Speedy restructuring needed in domestic agriculture sector

Thursday, Mar 17, 2016 08:24

An agricultural model at Hai Dang Farm in the northern province of Nam Dinh's My Loc District. — VNA/VNS Photo Vu Sinh

HA NOI (Biz Hub) — Restructuring and equitising State-owned enterprises in the agriculture sector must be implemented quickly, Minister of Agriculture and Rural Development (MARD) Cao Duc Phat said.

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

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

Tran Ngoc Thuan, general director of Viet Nam 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.

The group also has planned to disinvest VND3.1 trillion (US$139 million) from non-core businesses. Actually, it has so far disinvested only VND1 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.

Phi Manh Cuong, general director of Viet Nam Forest Corporation (VinaFor), told Viet Nam 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 VND1.57 trillion and late 2014, it reached over VND2.17trillion 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 Ha Cong Tuan, the agriculture 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.

Tuan 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 shares to foreign investors.

Strategic investors were 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 SOEs in the sector.

Ailing businesses will hinder the development of the whole sector, Tuan said. — VNS

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