Proposal for state-owned enterprises to divest capital from loss-making enterprises

	Expedite implementation of scheme of restructuring SOEs
	Comprehensive solution needed to support loss-making enterprises

Building a legal basis for enterprises with over 50% capital held by the State. Photo: Internet

Currently, the Ministry of Finance is collecting comments on a draft Decree amending and supplementing a number of articles of Decree No. 91/2015/ND-CP dated October 13, 2015 on state capital investment in enterprises and management, use of capital and assets at enterprises which has been amended and supplemented in Decree No. 32/2018/ND-CP dated March 8, 2018 and Decree No. 140/2020/ND-CP dated November 30, 2020 (Decree 91).

According to the draft report submitted to the Government on the Decree amending Decree 91, the Ministry of Finance said that the Committee for Management of State Capital at Enterprises and Airport Corporation - Joint Stock Company (ACV) have had Official dispatch on the distribution of after-tax profits according to regulations. In particular, the State Capital Management Committee has proposed to allow ACV to pay dividends in shares to help ACV increase its own capital and implement important national projects, large projects because if implemented according to old regulations, ACV will not meet the existing lacking capital needs to ensure timely completion of investment and construction, especially the Long Thanh International Airport project phase 1 which must be completed and put into operation in 2025. In this case, the State Capital Management Committee believes that ACV will have to borrow from credit institutions, leading to increased risks in investment activities, reduce project efficiency and operational efficiency of ACV.

Besides, another issue raised by the Ministry of Finance is solutions to support Vietnam Airlines Corporation - Joint Stock Company (VNA). According to the draft report, the Ministry of Finance said that through reports and instructions, the State Capital Management Committee has directed the representative of state capital at VNA to amend and supplement the company's charter to implement the capital divestment process in other enterprises according to regulations with 3 methods including: public auction; If the public auction is not successful, then a competitive offer will be made; If the competitive offer is not successful, it will be carried out by agreement.

However, the implementation of the public auction method could not be implemented due to related regulations. Furthermore, enterprises in which 50% or more of charter capital is held by the State cannot divest capital from enterprises that are suffering losses or accumulated losses, affecting the investment capital of the enterprise.

From the above issues, the Ministry of Finance believes that it is necessary to amend Decree 91 to remove obstacles and build a legal basis for enterprises with more than 50% of charter capital held by the State to divest capital in other businesses which suffer losses or accumulated losses. This also creates a legal basis for making additional investments in state capital into enterprises from dividends paid to state shareholders in joint stock companies within the scope of additional state capital investment to supplement timely resources with low capital costs.

Therefore, the draft Decree is built from the perspective of ensuring compatibility and synchronization between legal regulations on enterprises and legal regulations on management and use of state capital invested in production and business at enterprises, as well as ensuring compliance with the Government's authority in developing legal documents; in accordance with the provisions of law on implementation of administrative procedures; Uniform and easy to understand language and technical documents in the draft Decree. Simultaneously, ensure timeliness and resolve urgent situations for businesses when divesting capital from other businesses that suffer losses or have accumulated losses.

Accordingly, the Ministry of Finance proposed to develop a draft Decree amending and supplementing a number of articles of Decree 91 focusing on: regulations for enterprises that are joint stock companies held by the State over 50% charter capital or total number of shares with voting rights, the remaining profits are distributed as dividends to shareholders in cash or in shares for additional investment to increase charter capital and implement important national projects which are approved by competent authorities and approved by the Prime Minister to pay dividends in shares.

In addition, supplementing regulations, in case of divestment from a joint stock company with more than 50% of the charter capital of an enterprise in which the State holds more than 50% of charter capital but that joint stock company does not guarantee business operations for 2 consecutive years immediately preceding the year that organizes to divest capital must be profitable and have no accumulated losses up to the year that organizes divests capital; the owner's representative agency shall direct the representative of the state capital to choose the transfer shares in that joint stock company according to the provisions of Clause 2, Article 127 of the Law on Enterprises 2020. The order, procedures, and authority to divest capital comply with the law on management and use of state capital investment in production and business at the enterprise.

Commenting on the above proposals, economic expert Associate Professor Dr. Ngo Tri Long said that authorities need to carefully evaluate the impact of this draft Decree, including assessing the quantity and quality of businesses that have 50% state capital. Mr. Ngo Tri Long said that the investment and management of state capital at enterprises still has some problems, so the authorities need to study overall amendments and have specific solutions for the loss of some state-owned enterprises because input costs increase but selling prices do not increase.

In addition, according to experts, along with researching and promulgating more market-oriented legal regulations for the sector of State-owned enterprises, authorities as well as businesses must find solutions to improve competitiveness and ensure business activities, worthy of its leading role in the economy.