Boosting state capital divestment

What are your thoughts on the fact that seven out of eight state corporations slated for equitisation are in the transport sector?

The Ministry of Transport leadership, particularly Minister Dinh La Thang, is very committed to divesting state capital from firms in which the state does not need a dominant position. To achieve this goal the minister has shared this point of view with relevant businesses.

As the representative of state ownership in transport businesses, the minister’s view on this matter is vital because if the leaders of these corporations do not make the necessary moves they may be removed from their positions.

Does capital divestiture chiefly depend on the behaviour of the leadership of ministers, branches and local government?

That is correct. Decree 99/2012/ND-CP regulates the decentralisation and assignment of the rights, responsibilities and obligations of state representatives for SOEs (state-owned enterprises) and state capital invested in these enterprises.

Accordingly, the state representatives for SOEs (ministries, branches and provincial-level people’s committees) are responsible for re-organising, changing the ownership model, dissolution, and declaring bankruptcy, as well as revising and/or transferring chartered capital. The government has delegated the task of state capital divestment and has charged the aforementioned representatives with finding a way to accomplish this. If they don’t, the pace of equitisation will most certainly continue to be slow.

At the Ministry of Transport’s conference to review activities in 2013, Prime Minister Nguyen Tan Dung said business leaders failing to complete equitisation on schedule will be replaced. Do you think this will drive more significant progress in terms of SOE restructuring?

Previously people often attributed slow capital divestiture on an insufficient legal framework or poor stock market performance. But now the legal system is sufficient for the process and the stock market is improved. These factors, along with the government’s strong commitment, are very likely to hasten the process this year.

What would happen if leaders insist on not selling stakes to ‘preserve state capital’?

That is impossible given a prime minister decision approving the restructuring plan for 2011-2015. Accordingly, SOEs are classified into three groups. The third group is firms which have sustained losses over a long period of time. They are required to either become joint stock or limited liability companies, or go bust.

For the other two groups the decision requires state capital in non-core areas of business be divested.

This means state capital divestment will be transparent and made public and primary investors will decide on the enterprises’ value as this should not be set by business executives or management authorities.