New regulations on land valuation will speed up the equitization of SOEs

Mr. Dang Quyet Tien, Director of Corporate Finance Department

Can you outline the progress of equitisation, divestment of SOEs last time?

In the period before 2011-2015, equitization achieved more than 90% of the volume plan, while the capital sold to investors only reached 8% and changed significantly. In 2017, the Government has concentrated on equitization, divesting capital in some large companies such as Sabeco, Vinamilk as well as SCIC's businesses.

Obviously, the plan delivered from 2015 must be implemented fiercely. The equitization of Vinamilk, Sabeco has been assessed very well, therefore, creating motivation, attracting foreign capital, creating cash flow for the stock market.

The recent stock market is developing due to foreign capital inflows, which is different from the period 10 years ago, which were mainly from the resources of the people. But foreign capital requires us to have good products, in other words, when I invest capital, I will stay a long time with that product, industry ... this is the goal of the State. Firstly, we withdraw the capital properly, after the divestment the business will work better. Secondly, SOEs will not do that, only people, society and investors do it...

According to statistics, the number of equitized enterprises is quite low. Has Decree 126/2017 / ND-CP corrected this situation?

Last time, the progress of many enterprises’equitization, including corporations and corporations was slow, as these were large scale enterprises with complex asset structures, so the process of determining the value of the enterprise takes a long time. In addition, the amount of shares that these companies initially offered to the public were large, they should have chosen the appropriate time to offer, in order to avoid putting pressure on demand leading to the risk of an IPO being unsuccessful. In addition, there were still some ministries, branches and localities that were passive and not aggressive, affecting the fulfillment of the equitization plan, equitisation restructuring, and restructuring of SOEs in 2017.

On the other hand, the registration of transactions, SOE listings on the stock exchange after equitization, was not taken seriously. Thus, the first time the Government publicized the list of equitized enterprises with the ratio of annual equitized enterprises, and announced the divestment business so that investors, societies and markets could make a decision for investment.

This is done in accordance with Decree 126/2017 / ND-CP on transfer of SOEs and one member limited liability companies with 100% charter capital owned by SOEs. Accordingly, the first time in the Decree on equitization mechanism, there are detailed regulations on enterprises having to disclose information and listing on the stock market.

Accordingly, equitized enterprises must publicly disclose information on the Government Portal and at the same time send it to the Ministry of Finance, the Steering Committee for Enterprise Renovation and Development; to monitor the equitization process and schedule, information about enterprises, including the approved plan of land use, the area of land currently in dispute, the equitization plan, the situation and the results of the implementation of the equitization plan.

When compiling an IPO profile, enterprises must simultaneously compile custody registration dossiers and dossiers for transaction registration or listing on the securities market (if the conditions are met). Within 90 days from the closing date of the IPO, the company must complete the procedures for registration of shares at the Securities Depository Center and register transactions on UPCoM ...

Could you clarify the new features of Decree 126/2017 / ND-CP? These new points will help businesses solve the shortcomings, thereby overcome the slowdown equation, sir?

Decree No. 126/2017 / ND-CP with new points will remove the procedures, techniques that ensure market transparency. For example, when equitizating, a company must register the implementation steps for management agencies and people to supervise, also to show the responsibility of business leaders for the capital allocated by the State. At the same time, this decree also clearly states about the land when equitized, if not used by the State, returned for local auction. Thus, investors interested only in land will not seek to participate, giving way to investors focused on production, business, create added value ...

Decree 126/2017 / NĐ-CP also helps to remove problems in the equitization process, which is to allow investors to bring foreign consultants to assess the value of enterprises very publicly and transparently.

A new point in the Decree 126/2017 / ND-CP that we made for the first time, is to publicize the progress of each enterprise on the information system of the Government and the Ministry of Finance. Thus, when equitizing, the company must register the steps of the process. Then if a business is slow at any step, it is responsible for that. The Government doesn’t force, only allows the mechanism to self-register. That is to show the responsibility of business leaders, state management agencies for the capital entrusted by the State.

When the legal regulations are clear and open, if the pace of equitisation is still slow with most of the leaders hesitant, delaying implementing an organization. In this situation, the Steering Committee will hold the business leaders accountable.

Recently, the Prime Minister approved the equitisation of 3 companies in the oil and gas industry. Next time, he will approve the equitisation of the Rubber Industry Group ... These approvals show the drastic pace of the Government, and on such a large scale, it must be well prepared to find good markets and buyers. Thus, when it comes to equitisation, it must be well prepared, and most importantly, the Government has determined that it will not step back, and will ensure that it will change its quality.

I expect that, with the liberal mechanism along with active rights, in the coming time, the equitisation rate will be better, accelerate and achieve higher results.