Circuit boards produced by the Vietnam Posts and Telecommunication Group (VNPT). The firm is one of the large-cap State-owned enterprises.that may not complete the equitisation plan at the end of the year. — VNA/VNS Photo Minh Quyet

Government agencies approved equitisation plans for six State-owned enterprises (SOEs) this year, according to the Ministry of Finance’s corporate finance department.

Among the six SOEs, the Committee for Management of State Capital at Enterprises has completed the evaluation of the Power Generation Corporation 2 (EVNGENCO2).

Hai Duong Livestock Genetics One Member Co Ltd must complete its equitisation by the end of 2020 under Decision 26/2019/QD-TTg issued by the Prime Minister on August 15, 2019.

The livestock company had planned to launch its IPO on August 31 but the auction was cancelled on August 26 as no investors were interested in buying its shares, according to the Ha Noi Stock Exchange (HNX).

Since 2016, government agencies have approved equitisation plans for 177 SOEs, valuing those firms at more than VND443.5 trillion (US$19 billion). Of the total, the State capital is worth more than VND207 trillion.

Of all 177 SOEs, 37 companies are in the list of 128 SOEs that must be equitised by the end of 2020 in accordance with Prime Minister’s Decision 26/2019/QD-TTg and Document 991/TTg-DMDN.

The Vietnamese Government must sell its stakes in 91 other SOEs by December 31, 2020. Those companies are now managed by the authorities of Ha Noi and HCM City, the Committee for Management of State Capital at Enterprises, and the ministries of Construction and Industry and Trade.

As the Prime Minister’s SOE equitisation plan has remained stagnant for the last five years, economic specialists have said it would be very difficult, and in some cases impossible, for the stakeholders to complete the plan on schedule.

But equitisation would be inevitable because it is the only way to improve the performance and efficiency for SOEs and bring a large amount of cash for the Government to boost its national socio-economic development, they said.

State-funded companies had always delayed their equitisation process, economist Nguyen Tri Hieu said.

“They have many excuses to postpone divestment plans, and this makes the Government unable to reach its goal,” he said.

The head of the Corporate Finance Department, Dang Quyet Tien, said that companies had failed to fulfill their equitisation plans because of the COVID-19 pandemic.

“The whole world and the country have seen a downturn in socio-economic development. So it has been rough for local SOEs to find potential buyers for their shares,” he said.

In addition, a number of large-cap companies have very complex financial structure, own large areas of land in various cities and provinces, he said.

“That usually takes government agencies a long time to process their financial statements and land-use certificates, and it’s even more difficult to value those businesses.”

“Some large-cap enterprises such as the telecom groups VNPT and Mobifone, chemical group Vinachem, coal miner Vinacomin and creditor Agribank have not gained approvals for their land use rights,” Tien said.

In addition, SOEs now would need more time to meet requirements to sell the State capital as the rules on equitisation and divestment have been updated, making the process more complicated and time-consuming to follow, he said.

Meanwhile, some local authorities were not willing to give up their power in the businesses as government officials were scared of taking responsibility for selling the State capital, Tien added.

According to the finance ministry, SOEs have been asked to review their land use rights and report the land certificates to local authorities for valuation of the properties.

Government agencies controlling the State capital in SOEs are also held responsible for completing the valuation of the companies by the end of the year.

The agencies are also requested to finish the equitisation plans by the end of the year. Any troublesome cases should be reported to the Government for instruction.

The Ministry of Finance also stressed that leaders of ministerial and central agencies and chairmen of provincial people’s committees must to work more actively to complete the Government’s equitisation plans and they must be accountable for the plan implementation progress. — VNS