations), accounting for 14 percent of the plan; Ho Chi Minh City equitised 38 enterprises (11 corporations), accounting for 40 percent of the plan.

Regarding the divestment, the Prime Minister has approved the plan requiring the period 2017 - 2020 to withdraw about VND60,000 billion of state capital in enterprises. However, from 2017 to 2019, the State capital divested VND4,704 billion at 92 units, collectingVND8,964 billion. Particularly, in 2019,it has divested VND896 billion at 13 enterprises, collecting VND1,839 billion. Thus, the state divestment is worse than equitization,only reaching 7.8 percent of the plan.

In addition to businesses that have to divest from the list of Prime Minister's requests, in the past 3 years, the whole country has divested VND3,785 billion, collectingVND110,392 billion (including the divestment of VND3,436 billion, collectingVND109,965 billion at the joint stock company part of Saigon Beer - Alcohol - Beverage (Sabeco)).

Besides, in the process of implementing the restructuring project, some corporations and SOEs also divested VND16,279 billion, collectingVND51,714 billion since 2016. In all 3 fields, the whole country in the period 2016 - 2019 has divestedVND4,769 billion, collectingVND171,072 billion.

At many forums, Mr. Dang Quyet Tien, Director of the Department of Enterprise Finance, Ministry of Finance still has to reiterate that: Equitisation and divestment is an important solution in arrangement, innovation and restructuring state-owned enterprises (SOEs). The results of equitisation and divestment have had a positive impact on the development of the stock market and at the same time improving the performance of enterprises after equitisation. Most of the equitised SOEs produce and do businesseffectively, the budget payment and the income of workers also rise.

However, it is undeniable that some ministries, sectors, localities, state-owned economic groups and corporations have not really seriously implemented equitisation, divestment and restructuring plans under the direction of the Prime Minister. The role, awareness and responsibilities of heads of enterprises and units are not high, and not yet drastic in renewing enterprises' operations, publicity, transparency and compliance with law, ensuring market principles, fighting against group interests in equitisation and divestment of state capital. Of course, according to Mr. Tien, there are also objective issues such as the equitisation process of SOEs, which takes a lot of time to deal with financial, land and labor problems in the period before equitisation. Especially, the issue of land legal documents by the local People's Committee is slow, takes longer than the regulation, leading enterprises to adjust equitization progress.

Impute the blame to the heads

In order to continue promoting the renovation and improving the efficiency of SOEs, the focus is on economic groups, state corporations, ministries, branches, localities, state corporations and corporationsthat need to focus on overcoming shortcomings and limitations; seriously, urgently and drastically implement resolutions of the Party, National Assembly, Government and the direction of the Prime Minister.

According to Mr. Tien, the Ministry of Finance will continue to consult with the Government to improve the institution and legal framework on the management and operation of SOEs on equitisation, divestment and restructuring. However, it is important that ministries, sectors, localities, economic groups, state corporations, and SOEs urgently complete the approval or submit to competent authorities for approval plans to restructure the enterprises under management. The equitised SOEs should urgently review the entire land fund and land useto make plans in accordance with the land law and submit it to the People's Committees of the provinces and cities directly under the Central Government for opinions on the plan and land price for the competent authorities' approval before organising the valuation of the equitised enterprise in accordance with the current regulations.

In particular, the owner's representative agency will direct the representative of the state capital share to urge the equitised enterprises to strictly implement the registration of transactions and listing on the securities market according to the provisions of law. For enterprises which have been equitised and transformed into a joint stock company, it must make the finalization of equitization in accordance with regulations, if the time is not sufficient, they must report to the Prime Ministerand take responsibility for the delay. The transfer of the right to represent the owner of state capital to the State Capital Investment Corporation (SCIC) must be done in accordance with current regulations.

equitisation and divestment are treading water How to remove the delay in equitisation and divestment? Part 4: The sale of capital and debt recovery should be separated to avoid losing State capit

VCN - State divestment in enterprises is an important part of restructuring, innovating and improving the efficiency ...

At the beginning of 2019, the Prime Minister issued the Directive 01/CT-TTg on strengthening the direction, stepping up the restructuring, reorganisation, innovation, equitisation and divestment of state capital in State-owned enterprises and enterprises with state capital are also clearly stated, attaching responsibilities of the heads. At this point, during the preliminary review and review process, each unit and locality will have to review and re-report to the Government. The heads must strictly implement this directive.

By Hong Van/KieuOanh

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