Need for independent valuation agency to involve in equitisation of State-owned enterprises

assets valuation included the value of land facing difficulties by many businesses. Source: Internet

According to data of the Ministry of Finance, the number of enterprises subject to equitisation as planned by the end of 2020 was 92. The equitisation progress in the first months of 2020 was slow. The Covid-19 pandemic resulted in delaying production and business operation of enterprises, so the implementation of equitisation and divestment of enterprises encountered difficulties.

Currently, several units with many enterprises in the list of being subject to equitisation in 2020, including: Ho Chi Minh City (equitising 38 enterprises, including 11 corporations); Hanoi (equitising 13 enterprises, including four corporations); State Capital Management in Enterprises Committee (equitising six enterprises, including three corporations and three controlling companies); the Ministry of Industry and Trade (equitising four enterprises, including three corporations); the Ministry of Construction (equitising two controlling companies).

Commenting on the status of slow equitisation of SOEs, PhD. Le Duy Binh, Director of Economica Vietnam, said the motivation of SOE reform from the Government was very large, accordingly, the Government issued resolutions, directives and proposals for SOE reform but the motivation from management ministries and the motivation of the State Capital Management in Enterprises Committee was still in question.

According to Binh, maybe, SOEs were too familiar with current benefits so this caused significant impacts on whether they should convert into a joint stock company or not?

Moreover, the decision making of the investment project of a joint stock company would follow a different process, not the same process of SOEs as before which would affect their benefits if the enterprise was equitised. This has not created a real motive, except for some industries that need to be transformed.

Emphasising the reason of slow equitisation of SOEs is due to the motivation of enterprises, as well as determination of the head of the governing body, Professor Binh said that, to put the equitisation process of SOEs on schedule, following the right path, it was necessary to attach the responsibility of each individual, that is, the head of the enterprise and management authorities, because equitisation was in the plan, in the determination of the Government, it was only a matter of slow implementation.

Regarding assets valuation, Binh said this was one of the most important contents in the equitisation of SOEs, which belongs to the technical part, because assets valuation included the value of land facing difficulties by many businesses.

Therefore, this expert said the assets valuation and remaining value of SOEs required transparency in the equitisation process. This required an independent valuation agency to participate in equitisation in order to increase transparency, minimise group benefits.