Slow equitization and divestment put burden on investment spending

VCN - Slow equitization and divestment has caused the revenue from equitization to the state budget face the risk of failure to reach the plan. This is posing a problem to managers.
Dark and Bright picture after equitization- Part 5: Transport Hospital, after equitization is a dead end! Dark and Bright picture after equitization- Part 5: Transport Hospital, after equitization is a dead end!
Prime Minister criticizes localities that have delayed equitization Prime Minister criticizes localities that have delayed equitization
SOE equitization fails to reach target SOE equitization fails to reach target
Slow equitization and divestment put burden on investment spending
Revenue from equitization and divestment in the remaining months of the year are "looking forward" to divestment from a number of businesses. Photo: ST.


Hardly feasible

According to the Department of Corporate Finance, the Ministry of Finance, in the first eight months of 2020, six enterprises submitted reports for approval of equitization plans, of which one enterprise was under the equitization plan in the Prime Minister’s Decision No. 26 / 2019 / QD-TTg regarding the list of enterprises under equitization by the end of 2020, namely Hai Duong Breed Cattle Company Limited. The Commission for the management of State capital at enterprises also completed the announcement of the corporate value of an enterprise as the mother company – Power Generation Corporation 2 (EVENGENCO2).

In the past five years, 177 enterprises were approved by the competent authorities for their equitization plans with a total value of VND443,503 billion, of which the value of State capital was VND207,116 billion. However, of the 177 equitized enterprises, only 37 of 128 equitized enterprises were in the equitization list as planned, reaching 28%.

The number of enterprises to be equitized according to the plan in the remaining four months in 2020 is 91, of which their value for equitization of 90 enterprises will be determined and announced..

Thus, the progress of equitization of enterprises remains slow. The units have many enterprises under the equitization plan in 2020: Hanoi has 13 enterprises, accounting for 14% of the plan; Ho Chi Minh City has 38 enterprises, accounting for 40% of the plan; the Commission for the management of State capital at enterprises has six enterprises; the Ministry of Industry and Trade has four enterprises; and the Ministry of Construction has two corporations.

Regarding divestment, from 2016 to the end of August 2020, the divested capital was VND25,634 billion, revenue was VND172,877 billion. Recently, the Prime Minister has issued Decision No. 908/QD-TTg dated June 29, 2020 approving the list of State-owned enterprises (SOEs) to implement divestment of State capital in 2020. Accordingly, by the end of 2020, the owners’ representative agencies will divest capital in 120 enterprises, of which some agencies are being urged such as the Ministry of Construction is required to divest capital in four corporations before November 30, 2020.If the divestment is not completed, it will be transferred to the State Capital Investment Corporation (SCIC). 14 enterprises of other units are also in the process for transfer of divestment to the SCIC.

In general, the equitization and divestment progress in the 2016 – 2019 period and the first eight months of 2020 is still slow, so the completion of the equitization and divestment plan for the rest of 2020 is said to be unlikely.

Responsible for the delay

The slow equitization and divestment will lead to the revenue to the State budget being unable to reach the plan.

According to Resolution No. 26/2016 / QH14 dated November 10, 2016 of the National Assembly, in the 2016 – 2020 period, the revenue from equitization to the State budget for the medium and long-term investment is VND250,000 billion. In 2019, the Ministry of Finance transferred VND50,000 billion and in the first eight months of 2020, transferred VND6,500 billion from the support fund for enterprise arrangement and development to the State budget. From 2016 to June 2020, VND211,500 billion was transferred from this fund to the State budget, reaching 85% of the plan. The rest to be transferred from the fund to the State budget in 2020 according to the National Assembly’s Resolution is VND38,500 billion.

The slow progress in equitization and divestment led to revenue from equitization and divestment in the first eight months of 2020 reaching only VND830 billion. Meanwhile, the support fund for enterprise arrangement and development had other necessary spending tasks under the policy, with an expected amount of VND63,600 billion, including the amount transferred to the budget.

According to calculations by the Ministry of Finance, to fully meet the amount paid to the fund in 2020, it is expected that the main revenue will come from the divestment of state capital at Saigon Beer - Alcohol - Beverage Corporation (Sabeco), joint stock corporations of the Ministry of Construction and enterprises divested by SCIC under the direction of the Government.

To solve this problem, the acceleration of the equitization and divestment is a key. The Ministry of Finance has proposed to the Government and the Prime Minister to instruct the units to deploy solutions as quickly as possible. In the immediate future, SOEs under the equitization will urgently review the entire land fund under their management and use to develop land use plansto submit to the People's Committees of provinces and cities for comments on land plans and prices for approval before determining the corporate value.

