At the forum, most representatives from various business communities felt that stalling the reforms of state-owned enterprises (SOEs) could cause distrust, especially among foreign investors.— VNS Photo

HA NOI (Biz Hub) — The business community yesterday called for Viet Nam to speed up reforms of state-owned enterprises, as the country enters a new phase of economic reforms.

They were attending the Viet Nam Business Forum (VBF), the bi-annual dialogue between the private sector and the government on improving Viet Nam's business environment.

Taking the floor, Minister of Planning and Investment Bui Quang Vinh reaffirmed the Government's willingness to listen to the private sector's concerns about economic reforms.

"We want to know where the difficulties lie in improving the investment climate and increasing the competitiveness of our economy," Vinh said.

At the forum, most representatives from various business communities felt that stalling the reforms of state-owned enterprises (SOEs) could cause distrust, especially among foreign investors.

Steven Winkelman, chairman of the American Chamber of Commerce in Viet Nam, said the new phase of economic reforms call for encouraging and protecting private enterprises, committing to global best practices and restoring investor confidence – especially in the context of the Trans-Pacific Partnership (TPP) negotiations.

"Our members are hopeful that TPP will tear down trade barriers in areas such as government procurement and set standards for workers' rights, environmental protection and intellectual property rights," he said.

"TPP may also help with the difficult task of reforming Viet Nam's state-owned enterprises."

According to Dominic Scriven, head of the Capital Marketing working group under VBF, the equitisation process of state-owned enterprises is even more urgent now, as the state coffers remain limited despite the large need for public spending and investment.

As a result, the government has recently extended the state budget over-expenditure cap from 4.8 per cent of GDP to 5.3 per cent.

According to Scriven, the gross capitalised value of the public shareholding in 11 companies among the 20 largest-listed companies on the Ho Chi Minh City Stock Exchange is US$14.8 billion, or 38 per cent of the value of the entire HCM City Stock Exchange.

"Selling parts of these companies will easily compensate for the state budget deficit in the current difficult time, instead of cutting the minimum wage or resorting to other extreme measures," Scriven said.

The Capital Market working group under VBF also suggested that the first step would be cutting public equity in listed companies down to between 35 per cent and below 50 per cent and accelerating the "corporatisation" process in wholly state-owned enterprises.

Tran Anh Duc, representative of the Investment and Trade Group, said the equitisation speed has been reduced over the past years, with more than 800 enterprises equitised in 2004-05, compared to 13 in 2012.

"This fact has raised a big question about the speed of the equitisation progress in the coming years," Duc said.

Seck Yee Chung, vice-president of Singapore Business Group in Viet Nam, said domestic debt incurred by state-owned enterprises amount to about VND145 trillion ($6.9 billion), and called for non-commercial SOEs to divest from non-core businesses by equitisation to ensure that they can effectively fulfill their social missions.

On concerns of the business community, Deputy Finance Minister Vu Thi Mai said the Ministry was working on easing restrictions on how non-commercial SOEs could divest from non-core businesses.

According to Mai, the Ministry would also consider increasing foreign ownership in Vietnamese listed enterprises, which are currently capped at 49 per cent, except for securities firms.

"We therefore welcome the move from the Ministry of Finance to put forward proposals to raise this limit," said Preben Hjortlund, chairman of the European Chamber of Commerce in Viet Nam.

Hjortlund also added that the Free Trade Agreement between the EU and Viet Nam would likely be concluded at the end of 2014.

Regarding bad debts, Deputy Governor of the State Bank of Viet Nam Le Minh Hung announced that bad debts currently were listed at VND142.3 trillion ($6.78 billion), based on banks' reports.

He added that the State Bank would work with the Finance Ministry on building a legal framework to monitor the management of bad debts and the market. — VNS