Đặng Quyết Tiến, Deputy Director of the Department of Enterprise Finance, under the Ministry of Finance, spoke to the newspaper Kinh tế & Đô thị (Economic and Urban Affairs) on the importance of having a correct understanding about the equitisation process of SOEs
Many experts have complained that the restructuring of State Owned Enterprises (SOEs) has been slow. In your opinion, what are the hindrances?
In my opinion, a key factor leading to the problem is that some ministries are still trying to maintain the dominant percentage of charter capital in enterprises which are under their control. The Việt Nam Machine Erection Corporation (LILAMA) is a case in point. In its IPO (Initial Public Offering), not many investors showed their interest in the offerings. A key reason leading to the problem was that up to 90 percent of LILAMA’s charter capital belongs to the Ministry of Construction.
So in my opinion, if we want to speed up the equitisation process of State Owned Enterprises (SOEs), functional agencies should give up their desire to hold dominant shares in the enterprises which are affiliated to them.
Many ministries or corporations have argued that if they don’t hold the dominant shares in restructuring SOEs, they may lose their control rights in these enterprises. How do you respond to their arguments?
In my opinion, by holding of about 35 percent of shares in the equitised enterprise, the State still maintains a dominant voice in that enterprise. For example, if the employer of that enterprise wants to dismiss any worker, it must consult with a representative of the state’s shares. This is regulated in the law.
Under the law, the government will only hold the dominant shares in areas that the private sector cannot or is not allowed.
In reality, in some equitised enterprises, the government still holds dominant shares in these enterprises. As a result, not many changes occurred in the management of these enterprises, how do you respond to this problem?
As I have mentioned above, if in an equitised enterprise, the sold capital charter is so small, the investors’ voice will be very weak and things will still then be decided by the management board in the old way. A case in point was the Thái Nguyên Steel Complex or the Ninh Bình Fertilizer Company – following their equitisation these two companies still incurred big losses in their operation.
Has the Ministry of Finance adopted any measures to solve this problem?
As a State management agency, the Ministry of Finance has done its best, particularly through frequent inspection visits or checks to prevent the selling of shares at dirt cheap prices for the benefits of certain special interest groups. Such an act would distort the good idea of the SOE process launched by the government and discourage legitimate investors.
To speed up the equitisation of SOEs, it is important that these SOEs must uphold the principle of financial transparency and accountability as well as information disclosure. How are things done now?
I should say financial transparency and accountability and information disclosure have well been practiced by some groups or corporations like the Viet Nam Textile and Apparel Corporation, Viettel, VNPT or the Oil and Gas Corporation and others.
The Ministry of Finance has coordinated with Stock Exchange Transactions Bureaus and concerned agencies to evaluate financial reports prepared by State groups or corporations. We vow to up-hold the principle of a level playing field for both State enterprises and other enterprises._VNS