SOE equitization fails to reach target

Illustrative photo (Source: VOV)

Dang Quyet Tien, head of the Corporate Finance Department under the Ministry of Finance, made the remark at a press briefing held in Hanoi on August 5.

Under the Prime Minister’s Official Document No.991/TTg-DMDN dated July 10, 2017, 18 State-owned enterprises (SOEs) must be equitised within 2019. However, six SOEs have so far had their equitization plans approved by competent agencies while only one of the six firms was on the equitization list as stated in Document No.991.

Obviously, the equitsation process has so far failed to keep up with the pace as prescribed in Document No.991. Only 35 SOEs had been equitized by late June, representing only 28 per cent of the projected figure.

The Prime Minister’s Decision No.1232/QD-TTg states that the capital pestment at 62 SOEs must be completed throughout 2019. By late June, only nine of the SOE list had completed the pestment with the book value worth VND759 billion (US$32.63 million), earning VND1.657 trillion (US$71.25 million).

Ceramics and tile producer Viglacera has made headlines when managing to carry out its capital pestment with a book value of VND690 billion (US$29.67 million), raking in VND1.587 trillion (US$68.24 million).

Between 2017 and the second quarter of 2019, the capital pestment at 88 SOEs with a combined book value of VND4.549 trillion (US$195.60 million), generated a total of VND8.765 trillion (US$376.89 million).

Tien noted that by late June, up to 622 out of the 747 equitized firms had yet to finalize the transactions and listing of shares on local securities exchanges.

The ministry has considered the addition of 158 enterprises to the list of SOEs required to conduct the listing of their shares on bourses.

In total, 780 SOEs are set to implement the process of going public via listing their shares on the stock market, he noted.

He added that the sluggish equitization process can be attributed to the fact that ministries, sectors, and SOEs have failed to effectively realize the equitization and capital pestment plans approved by the Prime Minister.

Meanwhile, SOE leaders have yet to make drastic corporate reforms and ensure transparency of the equitization and pestment process in line with market rules.