Speedy restructuring needed in domestic agriculture sector

Update: March, 17/2016 - 09:00
An agricultural model at Hải Đăng Farm in the northern province of Nam Định’s Mỹ Lộc District. VNA/VNS Photo Vũ Sinh

HÀ NỘI (VNS) — Restructuring and equitising State-owned enterprises in the agricultural sector must be implemented quickly, Minister of Agriculture and Rural Development (MARD) Cao Đức Phát said.

The minister said this to participants at a conference to review restructuring of State-run enterprises between 2011and 2015, held in Hà Nội on Tuesday.

According to the minister, equitisation must be an important part of the restructuring process of SOEs in the agriculture industry.

Trần Ngọc Thuận, general director of Vietnam Rubber Group (VRG), said despite achieving success, the equitisation process in some member companies remained poor. Thuan attributed the low price of latex to the sluggish equitisation process in his corporation.

In addition, VRG also faced difficulties in managing a large-scale rubber plantation areas. The group has conducted equitisation in five member companies between 2011 and 2015. However, it carried out equitisation in only two companies only.

The group also has planned to disinvest VNĐ3.1 trillion (US$139 million) from non-core businesses. Actually, it has so far disinvested only VNĐ1 trillion.

Besides challenges, VRG was also successful in enterprise restructuring. It expanded production in key industries. As a result, in 2015, the group earned more than VND2 trillion. Of this figure, more than VND800 billion came from wood processing and the production of Medium Density Fibreboard (MDF). The group has now occupied 40 per cent market share of MDF in Viet Nam. It is expected to occupy at least 70 per cent of market share after some factories which are being built begin operations.

Phí Mạnh Cường, general director of Vietnam Forest Corporation (VinaFor), told Vietnam News that his corporation always attached great importance to SOE restructuring to make its production and business performance stable and better.

From 2011, the VinaFor has seen handsome growth amid the economic slowdown. In early 2011, the corporation’s equity stood at VND1.54 billion and late 2014, it reached over VND2.1 trillion with a profit of VND200 billion annually. By doing so, the corporation was careful when selecting strategic partners with close monitoring by relevant agencies such as finance, banking, auditing and accounting.

In addition, the corporation has also focussed on key sectors and avoided investing in non-core businesses.

According to Deputy Minister of MARD Hà Công Tuấn, the rural sector has become attractive to investors. Between 2011 and 2015, MARD reorganised and equitised 12 corporations, 4 companies and several member companies.

The total capital from the equitisation process between 2011 and 2015 reached nearly VND2 trillion. Tuấn also said the process of equitisation remained sluggish. He said in the process, some equitised businesses could not sell out their shares as planned. There was no business that could sell their share to foreign investors.

Tuấn further said strategic investors was an important factor to SOEs in the equitisation process.

In the time to come, the rural and agriculture sector need to make great effort in restructuring SEs in the sector. Ailing businesses will hinder the development of the whole sector, Tuấn said. — VNS