Equitization is still very slow: Minister Ho Duc Phoc

VCN - Speaking at the Conference "Solutions to promote the equitization of enterprises, public service delivery units and divestment of state capital in enterprises" jointly held by Finance Magazine and the Department of Corporate Finance (Ministry of Finance) on the morning of May 17, Minister of Finance Ho Duc Phoc said in the near future, the Government will select five cities under the Central Government to approve the land arrangement plan and select some equitized enterprises to pilot the listing of trading on regional and global stock markets, ensuring transparency and competitiveness.
Major goals of thrift practice against waste Major goals of thrift practice against waste
Revenues from equitization, divestment – Why it is difficult? Revenues from equitization, divestment – Why it is difficult?
Completing the legal framework to develop and improve the efficiency of state-owned enterprises Completing the legal framework to develop and improve the efficiency of state-owned enterprises
Minister of Finance Ho Duc Phoc speaks at the Conference.
Minister of Finance Ho Duc Phoc speaks at the Conference.


The minister affirmed that the restructuring of SOEs is an important task.

The Ministry of Finance has advised the Government and implemented equitization and divestment and achieved many positive results.

The mechanisms and policies have been improved through the issuance, amendment and supplementation of decrees related to equitization and divestment. As a result, the bottlenecks in terms of mechanisms and policies have been solved, removing many difficulties for enterprises.

Besides the achieved results, there are still many shortcomings in equitization and divestment. Those are problems that require consultation and coordination of ministries, agencies, corporations and groups to solve in order to promote the country’s economic development and effective economic restructuring to realize long-term goals.

Shortcomings and problems that were mentioned by Minister Ho Duc Phoc include the slow equitization progress, failure to achieve the results set out in the plan issued by the Government; revenue from equitization not meeting the requirements. Particularly in 2021, the National Assembly assigned the Government to collect VND40,000 billion from equitization, but by the end of 2022, this was only VND2,000 billion. The minister said equitization is still very slow.

Also according to the Minister, the determination of corporate value is inaccurate, with the determined value of an enterprise often lower than the actual value and the re-determination is slow, thus causing loss and waste.

“When I was working as the Auditor General, I re-audited the valuation of 45 enterprises. After the audit, their value increased many times, 2.8 times on average. That shows that the determination of enterprise value is not accurate, but the biggest risk is the value of the land use right," said the Minister.

According to the Minister, the annual land rent was not included in the corporate value, but the one-time land rent was included, so the one-time valuation was not close to the market price.

In addition, after 10 or 20 years, the value will change. Not to mention the one-time payment of land rent when the equitized enterprise changes the purpose of land use to urban areas, or other works, then this change will lead to inaccurate land value determination, causing revenue loss.

In 2018, the National Assembly issued Resolution 60 prohibiting the change of land use purposes originating from the State to other purposes.

However, by 2020, when Decree No. 140 was issued, Resolution 60 was abolished, but Decree 140 did not clearly stipulate whether the land use purpose can be changed or not, causing confusion. According to the Minister, we must identify this problem and advise the Government to amend it.

The Minister also pointed out that there are no clear regulations on the arrangement of real estate, such as determining commercial advantages, and joint ventures. To solve this situation, the Prime Minister has requested the Ministry of Finance work with relevant ministries and agencies to remove difficulties for enterprises to accelerate equitization and divestment of capital in enterprises. Besides, the heads of SOEs have not made all efforts to implement the equitization, so the SOEs' equitization progress fails to meet the plan.

In 2022, revenue from equitization will be the same as in 2021 if equitization is not implemented. This is also a problem that must be solved. The Ministry of Finance is preparing a report to the Government and the National Assembly to amend the Law on Management and use of State capital in production and business of enterprises.

Regarding solutions to accelerate equitization and divestment, the Minister said that in the near future, five centrally-run cities will be selected to approve the land arrangement plan and a few enterprises will be selected to pilot the listing of trading on regional and global stock markets, ensuring transparency and competitiveness.

Concentrate on equitization and divestment in enterprises with large capital scale Concentrate on equitization and divestment in enterprises with large capital scale

Minister Ho Duc Phoc also asked the delegates to study and give opinions on a number of issues on amending the Law on Management and Use of State Capital in the production and management of enterprises; method of determining corporate value accurately; determining the value of land use rights, in which, whether the value of land use rights is included in the corporate value upon equitization or not, or the annual land rents will be included in the corporate value upon equitization and the land using purpose is maintained as the approved equitization plan and the change of land using purpose must be in accordance with the law.

By Hoai Anh/ Huyen Trang

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