Part 3: Equitisation of HCM City

	Part 1: Consequences from the delays equitisation and divestment of SOEs
	Removing problems in management and use of revenues from equitisation and divestment of SOEs
	Deputy PM reviews SOEs equitisation, restructuring

Cholimex has been equitised and officially transformed into a joint stock company from July 15, 2016, it is still unable to complete the final settlement of the enterprise transformation “due to a number of difficulties that have not been instructed by the People's Committee of Ho Chi Minh City”

Increase State revenue from equitisation

Ho Chi Minh City is considered to implement very early regulations related to the arrangement and equitisation of state-owned enterprises (SOEs), establishing the Equitisation Steering Committee of 40 out of 40 enterprises with 100 percent state capital, issuing equitisation decisions and selecting the time of valuation for 37 of 40 enterprises. Standing Vice Chairman of the Ho Chi Minh City People's Committee Le Thanh Liem said that in recent years, the restructure and reorganisation, renovation, equitisation and divestments of SOEs have achieved many positive results.

From 2013 to 2016, Ho Chi Minh City equitised 32 enterprises, the total state capital in equitised enterprises reached 9,338,070 billion VND, equaling to 196.76 percent, an increase of 1.96 times compared with the total value of State capital before redefining. In the period of 2014-2018, the city has divested state capital in many businesses, earned 5,238.24 billion VND, up 1.65 times compared to the amount of State capital sold and reorganized by forms of dissolution, bankruptcy, sale of businesses in 13/25 enterprises. These results have contributed to increasing revenue for the city budget in the period of 2011-2017, on average, the annual State budget was nearly 11 trillion VND.

In addition to the achieved results, Liem also said that the equitisation of SOEs in the city still has some shortcomings and limitations such as not implementing the schedule of equitisation of SOEs in 2016-2020 under the direction of the Prime Minister. The revaluation of enterprises has not calculated correctly and fully. The implementation of the restructuring plan approved in some enterprises does not focus on the main production and business sectors, in some cases, the revenue from investing outside enterprises accounts for a large proportion. The enterprise's profits mainly come from financial sources.

In addition, in some cases, the dealing with losses of investment, arranging dissolution and bankruptcy for ineffective enterprises has been prolonged; the settlement finalisation of SOEs is still slow; registration of transactions and listing on the stock market is still difficult, so publicity and transparency are limited.

Difficulties

Explaining the delay of Ho Chi Minh City, which is affecting the equitisation progress of the country, according to Liem, this is due to equitised and divested enterprises in this period are large scale and complex financial; they manage, use many positions of houses, land and many joint venture activities, and associate with land use rights. At the same time, many businesses operate in relation to the socio-economic development and serve the city's political and public tasks; the capacity of the valuation consultancy unit in some cases does not meet the requirements.

On the other hand, some regulations on equitisation and divestments are issued in a strict direction, with long implementation time, especially in terms of land. Business valuation to ensure maximum benefits of the Government has to follow the process from the beginning. However, the subjective reason of the slow equitisation of enterprises in Ho Chi Minh City is that some departments, industries and enterprises have not been active in implementing their tasks, they are still afraid of waiting for direction, not proposing to handle or solve problems related to the assigned functions and tasks.

According to Ho Chi Minh City Enterprise Management and Innovation Board, in addition to 39 equitised enterprises that are currently behind schedule, Ho Chi Minh City has 15 subsidiaries under SOEs that need to be equitised. As planned, nine of them must be equitised. Thus, Ho Chi Minh City has a total of 48 enterprises to be equitised in 2019-2020.

Facing the urgent task, the Ho Chi Minh City People's Committee signed a directive to strengthen and direct the restructuring, reorganisation, innovation, equitisation and divestment of State capital in enterprises. Accordingly, the Ho Chi Minh City People's Committee directs and assigns tasks to the director of a department, functional branches, chairman of district People's Committee and member councils of State enterprises under the People's Committee of Ho Chi Minh City; units must focus on completing the construction, evaluation and submit to the People's Committee of Ho Chi Minh City for approval of the plan to restructure the SOEs under the People's Committee of Ho Chi Minh City under the direction of the Prime Minister. On that basis, enterprises organise the implementation.

On the business side, the representative of Saigon Tourism Corporation (Saigontourist) said it will implement under the Prime Minister's direction and the process proposed by the Ho Chi Minh City People's Committee. In fact, according to the previous plan, Saigontourist will be equitised in 2018 and in the first phase, 35 percent of State shares here will be sold. The enterprise has carried out many related works such as determining the value of enterprises, determining the criteria for selecting strategic shareholders, training human resources to prepare for the development strategy after equitisation. However, the equitisation process at Saigontourist was halted by asset valuation. Saigontourist also proposed Ho Chi Minh City issue a decision on asset transfer for equitisation.

As an enterprise that has finished equitisation but is still "stuck" at the end of the equitisation and divestment, Huynh An Trung, General Director of Cholimex Food Joint Stock Co (Cholimex) said that although Cholimex has been equitised and transformed into a joint stock company from July 15, 2016, it is still unable to complete the final settlement of the enterprise transformation "due to a number of difficulties that have not been instructed by the People's Committee of Ho Chi Minh City".

Specifically, Cholimex has not been instructed on how to determine long-term financial investment capital in enterprises; legal procedures, land costs, compensation and clearance of investment projects in Vinh Loc Industrial Park as well as the method of determining costs corresponding to revenue received in advance (money for long-term land lease customers) of Vinh Loc Industrial Park Company Limited (a subsidiary of Cholimex). The extension of the time for carrying out the settlement procedures of the enterprise has affected the development of Cholimex Company.

"It has been three years but we are unable to finalize how much of the state capital is in the company. If it is not finalised, we cannot put any capital into use or invest and we cannot transfer or join the market and develop in accordance with the model of a joint stock company,” Trung said.

In the same situation, there are now many equitised enterprises in Ho Chi Minh City for a long time but still cannot settle, causing difficulties for businesses and investors.