In addition, the representative agencies of state capital owners in state-owned enterprises in the list of enterprises under equitization by the end of 2020 have to complete the determination of corporate value, financial settlement, and announce corporate value by the end of 2020.

In addition, the representative agencies of state capital owners in state-owned enterprises must divest in 2020, deploy the divestment according to regulations and promptly report to the competent authorities to synthesize and submit to the Prime Minister for reviewing regulations causing difficulties for capital divestment to revise.

Heads of ministries, ministerial-level agencies, government-attached agencies, chairpersons of People's Committees of provinces and centrally-run cities shall drastically direct the implementation of equitization, divestment, and restructuring of SOEs according to the proposed plan; be responsible for the results of SOE restructuring; and be accountable to the Prime Minister for failing to fulfill the tasks assigned by the Prime Minister and at same time, regularly urge, supervise, promptly remove or report to competent authorities to remove difficulties and problems in the process of equitization and divestment.

Regarding the revenue from equitization, with the difficulties in completing the plan, the leader of the Corporate Finance Department said that the most important task is choosing the right time for equitization for the first time (for the enterprises subject to equitization) and divestment, not selling shares and divesting capital at any cost to ensure the interests of the State.

Equitization: Heads must take responsibilities under Prime Minister for failure to fulfill assigned plans Equitization: Heads must take responsibilities under Prime Minister for failure to fulfill assigned plans

VCN – The equitization progress in the first months of 2020 was quite slow. Unpredictable developments of ...

In necessary cases, it needs to reduce investment spending from equitization and divestment of enterprises to ensure the balance of the State budget. Enterprises which were equitized and converted to operate as joint stock companies are proposed by the Ministry of Finance to make a settlement of the equitization; determine the payable or temporary payable to be paid to the fund; for enterprises failing to meet the deadline, they must report to the Prime Minister, clearly explain the reason and take responsibility for this delay and handover enterprises subject to transfer of the right to represent the owner of state capital to SCIC in accordance with prevailing regulations.

Through reviewing the Decisions of the Prime Minister since 2019, the expected revenue from equitization and divestment in 2020 will be VND42,200 billion in the case of successful divestment of entire state capital at Sabeco. In addition, if ministries, central agencies and localities drastically direct the implementation of the equitization and divestment plan in accordance with the roadmap along with the recovery trend of the financial and securities market, the total expected revenue to the fund may reach over VND45,000 billion.
By Hong Van/ Huyen Trang

Related News

Vietnam secures VND 157 billion from state enterprise divestment in 2024

Vietnam secures VND 157 billion from state enterprise divestment in 2024

VCN - The Ministry of Finance reported that in 2024, the divestment of state capital in 5 enterprises (F1) generated VND 157 billion from an initial value of VND 145 billion
Researching and proposing amendments to 2014 Customs Law to meet the requirements of innovation

Researching and proposing amendments to 2014 Customs Law to meet the requirements of innovation

VCN - After 10 years of implementation, the Customs Law has been effective in reforming administrative procedures and protecting national sovereignty. However, in the context of innovation requirements, it is necessary to continue reforming specialized inspections and focusing on digital transformation.
Flexible and proactive when exchange rates still fluctuate in 2025

Flexible and proactive when exchange rates still fluctuate in 2025

VCN - In the last days of 2024, as many forecasts, the US Federal Reserve (Fed) continued to cut interest rates, pushing the USD index up, creating pressure on domestic exchange rates. Therefore, domestic exchange rate management policies need to continue to be flexible and appropriate, thereby supporting businesses in import and export.
Enterprises focus on Tet care for employees

Enterprises focus on Tet care for employees

VCN - Tet bonuses are always an issue that receives special attention from employees at the end of each year. This year, the economy is facing many difficulties, many enterprises in the southern provinces have announced Tet bonuses, reflecting their tireless efforts to ensure the rights of employees.
Comment

Latest News

Personal income tax proposed for interest on some bank savings accounts

Personal income tax proposed for interest on some bank savings accounts

Instead of the current personal income tax exemption on interest from all individual bank savings accounts, the proposal would exempt tax only for low amounts of savings.
Banks set for aggressive bond issuance in 2025 to fuel growth

Banks set for aggressive bond issuance in 2025 to fuel growth

With a higher credit growth goal set by the SBV, banks are ramping up their efforts to secure funding through bond issuance.
Central bank cuts interest rate on bills for first time in 2025

Central bank cuts interest rate on bills for first time in 2025

According to data from the financial data provider Wichart, the SBV issued VNĐ19.6 trillion of bills in the past week. The interest rate on the bills decreased by 0.1 percentage point, from 4 per cent to 3.9 per cent on February 14.
Focusing on inspecting inventory of public assets at units with large and complex assets

Focusing on inspecting inventory of public assets at units with large and complex assets

VCN - According to Official Dispatch No. 1456/BTC-QLCS on inspecting the preparation and implementation of the General Inventory of Public Assets recently issued by the Ministry of Finance, the inspection of the inventory of public assets focuses on units with large asset scale and large number of inventory items, complex assets, and slow implementation progress.

