How to remove the delay in equitisation and divestment? – Final part: basis to assess individual responsibility

	Part 3: Equitisation of HCM City
	Part 2: Divesting and equitising EVN: difficulties due to participation of too many agencies
	Part 1: Consequences from the delays equitisation and divestment of SOEs

Mr. Nguyen Hong Long

According to the Steering Committee for Enterprise Innovation and Development, since 2016, equitisation and divestment have seen many changes in quality, ensuring transparency and maximum benefits for the State. Could you please tell us more about this?

Equitisation and divestments are tools to restructure and innovate SOE operations. The biggest goal of SOE restructuring and innovation is to renovate the governance model, change technology and call for investment to ensure the most operational efficiency. Accordingly, the equitisation and divestment must be legal, transparent and bring the highest benefits.

From 2016 to 2020, the Government has issued many documents to drastically carry out this activity.

Firstly, Decision No. 58/2016 / QD-TTg dated December 28, 2016 on criteria for classifies SOEs, enterprises with State capital and the list of SOEs subject to restructuring in the 2016-2020 period. This Decision is very specific and clarifies industries allowed to hold State capital and the ownership rate of State capital.

Subsequently, Documents No. 991 / TTg-DMDN dated July 10, 2017 approving the List of SOEs completing equitisation for each year in the 2017-2020 period; Decision 1232 / QD-TTg dated August 17, 2017 approving the List of enterprises with state capital implementing divestment in the 2017-2020 period.

It can be seen that there is not a document that can be true for all types of enterprises, for all regions and for all times. After the documents on equitisation and restructuring of enterprises were issued, the Government instructed the Ministry of Finance to amend Decree 59/2011 / ND-CP and issue Decree 126/2017 / ND-CP. Accordingly, the Government issued Decree 167/2017 / ND-CP dated December 31, 2017 providing for the rearrangement and handling of public assets; and Decree 32/2018 / ND-CP amending Decree 91/2015 / ND-CP on state investment capital in enterprises.

In addition, at the beginning of 2019, the Prime Minister issued Directive No. 01 / CT-TTg dated January 5, 2019 on strengthening the direction, promoting restructuring, innovation, equitisation and divestment in state-owned enterprises and enterprises with state capital.

It can be seen that the Government has paid attention to this work. However, the fact shows that equitisation and divestment progress is lagging behind the plan. Specifically, until now equitisation has reached 27.5 percent of the number of enterprises and divestment reached 21.8 percent of the plan for the whole period of 2016-2020. Why is this?

The assessment that equitisation and divestment is slow is not satisfactory because in the first three years, the progress was quite slow and only 116 enterprises were equitized, but in the following two years, 383 enterprises were equitized, 3.3 times higher. Furthermore, equitisation and divestment need to undergo many stages and many preparatory steps.

For example, according to Official Letter No. 991 / TTg-DMDN, this period needs to equitize 127 enterprises, but up to now, in the two big cities, 50 enterprises have not been able to implement equitisation. Or divestment was only 21 percent of the list approved by the Prime Minister in Decision 1232. In addition to this list, there are many other channels performing divestment. In this year, among 30 enterprises performing divestment, only 10 enterprises divested under Decision 1232, and 20 enterprises divested according to other channels.

This shows that the system of legal documents on equitisation and divestment that has been issued in the direction of increasingly strict, open, transparent manner, ensuring maximum benefits of the State, has prolonged the implementation process.

In addition, many enterprises implementing equitisation and divestment in the 2016-2020 period are large-scale enterprises with complex finance and land, as well as large scopes of operation, so financial handling and approval of land use plans, enterprise valuation and share offering for the first time face many difficulties and takes a long time.

Moreover, the review and approval of land use plans takes time, so enterprises subject to equitisation must review and make a plan to rearrange and handle real estate; the consultation of making legal documents, and comments on the land use plans implemented by local authorities was slow, taking longer than prescribed.

