The process of SOEs’ equitization is slow and not substantive

The whole divesting capital of the State in the 2011-2015 period is equivalent to about 2% of the total book value of SOEs. Illustration: Thu Hoa.

Private enterprises are the main driving force

Discussing the restructuring scheme of the economy, Mr. Nguyen Duc Kien, Vice Chairman of the Economic Committee of the National Assembly said that the most important thing in the scheme of restructuring the economy in 2016-2020 is not setting up the capital ratio of the investors to participate in the restructuring of State-owned enterprises (except for the credit agencies), even though there is a trend to sell a major State enterprise for other economic sectors to take part in restructuring.

Typically is the sale of the Vinamilk’s shares, which is one of the 10 largest SOEs will be sold openly on the trading floor in the near future. "How to sell is experiencing the mixed opinions, however, we have not considered, but must acknowledge the great innovation," Mr. Kien suggested.

In this regard, Dr. Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) said, the 2nd Session of the XIV National Assembly has adopted a resolution on the economic restructuring plan with high consensus from the National Assembly and the Government in changing the economic model, which defines the private sector is important. He stressed that the private sectors is not only the motivation, but the main driving force, and the main goal of the restructuring process of the economy during the period 2016 - 2020. Accordingly, there is a need to reallocate resources for the economy to develop effectively, and create a fair business environment, enhancing the competitiveness and improving the domestic power.

"To achieve that result, we need to restructure the economy. One of the key tasks is to restructure the State sector, open up opportunities and geographical space for the private economy. In particular, the proposal to set a target of reducing the rate of the State holding a majority stake in the SOE, divesting from the SOE, and it is unnecessary to hold more than 50%. These are the important decisions to create new breakthroughs in our structure program," Chairman of the VCCI emphasized.

Also according to Mr. Vu Tien Loc, the SOE restructuring target is to create new opportunities for investors and the private sector, put the SOEs operating in an environment of equality. "I expect the domestic private enterprises to actively participate in this process and the private sector is the main driving force in the process of SOEs economic restructuring, instead of giving up this playground to FDI," Mr. Loc said.

Equalization is not substantive

According to Mr. Vu Tien Loc, SOEs currently hold resources of the economy, restructuring the State sector and divesting from SOEs will create opportunities for private enterprise to become strategic investors for SOEs. "For that opportunity to become reality requires specific plans as well involvement in the process of equitization boosting," said Mr. Vu Tien Loc.

However, Chairman of VCCI said that in 2011-2015, we had arranged 558 companies, including 478 equitized enterprises, reaching 93% of the plan, and arranged 80 companies in another form. Cumulative from 2012 to October, 2015, the whole country divested 16,450 billion vnd, earning more than 22, 870 billion vnd.

Given that the whole divested capital of the Country is equivalent to about 2% of the book value of the SOEs, the Chairman of VCCI confirmed the ongoing process of equitization is very slow and not substantive.

According to Mr. Loc, in many cases, the partners who buy shares of the SOEs are other SOEs. There are the mutual cross-ownerships meaning that the post successful equitization enterprises still remains as the SOEs. The Chairman of VCCI hopes that in the next time, there will be a fundamental change, how the private enterprises can develop sustainably to become co-owners of SOEs.

Talking about challenges for the process of restructuring the economy, including restructuring of SOEs, Mr. Nguyen Duc Kien said that the greatest challenge for implementation is to do it substantively. With regards to the numbers, we have achieved, but we did not achieve the true nature. Without changing the ownership structure, the current management model of enterprises did not perform as expected. Thus, when the pattern and capital is not achieved, the profits will not be achieved. Therefore, the biggest challenge is from the enterprises themselves, rather than structural issues, because the mechanism is behind the reality, the just-passed-law cannot be the right fit with the reality.

The percentage of sales will be made public

More information on equitization, Mr. Ho Sy Hung, Director of the Department of Enterprises Development, the Ministry of Planning and Investment said that from 2011 to September, 2016, there were 426 enterprises have already deployed their first equitization, of which only 254 companies sold all of the shares (60%), 172 enterprises (40%) unsold shares, which represents that absorption from outside has not been high.

A report of the Ministry of Finance recently specified the large enterprises with high State capital after equitization such as: Lilama remaining 98%, Vietnam Aviation Corporation 95.5%, Petroleum Corporation 94.99%, Steel Corporation 93.6%, Airports 92% etc.

Sharing on this regard, Mr. Duong Thanh Hien, Deputy Director of the Vietnam Debt and Asset Trading Corporation (DATC) said, the divestment of the unprofitable enterprises are facing many difficulties, for example investors want to buy by the batch, not retail. "However, we have not received permission to sell by the batch. We also sent a written request to the stock exchanges that if not for sale by the batch, then for rental, but still no answer. I think these are the barriers to businesses’ divestments at present."

Further discussions on this issue, Mr. Dang Quyet Tien, Deputy Director of the Corporate Finance Department (the Ministry of Finance) said that equitization is not the problem of selling, but the process of changing the quality of enterprises. Need to change the perception of buyers, especially foreigners. If foreigners do not see the company’s development strategy, they will not dare to buy.

"The complete objective of the Government is to sell the State capital at the SOEs with the market prices. However, the market is being completed, so the policy mechanism should open," Mr. Tien said.

According to Mr. Dang Quyet Tien, in the next time, the Government will publicize a list of the shares percentage that the State holds in companies, so the percentage of sales will be made public. At the same time, in the coming time, we will change the way to equitize and the businesses’ prices will be related to investors’ tastes.