SOE equitization program restarted on low note
By Tu Hoang - The Saigon Times Daily
HANOI – Vietnam has restarted a major plan to equitize State-owned enterprises (SOEs) after long delays caused by the troubled stock market and economic woes.
According to the Ministry of Finance, as of June 20, 93 SOEs had registered for equitization this year, with 22 under ministries, 33 under State conglomerates and corporations, and 38 under local authorities.
The SOE equitization plan is a Government effort to restructure the State corporate sector, which is holding most of the nation’s resources but not performing as well as hoped.
Jonathan Pincus, senior economist of the Fulbright Economics Teaching Program, told the Daily that it would be hard for the SOE restructuring program to gain success if it depended heavily on equitization.
The reason is that after equitized, SOEs still do not need to improve their competitiveness and corporate governance. Moreover, the equitization program will encounter difficulties when the stock market does not perform well.
Minister of Finance Vuong Dinh Hue admitted the equitization process had faced a host of bottlenecks in recent years.
When recently asked about the reason for equitization delays, Hue replied with a question: “If you were a business owner, would you sell your business at a low price?”
In 2008-2011, only 117 SOEs went public, equivalent to the number realized in 2007 and several times lower than the years before that. In the past 20 years, the number of SOEs dropped significantly, from 12,000 to around 1,300 in late 2011.
Nguyen Van Giau, chairman of the National Assembly Economic Committee, said less than 15% of State ownership had been transferred to other sectors over the past 20 years of equitization.
The root cause, according to Giau, is the stock market crash in 2008, which has had a long-lasting impact on the market thereafter.
Moreover, the remaining SOEs on the equitization list are mostly medium and large, even very large, so the equitization process gets increasingly complicated, especially when it comes to evaluating assets and resolving conflicts of interest between related parties.
The Government used to promise the equitization program could be done before 2010.
A report by the finance ministry reflecting opinions of four ministries, nine conglomerates, 10 corporations and 57 local governments showed that a total of 899 SOEs had mapped out plans for equitization or restructuring in the period from 2011 to 2015. Among those, 367 will be equitized and the remainder will change hands, or be dissolved.
However, the report did not mention the number of equitized SOEs in the first half of this year, and the total capital of the 93 enterprises subject to equitization this year.
The finance ministry said it would continue to update data so that relevant agencies can join hands with each other to carry out the process and concerned investors can grasp information.