Transport business innovations called efficient, says Deputy PM

A Vietnam Airlines aircraft. The national flag carrier has achieved the target of becoming a four-star airline, just one year after its equitisation. - Photo tienphong.vn

Deputy Prime Minister Vu Van Ninh, the head of the national steering committee for corporate innovation and development, made this announcement at a recent meeting concluding the reorganisation of State-owned enterprises (SOEs) in the sector from 2011-15.

Of note, the Airports Corporation of Viet Nam (ACV), the largest enterprise in the domestic transport sector, managing 22 airports nationwide, received VND1.1 trillion (US$49 million) from an initial public offering (IPO) last December 10.

This occurred after national flag carrier Vietnam Airlines raised a similar amount, after selling 49 million shares to the public one year ago.

Further, Deputy Minister of Transport Nguyen Hong Truong said the ministry has completed equitisation of 137 enterprises over the last five years, 67 more than the number it targeted for the period.

By the end of 2015, the ministry completed the sale of its shares in 124 enterprises through IPOs, being set to pay some VND1.7 trillion ($75.5 million) to the business development fund of the State Capital Investment Corporation, exclusive of the ACV's offering.

The ministry has also completed divestments worth VND4.4 trillion ($195.4 million), a value nearly doubling the average of all sectors, in 113 enterprises. It plans to divest from all of its corporations during the first quarter of 2016.

Also, 18 of its corporations have recorded better post-equitisation performances, with their combined asset value growing by 35 per cent during 2011-15, at VND207.93 trillion ($9.24 billion).

Also, their total ownership capital doubled to VND119.38 trillion ($5.31 billion), while the ratio of loans to ownership capital fell from 3.52 to 1.76 during the period.

In the last five years, corporations posted average growth rates of 48.7 per cent per year in pre-tax profits, 8.07 per cent per year in labourers' incomes, and 12.85 per cent in finances contributed to the State budget.

"Positive changes"

"With rationalised production and labourers' productivity, the average incomes of employees have seen positive changes," Truong said.

Additionally, Central Hospital of Transport Director Tran Trung said the hospital has been better managed, with more skillful doctors and modern equipment, since it sold nearly five million shares at an average price of nearly VND23,600 ($1.05) per unit in an IPO last October 21.

Also, Ngo Van Tuan, Chairman of the Viet Nam Waterway Construction Corporation, said equitisation saved his company from the brink of bankruptcy.

Before the firm sold 10.98 million shares with a combined face value of VND109.86 billion ($4.88 million) in an IPO in March 2014, it had nearly lost it ability to pay salaries and owed workers up to seven-month wages. But these difficulties have been settled due to the efforts of shareholders, he said.

Of special note, Vietnam Airlines announced that it has achieved the target of becoming a four-star airline with a modern fleet of aircraft, keeping abreast with the world's top airlines, just one year after its equitisation.

Deputy PM Ninh said these developments are evidence of efficiency in SOE rationalisation activities of the transport ministry, which has taken the most drastic actions among ministries and sectors in this process.

Ninh's comment came as Viet Nam's IPO activity had slackened in 2015, which was attributed to a lack of blockbuster deals.

Viet Nam News reported in December that several most-anticipated share offerings had missed the deadline for this year.

The holdup in the equitisation of mobile network operator MobiFone, Viet Nam National Shipping Lines (Vinalines) and VietJet Aviation Joint Stock Company has disappointed investors.

Vinalines CEO Le Anh Son, in particular, attributed the delay to the lengthy time of settling his company's debts, which stood at more than VND7 trillion ($311 million).

"Highest determination"

Despite the delay in the transport ministry's Vinalines case, the progress throughout the sector apparently deserves Ninh's appreciation and is in line with Minister Dinh La Thang's promise of taking "the highest determination" in the equitisation process.

"That (equitisation) is indispensable and the only way to go, we have no other choices," he told the media.

A reasonable roadmap for equitisation, close collaboration with other ministries and sectors, along with proper selection of strategic investors, were needed for successful implementation, he added.

Ninh asked the transport ministry to complete restructuring Vinalines and the Shipbuilding Industry Corporation, a unit also facing business difficulties, in the coming months. He also ordered it to continue to review and find more SOEs needing to be equitised.

"After being equitised, enterprises must enhance management capacities and operation efficiencies to successfully integrate into the global economy," he urged.

He also asked the Ministries of Finance and Planning and Investment to build special mechanisms to assure that equitised firms improve their competitiveness.

Deputy Minister Truong pointed out that dealing with employees who become redundant in the SOE reorganisation process is a major issue, although labourers' incomes have improved in transport businesses following their equitisation.

During 2011-15, the transport ministry directed companies to assist some 20,000 redundant workers with a total amount of some VND750 billion ($36.58 million).

It has also worked with the Government, the Ministry of Labour, Invalids and Social Affairs and businesses to create new jobs for them. "But the number of redundant workers is very great at some equitised firms," he said.