Equitization creating strong "push" for businesses and the economy.

Mechanical manufacturing operationsat the CNS Amura Co., Ltd. - Saigon Industrial Corporation. Photo: N.Hien.

As the synthesis results of the Ministry of Finance at 350 enterprises after equitization in 2015 showed, compared with the year before equitization, profit before tax increased by 49%, budget contributionincreased by 27%, chartered capital increased by 72%, total assets up by 39%, revenue up by 29%, and the average income of workers increased by 33%.

In addition, Mr. Dung said, the introduction of the joint-stock companies through equitization continues to increase competition in the economy, boosting development for the stock and financial markets. Through equitization, the State has more revenue to invest for social -economic development; enterprises have conditions to mobilize resources for innovation, development,and to improve production and businessefficiencyetc.

He also said, the equitization of some economic groups, State corporations and large-scale SOEs associated with auctioning and listing on the stock market has provided the stock market with quality goodsand had a powerful impact on capital market development, while enhancing the openness, transparency and social control over the activities of enterprises.

From 2011-2015 there were 276 equitized enterprises to auction IPO with total offered shares of 3,068 million shares, worth 17,558 billionvnd. Among them, 1.500 million shareswere sold, worth 20,547 billionvnd, reaching 49% of the total number of offered shares. At present there are 411 equitizedbusinesses listed shares on the stock market, which has 263 enterprises on the HCMC and 148on the Hanoi Stock exchange. In addition there are 207 companies registered for exchanges on the Upcomfloor. Particularly in 2011-2015, there were 67 listed companies (43 companies on the Hanoi, and 24 enterprises on the HCMC floor); In addition there were 128 companies registered for exchanged on the Upcomfloor.

The divestmentResult is limited

As reported by the Ministry of Finance on the work of divesting from sectorsand fields belonging to or not belonging to the main business of State economic groupsand corporations (securities, banking, estate...), in 2011-2015, is was expected to divest about 26,000 billionvnd. However, the result of divestment was just 42%, so there is 58%, equivalent to 15,000 billionvnd to make divestments in the period 2016-2020.

On divestingState capital in the divested enterprises, the list of types of SOEs, as reported by the Ministry of Finance and the State Securities Commission, on the results of IPOs of 426equitizedSOEs in 2011-2015, only 254 SOEs (60%) sold off shares and 172 SOEs (40%) have not sold off all shares under anapproved equitization scheme. The SSC’s report also showed that, in 2015, there were 128 IPO companies thatsold on averageabout 36% of the total number of offered shares.

In addition, 63% of State-owned enterprises still hold more than 50% of charter capital, among them, 16% of SOEs hold more than 90% of charter capital. After IPO, on average, the State still holds 81% of charter capital in enterprises, while outside investors hold 9.5%, strategic investors hold 7.3%, workers and union organizations hold 2.2%. Therefore, Mr. Nguyen Trong Dung said, next time will continue to divest from these businesses in order to pull off the percentage of the Stateown equity rate.

On divesting in 10 large companies like Vinamilk, Sabeco, Habeco etc.under the Government’sdirection, Mr. Nguyen Hong Hien, Deputy Director of the State Capital Investment Corporation (SCIC) said, 9% of Vinamilk’scapital is expected to be sold in early next December. For the last 9 large enterprises, SCIC is planning to meet the multiple objectives, besides bringing the highest efficiency for the State capital, at the same time creating conditions for raising the quality for enterprises’governance, and motivating for businessessto develop.