SOE equitisation a slower process than planned

Thursday, May 07, 2015 08:00

Dang Quyet Tien
Viet Nam plans to equitise 289 State-owned enterprises (SOEs) this year, according to the Ministry of Finance. But, by the end of the first quarter, only 27 SOEs had launched their Initial Public Offerings (IPOs) and withdrawn capital from non-core businesses.

Equitising 262 SOEs in the remaining nine months is a tall order. Dang Quyet Tien, deputy head of the Enterprise Finance Department under the Ministry of Finance spoke to Vietnam News Agency about the challenges involved.

What were the basic results of SOE equitisation so far?

In February 2014, at a meeting with State-owned economic groups and corporations, ministries and sectors, Prime Minister Nguyen Tan Dung set the goal of equitising 432 SOEs in 2014-15.

By the end of the first quarter of this year, 172 SOEs, one-third of the target, had been equitised. Of these 143 were completed in 2014 and 29 in the first quarter of 2015. Twenty-seven enterprises received permission in the first quarter to launch their IPOs.

The equitisation process has concentrated on large State-owned economic groups and corporations, drawing greater investor and public attention. Equitisation progress has been slower than planned.

Why has it been slow?

There are three main reasons. First, the period between the end of 2014 and the early of 2015 is the time that enterprises in the equitisation plan had to complete production and business plans for ensuring income and solving other issues after one year of operation.

Second, the equitised enterprises are large and important corporations and economic groups, so financial issues are complicated and take time to resolve.

Third, the low percentage of the shares being sold to investors has not matched market demand.

Some people have attributed the slow equitisation process to overvalued assets at SOEs, but there are those who say that they have actually been undervalued to promote the process. So, what are State agencies doing to ensure reasonable assessment of asset values?

Assessment is very important because if SOEs assets are valued accurately, the market would have quality products at their right value as expected. This would attract investors.

Consultancy on asset valuation should follow the market and not be driven by other considerations.

When preparing to sell SOE shares, the stock exchanges and the enterprises must co-operate in finding real investors and strategic shareholders. The volume of shares sold must be reasonable to attract investors.

This year is the last year to implement the 2011-2015 plan on restructuring the SOEs. What will State agencies do to meet the targets?

Twenty-nine SOEs have been equitised in the first quarter of this year, and 260 would be equitised in the remaining of nine months. As per the Prime Minister's directions, those enterprises whose asset evaluations have been completed must be equitised right away, and those in the process of having their assets assessed should complete the assessment in the third quarter.

Meanwhile, the Enterprise Reform and Development Steering Committee and ministries concerned with the equitisation of SOEs should complete soon the mechanisms and policies needed to support and solve difficulties that come up in the equitisation process.

The committee and the relevant agencies have to supervise and encourage enterprises to speed up the equitisation process.

At the same time, the State agencies should be transparent about providing information on the process so that it can be speeded up.

Is anything being done to attract foreign investment to the equitised SOEs?

In the coming months, the Ministry of Finance will submit to the Government an amended decree on implementing the Law on Securities and increase room for foreign holdings in the equitised SOEs. — VNS

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