In particular, it is undeniable that some ministries, sectors, localities, economic groups, state corporations and SOEs have not had serious and drastic direction and implementation; have not taken the initiative or advised and proposed to the Prime Minister to solve problems and shortcomings; some do not dare take responsibility for difficulties and obstacles, leading to the delay.

Under the drastic guidance of the Government and the Prime Minister, the equitisation and divestment progress will be accelerated in the last two years of the 2019-2020 period, especially in 2020. The evaluation of implementation results will be conducted by the end of 2020.

In the future, how can these problems be removed to ensure equitisation in accordance with law while ensuring the progress assigned by the Government, sir?

Recently, at the briefing meeting of the Steering Committee for Enterprise Innovation and Development on the performance of restructuring, equitisation, divestment, restructuring of state-owned enterprises and enterprise development, Deputy Prime Minister Vuong Dinh Hue directed the Ministry of Finance to continue to review related legal documents, including Decree 126/2017 / ND-CP, Decree No. 167/2017 / ND-CP, Decree No. 32 / 2018 / ND-CP and the guiding Circulars to remove difficulties and obstacles in equitisation, divestment, and report to the Prime Minister; and preside over and work with the Ministry of Natural Resources and Environment to organize a conference to solve problems in reviewing, arranging and handling land and public assets of localities and enterprises implementing equitisation and divestment in the third quarter of 2019.

The Deputy Prime Minister also assigned the Ministry of Natural Resources and Environment to review regulations related to comments and approval of land use plans of enterprises subject to equitisation to remove obstacles according to their competence; urge localities to coordinate closely with the Ministry of Finance to perform this task; and promulgate a circular guiding Decree No. 126/2017 / ND-CP in July 2019.

The localities must coordinate with concerned agencies to review, comment or approve land use plans according to regulations applicable to attached State enterprises and equitized enterprises owning land in the area; proactively remove difficulties, accelerate the progress of equitisation and divestment plans.

The Ministry of Finance shall assume the prime responsibility and coordinate with the Ministry of Natural Resources and Environment to hold a conference to solve problems and difficulties in reviewing, arranging and handling land and public assets of localities and enterprises subject to equitisation and divestment in the third quarter of 2019.

The above documents will remove the current institutional constraints. But the equitisation and divestment need efforts and responsibilities of management agencies, economic groups and corporations. Especially, the two big cities of Hanoi and Ho Chi Minh City need to speed up the commenting and approval of land use plans of attached enterprises subject to equitisation and enterprises subject to equitisation with land located in the cities; deploy necessary works to immediately carry out equitisation and divestment plans.

As you mentioned, one of the reasons for delays in equitisation and divestment is the psychology of not taking the initiative. Thus, besides removing institutional constraints, is it time for the Government to apply sanctions?

This is a delicate subject, but it is impossible not to mention. In Directive No. 01 / CT-TTg, the Prime Minister directs tightening discipline in SOE equitisation and divestment, which clarifies the responsibilities of individuals and organizations in the delay of equitisation, divestment, transaction registration, listing on the stock market, equitization settlement and remittance to the fund; the observance of administrative discipline, compliance with the regulations on equitisation, divestment, restructuring and performance of SOEs and offers strong sanctions to strictly handle violations.

The Prime Minister also directs ministries, ministerial-level agencies, government-attached agencies, localities, groups, corporations and SOEs to intensify inspection, supervision and audit to prevent losses of state capital and assets in the process of restructuring, equitisation, divestment and management and use of state capital. In particular, it is required to supplement the content of inspecting responsibilities of the head of the unit in the observance of administrative discipline in implementation of equitisation and divestment plans; responsibilities in organizing and completing annual business and production plans; and supplement the list of inspection for enterprises that are late in the settlement at the time of transfer from SOEs to joint stock companies.

Equitisation of State-owned enterprises remains slow: official The equitisation of State-owned enterprises (SOEs) is still slow, failing to reach the rate of progress as ...

Directive No. 01 is the basis for considering the responsibilities of collectives and individuals in delaying the equitization and divestment at the end of the 2016-2020 period.