A production chain at the Saigon Alcohol Beer and Beverages Corporation’s plant in Thanh Loc Industrial Zone, Kien Giang province (Source: VNA) Nguyen Duy Long from theministry’s Corporate Finance Department made the statement at a seminarentitled “Equitisation of SOEs from the perspective of foreign investors” heldby the National Assembly Economic Committee and the American Chamber ofCommerce in Hanoi on September 8.
The seminar aimed toprovide opportunities for managers and enterprises at home and abroad to meetand exchange experiences in the divestment of State capital in equitisedenterprises.
It is expected to helpthe Economic Committee advise the National Assembly and recommend legalpolicies on the management and use of State capital and assets in enterprises.
Long said Vietnam equitised508 businesses in 2011-15, which had more than 189 trillion VND (8.4 billion USD)of State owned capital. In 2016, the State approved equitisation plans for 58businesses, six of which were SOEs.
“The system of SOEs hasbeen restructured from 1,500 enterprises in 2010 to about 600 in 2016, mainlyoperating in key sectors to ensure macro balance for the economy,” said Long.
According to the report,equitisation has helped restructure human resources for firms and society,along with developing the capital market and stock market. It has also changedcorporate management, helping raise business efficiency.
However, equitisation ina number of ministries and localities has fallen short of plans. The rate ofState capital at equitised companies is still high because the amount ofpublicly offered shares was low compared with corporate equitisation. In particular,the mechanism of SOE equitisation has revealed several shortcomings which needto be studied and fixed.
At the seminar,participants mentioned things hampering equitisation. Among them, besides someobjective reasons, the SOE equitisation process was influenced by globalfactors and regional economies.
Many participants saidseveral ministries, sectors, localities, economic groups and State corporationshave not actively organised equitisation.
Many equitised SOEs, whoare meant to list on the stock market, have not yet listed after launchinginitial public offerings (IPOs). In addition, employees at various levels,sectors and enterprises are still afraid of equitisation and worried abouttheir role after the process, which slows down its progress.
Tran Dinh Thien,director of the Vietnam Institute of Economics, pointed out a paradox of theequitisation process that although 96.5 percent of enterprises have beenequitised, only eight percent of State capital was transferred to the privatesector.
According to Thien, thatis because the proportion of State capital for sale is very limited.“Therefore, private enterprises are excluded from the right to participate inthe management, not to mention corporate controlling rights. This is also oneof the reasons why private investors, including foreign ones, are notinterested in buying SOEs,” said Thien.
Participants said thatit was necessary to complete a system of mechanisms and policies for therestructuring of SOEs, to carry out the roadmap for equitisation and divestmentof State capital approved by State agencies and to ensure transparency in therestructuring of state enterprises.
Adam Sitkoff, executivedirector of the American Chamber of Commerce in Hanoi, said that in order toincrease the confidence of investors, equitisation and divestment must betransparent and investors must be provided with full information related to thebusinesses.
Meanwhile, Tony Fosterfrom Freshfields, a law firm in the UK, said that to attract serious and longterm investors, they should be able to buy controlling stakes of equitisedbusinesses or divestment of State owned enterprises.
At the seminar, manyparticipants also said that to overcome the shortcomings in the equitisation,the country would need to apply asset assessment methods that suit the marketmechanism, ensuring State capital and assets and corporate values are properlyassessed.
At the same time, itwould be essential to select independent valuation consultants with prestige,encouraging investors to buy shares and contribute capital to enterprises whenthey carry out equitisation and divestment of State capital. -VNA
