Why is equitization slow? - "Huging" many "large Corporations", Ministry of Industry and Trade suffers from debts

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The Ministry of Industry and Trade is expected to submit a detailed report on state capital divestment scheme at Sabeco and Habeco to the Standing Government this week.

Unchanged but worse

The Ministry of Industry and Trade is always actively divesting capital and supporting enterprises to implement equitization and the divestment procedures in accordance with current regulations. That is the general answer of Ms. Nguyen Thi Hoa, Deputy Director, Standing Board of Business Innovation (Ministry of Industry and Trade) when the reporter of the Customs Newspaper asked: " in the recent times, how has the capital divestment and equitization of the Ministry of Industry and Trade been implemented and what are results? "

Ms. Hoa said, according to Decision No. 58/2016/QD-TTg of the Prime Minister, the groups, and corporations under the Ministry were concentrating on building plans for renovation, equitization and capital divestment in enterprises in the period 2017-2020. In particular, the Ministry of Industry and Trade will develop a list of enterprises to be arranged and equitized each year from 2017 to 2020. The Ministry of Industry and Trade has also appraised and submitted to the Prime Minister for approval according to the competence on the roadmap of determining the value of equitized enterprise of each enterprise and the plan for capital divestment in equitized enterprises.

"The ministry has also succeeded in moving some state-owned companies into joint-stock companies and diversifying shareholders (all economic sectors, especially the private sector), thereby strengthening the management and technology to promote production and business activities, create maximum favorable condition and transparency in business, and increase the efficiency of state capital", Ms. Hoa said.

Nevertheless, equitization and capital divestment of enterprises of the Ministry of Industry and Trade seems to have stopped at the superficial level, still remains unfinished works. The most visible evidence is the failure to complete four projects to reorganize, renovate and restructure state-owned enterprises in the period 2017-2020. According to Direction 05 / CT-BCT issued by the Ministry of Industry and Trade at the end of April 2017 on promoting SOE reorganization, renovation and restructuring under the Ministry of Industry and Trade for the period 2017-2020, the four groups including Vietnam Electricity (EVN), Vietnam Oil and Gas Group (PVN), Vietnam National Coal and Mineral Industries Holding Corporation Limited (Vinacomin), Vietnam Chemical Group must submit the plan to reorganize, renovate and restructure enterprises before May, 20th, 2017. However, up to now, this Ministry is still in "debt" for the project of Vinacomin.

Another case is that the capital divestment at Hanoi Beer, Alcohol and Beverage Joint Stock Corp. (Habeco) and Saigon Beer, Alcohol and Beverage Joint Stock Corp. (Sabeco), is also “listed” in the existence, limitation because of slow capital divestment by the Steering Committee for Enterprise Innovation and Development.

Notably, regarding the settlement of 12 losing- making and weak projects of Industry and Trade sector, especially PVN's projects at the recent session to implement conclusions of Politburo on the lose-making projects of the Industry and Trade sector dated July 5th, 201, the Deputy Prime Minister Vuong Dinh Hue has criticized that the settlement had hardly any changes but became worse. Meanwhile, Directive. 05 of the Ministry of Industry and Trade strictly determined that: " enterprises that suffer losses and have long-term financial backlogs and are unqualified for equitization must resolutely arrange, merge or bankrupt as prescribed by the State".

More time needed due to large scale

When discussing the difficulties and obstacles of the Ministry of Industry and Trade in the process of capital divestment and equitization, Ms. Hoa said, the application of legal documents has exposed certain difficulties that affected to the progress of equitization. In addition, enterprises managed by the Ministry are mostly large groups and corporations with large capital, large scale, assets and large areas, so the valuation of enterprises also affects the progress and requires coordination among ministries, sectors, and localities.

As evidence of this, Mr. Do Thang Hai, Deputy Minister of Industry and Trade said that until now, the project of the coal industry has delayed for many reasons, including the impact on the worker’s life. When domestically produced coal is more expensive than imported coal, the coal industry is still considering to not affect 113,000 workers of the whole industry. "Every worker in the coal industry has four to five dependent family members, so it is important to keep a close eye on this industry. The Ministry of Industry and Trade has also requested Vinacomin, General Department of Energy to submit to the Government a plan for capital divestment immediately in this July", Mr. Hai added.

He also said that the lose-making and weak projects of the Industry and Trade sector were waiting for the settlement, because these were projects of large groups and corporations, therefore, they require more time to settle. Besides, Mr. Duong Duy Hung, Director of Planning Department (Ministry of Industry and Trade) added that after implementing many solutions, so far some initial projects have changed very well, particularly, the fertilizer project group re-operates effectively (including Ninh Binh Nitrogenous Fertilizer, Ha Bac Nitrogenous Fertilizer, DAP No. 1 and DAP No. 2). Two steel plants have positive changes. Phuong Nam Pulp mills have made a plan to put their properties and inventories up for auction.

On the principle of the Steering Committee as well as the Prime Minister is too urgent to make these projects better, solve all problems of the projects to make these projects operate better and more effectively, representative of the Planning Department said that in the coming time, the Ministry of Industry and Trade will focus on implementing the guidelines to submit to the Head of the Steering Committee for consideration in this July before submitting to the Prime Minister the official settlement scheme for 12 projects.

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Mr. Do Thang Hai reiterated that in the coming time, the Ministry will continue to drastically direct the strong restructuring of operations of a number of groups and corporations operating in the large manufacturing fields of the economy such as beverages, chemicals, electricity, coal, minerals, oil and gas ... Mr. Hai assessed "This is an immediate solution to reduce management costs, improve efficiency in production and business and long-term solution to ensure sustainable development and support the sustainable economic growth in the coming years".