It was essential to tackle bottlenecks in determining the corporate value of State-owned enterprises (SOEs) to ensure the accuracy of valuation and speed up the equitisation process, according to the Ministry of Finance.

Dang Quyet Tien, director of the ministry’s Corporate Finance Department, said that the equitisation of SOEs had been painfully stagnant partly due to the negative impact of the COVID-19 pandemic on the domestic and regional financial and stock markets, which caused difficulty in the determination of corporate value and the implementation of the State stake auction.

According to Nguyen Duc Do from the Institute of Economics and Finance, the problem in the valuation of corporate assets was a barrier to the equitisation process.

Do said that theoretically and practically, it was difficult to determine the value of SOEs accurately because factors which underlined the valuation, such as interest rates and profit prospects, always fluctuated. In addition, the selling prices of State stakes depended on the macro-economic situation and the stock market.

Because of the difficulty in accurately determining the corporate value as well as the selling prices of State stakes, the people who were in charge of approving the equitisation plans were always cautious with the fear that they would be responsible in case the equitisation results were not successful as expected, Do said.

The fear of responsibility multiplied when the legal base and policies related to equitisation remained unclear, especially approaches in the valuation of assets such as land and brand, Do said.

Besides improving the land policies, it was also important to accept the market fluctuations in the valuation of corporate assets, he said.

The critical point was to build competitive and fair auction mechanisms with information dissemination and transparency mechanisms so that the valuation could achieve the highest accuracy, Do said.

Minister of Finance Ho Duc Phoc said previously that the corporate valuation played an important role but had not achieved accuracy, often lower than the actual value or the post-audit value, which caused significant losses.

He cited evidence that the auditing at 45 SOEs after equitisation reassessed the value of many SOEs several times higher, an average of 2.8 per cent higher, demonstrating problems in the corporate valuation, especially the value of land use rights.

A Viet Nam National – Mineral Industries Holding Corporation Limited representative said that SOEs were still confused with the determination of brand value, adding that it was necessary to raise specific methods to determine the cultural and historical factors in corporate valuation.

Brand focus

It’s time for the Government to pay special attention to developing SOE brands after equitisation, said Ngo Tri Long, former director of the ministry’s Price and Market Research Institute.

Long pointed out that many brands of SOEs were disappearing or becoming vague after equitisation, adding that this should also be considered the loss of an asset.

Stressing that branding was the main resource for the economic development of a country, Long said that the SOE equitisation and State capital divestment should pay special attention to preserving national brands and creating conditions for these brands to continue to develop.

The Government in February asked SOEs to focus on efficiency without losing their brands and corporate identity. — VNS