Most State-owned enterprises still face difficulties after being equitised due to a lack of changes in management, delegates heard at a seminar on Friday. — Photo antt.vn

HCM City — Most State-owned enterprises still face difficulties after being equitised due to a lack of changes in management, delegates heard at a seminar on Friday.

“The goal of equitisation is to help enterprises re-arrange their structure, but many enterprises do not meet this expectation because there are no changes in management, especially for those firms where the State still keeps a 51 per cent stake,” Lê Trọng Sang, head of the HCM City Board for Enterprises Management Renewal, was quoted as saying in the Sài Gòn Giải Phóng (Liberated Sài Gòn) newspaper.

Of a total of 32 equitised enterprises during 2013-2015, only 4 of them registered to list on the stock market.

“Turnover of the equitised firms has reduced 1.5 per cent in comparison with the past and only 30 per cent of them are profitable and contribute to the State budget,” Sang added.

Poor management and the price of renting land increasing 12-15 per cent were the reasons for losses.

HCM City still has 42 enterprises which are seeking to be equitised, of which, the Government has a stake of under 50 per cent in 39 of them and over 50 per cent in three.

In addition, 22 public utility enterprises at the district level face a lack of a legal framework to be equitised.

“The most difficult work is how to assess the value of an enterprise, and we should hire an international consultancy to do this work,” he suggested.

By the end of last year, HCM City withdrew a total of VNĐ3.5 trillion ($155 million) from core businesses, such as real estate, banking and insurance and this year, the city will take its capital back from an additional 10 enterprises.

“Right now, there is around VNĐ2.4 trillion ($106 million) needed to be withdrawn,” Sang added.

By the end of 2018, the city plans to equitise 51 enterprises and complete a management model to supervise State assets in equitised enterprises.

At the seminar, delegates thought that the most difficult work in equitisation was how to deal with real estate related matters in joint-ventures because the legal framework for valuing enterprises within joint venture projects hasn’t been released yet, including the value of real estate.

“Meanwhile, strategic investors mostly pay attention to assets and real estate,” Huỳnh An Trung, general director of Chợ Lớn Investment, Import-Export Joint Stock Company (Cholimex) said.

Trung revealed that his company spent nearly half a year to identify the value of real estate.

He also pointed out that if the Government only sells a small proportion of its shares, investors did not want to buy because there is no chance for them to change the businesses.

“Another thing we should be concerned about is if we give a high value to enterprises it will be difficult to sell shares because it makes the return on equity (ROE) low,” he added.

“To speed up equitisation for State-owned enterprises, a legal framework should be completed along with improving staff capacity,” Lê Thị Hồng Hậu, party secretary of the HCM City Enterprises Bloc, concluded. — VNS