Equitisation still on the back burner

According to the Ministry of Finance (MoF), 93 state-owned enterprises (SOEs) must complete equitisation this year, of which 22 are under ministries, 33 under state-run economic groups and corporations and 38 under local authorities’ supervision.

Nguyen Duy Long, head of the MoF’s Enterprise Reform, Restructuring and Development Department, said fulfilling the equitisation plan was a pipe dream.

“Up till now, the MoF has not received any decision approving the 93 SOEs’ equitisation schemes from related ministries,” said Long.

In 2012’s first seven months, there were only a few SOEs to be equitised which must have been equitised last year.

Long said the stock market slowdown, apart from other macroeconomic difficulties, had had a negative impact on equitisation. “In addition, most SOEs to be equitised this year are big-scale with many financial difficulties.”

Long also pointed out that the first quarter was a time when enterprises focused on making their financial reports and equitisation was not a priority.

However, he noted 10-20 SOEs would be equitised by the end of September. A typical example is Electricity of Vietnam (EVN) which has gained traction in the equitisation process since 2010. EVN’s deputy general director Dinh Quang Tri said the current mechanism which did not allow  state-owned groups and corporations to make a loss to the state capital when being equitised was a barrier to the equitisation process.

“Also, in a difficult stock market, capital withdrawals are difficult. Thus, so many business leaders delayed the equitisation process to wait for the market recovery,” Tri said.

Nguyen Dinh Cung, vice head of the Central Institute for Economic Management (CIEM), said the state should not force SOEs to be equitised at any price.

“It is important that enterprises must raise business efficiency as well as capital usage capacity to sell state capital at the most reasonable price at a suitable moment,” he said.

In 2011, the number of equitised SOEs was only 60 while the whole year 2010 saw only 144 SOEs complete equitisation.

In 2009, there were only 65 equitised enterprises, much less compared to its target of 714 enterprises during 2009-2010 and 349 equitised enterprises in 2008, according to the MoF.
Currently, there are 1,309 wholly SOEs left. But according to the government’s plan, up to 2015, only 692 enterprises will retain their wholly state-owned status and 573 will be equitised which means that some 150 enterprises must be equitised every year from now.

SOEs equitisation began in 1992. By the end of 2011, nearly 4,000 SOEs had been equitised. The number of SOEs dropped from the original 12,000 to 5,655 in 2001.