Privatization progress remains slow

Mr. Dang Quyet Tien, Director of the Corporate Finance Department (Ministry of Finance) spoke at the meeting. Photo: Nguyễn Thanh

Still behind schedule

Speaking at a press conference of the Ministry of Finance, Mr. Dang Quyet Tien, Director of the Corporate Finance Department (Ministry of Finance) said: Regarding the privatization situation, according to Official Letter No. 991/TTg-DMDN dated July 10, 2017 and Decision No. 26/2019/QD-TTg dated August 15, 2019 of the Prime Minister, the privatization plan for the period of 2017-2020 included 128 enterprises.

In 2019, there were nine enterprises that approved the privatization plan by competent authorities. However, there were only three enterprises on the list of privatized enterprises according to Official Letter No. 991/TTg-DMDN (two enterprises) and Decision No. 26/2019/QD-TTg (one enterprise).

In the period of 2016 - 2019, 168 enterprises have been approved by the competent authorities for the privatization plan with a total enterprise value of VND 443,056 billion, of that the value of state capital was VND 206,694 billion.

However, among 168 privatized enterprises, only 36 privatized enterprises were on the list of 128 privatized enterprises according to Official Letter No. 991/TTg-DMDN and Decision No. 26/2019/QD-TTg of the Prime Minister (reaching 28 percent of the plan). The remaining enterprises which are subject to privatization according to the plan by the end of 2020 was 92.

"Thus, the progress of privatization of enterprises was still slow, not reaching the plan," Tien said.

With the divestment, the report of Ministry of Finance showed that in 2019, the total number of divestments was VND 2,687 billion, earning VND 5,098 billion. The accumulated total divestment from 2016 - 2019 was VND 24,769 billion, earning VND 171,072 billion.

Mr. Tien emphasized that in general, the results of privatization and divestment have had a positive impact on the development of the stock market as well as improving the performance of the enterprises after privatization.

However, the current constraint was the slow progress of privatization, divestment, approval of restructuring plan, failing to reach the plan; slowly settling and handing over to joint-stock companies; slowly handing over the right of State owner’s representatives to the State Capital Investment Corporation (SCIC), failing to ensure the plan under the direction of the Prime Minister.

“Many businesses were too slow to register their transactions and list on the stock market, affecting the publicity and transparency of the market, slow innovation of corporate governance after privatization in accordance with the practices and standards of businesses on the stock market as well as restricting the supervision of the whole society for the activities of these businesses,” Tien said.

The leader was not drastic

Why was the process of privatization and divestment of state capital so slow and inadequate? Answering this question, Tien said that: A number of ministries, sectors, localities, economic groups, state corporations had not really seriously implemented privatization, divestment and restructuring of state enterprises under the Prime Minister's direction and complied with the reporting regime.

Besides that, the role, awareness and responsibilities of the leaders of enterprises and units were not high in renovating the enterprises' operations, publicity and transparency, in compliance with laws and regulations, ensuring market principles, combating group interests in privatization and divestment of state capital.

In addition, the privatization process of state-owned enterprises needed a lot of time to deal with financial, land and labor problems before privatization, which prolonged the time of privatization.

Especially, the issue of establishing legal documents of land by the local People's Committee was slow, it prolonged the time compared with regulations, leading to the adjustment of privatization progress of enterprises.

Regarding solutions to promote the restructuring of state-owned enterprises in the future, Mr. Tien said that he would continue to improve the institution and legal framework on the management and operation of state enterprises and state-owned enterprises on privatization, divestment and restructuring.

Ministries, sectors, localities, economic groups, state corporations and state-owned enterprises should complete the approval or submit to competent authorities for approval the plan to restructure the enterprises under their management area.

The state-owned enterprises under privatization should urgently review the entire land fund being managed and used to formulate land use plans in accordance with the land law and submit to the People's Committees of the provinces and cities in order to give opinions on the plan and land price for the competent authorities to approve before organizing the valuation of privatized enterprises in accordance with the provisions of Decree No. 167/2017/ND-CP dated December 31, 2017 and Decree No. 126/2017/ND-CP dated November 16, 2017.