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SOE equitisation faces hurdles

Update: June, 26/2014 - 08:54
Dang Quyet Tien

The process of equitisting 432 State-run enterprises (SOEs) has been targeted for completion by 2015. However, many difficulties still remain that need to be dealt with so the process can be competed as scheduled. Vietnam News Agency discussed the problem with Dang Quyet Tien , Deputy Director of the Corporate Finance Department at the Ministry of Finance.

Can you tell us about the major obstacles facing the equitisation process?

There are three main reasons that have slowed the equitisation process over the years. Firstly, Viet Nam has been affected by the economic crisis since 2011. The stock market has been hit by the crisis, resulting in adverse effects for the equitisation process and issuance of initial public offerings. In addition, a number of policies have become obsolete, and from 2011-2015, many State groups and corporations that have started the process need policies to be more open. Furthermore, leaders of State-owned groups and corporations are reluctant and unwilling to implement the equitisation process.

Some experts say that the target of equitising 432 State-run enterprises from now until 2015 would create an oversupply for a small-scale market like Viet Nam. By doing so, a great number of equitised enterprises will make a loss as their shares will be offered at prices lower than their real value. What is your view?

Viet Nam's market is in a recovery period, but it cannot develop strongly. To focus on equitising 432 State enterprises may create an oversupply for the market. However, the Government has instructed companies to carry out the equitisation process following a roadmap, but not do so at all costs. In addition, the Prime Minister has assigned provincial chairmen and corporations to review approved equitisation projects.

The mission to divest from non-core businesses currently faces SoEs. What should they do to handle this challenge?

Apart from Government support, leaders of corporations and groups must identify that disinvestment is a necessary duty and responsibility. Leaders must review the list of investment projects that need to divested from. In my opinion, companies that face equitisation problems must report to higher authorised agencies and the Ministry of Finance to solve them.

If the problems remain unsolved, they should report to the Prime Minister for settlement. For example, the Viet Nam National Coal and Minerals Industry Group (Vinacomin), Electricity of Viet Nam and Vinatex have started to divest from non-core businesses in accordance with the roadmap set by the Government.

Can you tell us about the work being carried out by the Government to help accelerate the equitisation process?

Last February, the Prime Minister conducted a meeting with corporations and SOEs to work out solutions to the issue. The Government has so far enacted comprehensive legislation to remove difficulties and promote equitisation while handling bad debt and divestment.

The Prime Minister has issued Directive 06 to outline specific instructions for various ministries to smooth the way for the equitisation process.

Every month, hold a meeting to discuss progress.

Deputy Prime Minister Vu Van Ninh has also been instructing ministries and provinces to remove difficulties for each equitisation plan. In other words, co-ordination between ministries and enterprises should be more comprehensive. — VNS

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