More News

The government seeks approval for revised GDP, CPI targets

The government seeks approval for revised GDP, CPI targets

VCN - The Government submitted to the National Assembly for consideration and comments on adjusting the target for the growth rate of gross domestic product (GDP) to 8% or more; the average growth rate of the consumer price index (CPI) to about 4.5-5%.
Fiscal, monetary policies support demand stimulation, price stabilisation

Fiscal, monetary policies support demand stimulation, price stabilisation

These efforts, in conjunction with the implementation of monetary policies and other macroeconomic policies, aim to solve difficulties for businesses and the public, stabilise the macroeconomy, control inflation, ensure the balance of the economy, promote economic growth, and secure social welfare and people’s livelihoods.
Vietnam gears up for potential inflation impact in 2025

Vietnam gears up for potential inflation impact in 2025

VCN - For sound price management and inflation control, Deputy Prime Minister Ho Duc Phoc directed officials to vigilantly track both domestic and international market dynamics. The goal is to proactively develop flexible strategies and solutions, enabling a swift response to any emerging challenges.
VN’s credit conditions in 2025 expected to be stable

VN’s credit conditions in 2025 expected to be stable

The credit conditions for Việt Nam will stabilise in 2025, after improving substantially over the past year, the rating agency VIS is forcasts.
State revenue in first month of the year equal to 14% of the estimate

State revenue in first month of the year equal to 14% of the estimate

VCN - According to the Ministry of Finance, in January - the first month of 2025, the total state budget revenue is estimated at VND275.9 trillion, equal to 14% of the estimate; meanwhile, the total state budget expenditure is estimated at VND134.4 trillion.
Securities 2025 expects a breakthrough in scale and quality

Securities 2025 expects a breakthrough in scale and quality

VCN – The positive factors inherent in the macro economy and the Vietnamese stock market will continue to create the foundation for the market to maintain stability, good liquidity, and growth in both scale and quality in the new year of At Ty 2025, Chairwoman of the State Securities Commission Vu Thi Chan Phuong said.
Cash reserves in stock accounts at six-quarter low amid margin rise

Cash reserves in stock accounts at six-quarter low amid margin rise

These funds are readily available in investor accounts, but remained undeployed as of the year-end.
Five solutions for developing stock market in 2025

Five solutions for developing stock market in 2025

VCN - On February 5, 2025, at the Gong-beating ceremony to open the stock trading at the Ho Chi Minh City Stock Exchange (HOSE), Deputy Minister of Finance Nguyen Duc Chi introduced five solutions for comprehensive development of the stock market.
Minister of Finance Nguyen Van Thang works with GDVC at the first working day after the Tet holiday

Minister of Finance Nguyen Van Thang works with GDVC at the first working day after the Tet holiday

VCN- On February 3, the first working day after the Tet holiday, Minister of Finance Nguyen Van Thang and the delegation visited and worked with the General Department of Vietnam Customs (GDVC).
Read More

Your care

The system has not recorded your reading habits.

Please Login/Register so that the system can provide articles according to your reading needs.

Latest Most read
Personal income tax proposed for interest on some bank savings accounts

Personal income tax proposed for interest on some bank savings accounts

Instead of the current personal income tax exemption on interest from all individual bank savings accounts, the proposal would exempt tax only for low amounts of savings.
Banks set for aggressive bond issuance in 2025 to fuel growth

Banks set for aggressive bond issuance in 2025 to fuel growth

With a higher credit growth goal set by the SBV, banks are ramping up their efforts to secure funding through bond issuance.
Central bank cuts interest rate on bills for first time in 2025

Central bank cuts interest rate on bills for first time in 2025

According to data from the financial data provider Wichart, the SBV issued VNĐ19.6 trillion of bills in the past week. The interest rate on the bills decreased by 0.1 percentage point, from 4 per cent to 3.9 per cent on February 14.
Focusing on inspecting inventory of public assets at units with large and complex assets

Focusing on inspecting inventory of public assets at units with large and complex assets

VCN - According to Official Dispatch No. 1456/BTC-QLCS on inspecting the preparation and implementation of the General Inventory of Public Assets recently issued by the Ministry of Finance, the inspection of the inventory of public assets focuses on units
The government seeks approval for revised GDP, CPI targets

The government seeks approval for revised GDP, CPI targets

The Government submitted to the National Assembly for consideration and comments on adjusting the target for the growth rate of gross domestic product (GDP) to 8% or more
Mobile Version