10:50 | 15/12/2017 Economy
(VEN) - Vietnam has equitized more than 4,500 state-owned enterprises (SOEs) since 1992, but foreign investors’ involvement in the process has not met expectations, according to a recent report by the Central Institute for Economic Management (CIEM).
According to the report on strategic shareholders in the equitization of SOEs, there are five reasons why strategic shareholders are not interested in the equitization of Vietnamese SOEs, slowing down the equitization process.The biggest obstacle is the state’s tight control over the ownership ratio of foreign strategic shareholders, reducing investment incentives for shareholders who are not guaranteed full rights in managing the businesses in which they invest.
Only six out of 46 SOEs approved for equitization in 2011-2016 offered international investors over 50 percent of ownership and five of them have sold out such stakes.
Foreign shareholders cannot hold stakes of more than 49 percent in SOEs as stated in Decree 60/2015/ND-CP. State enterprises in fishery- and shipping-related services set even lower foreign ownership rates, at 40 percent and 30 percent respectively.
Other reasons include unreasonable evaluation of enterprises and prices of their stocks, lack of attractiveness to strategic shareholders, lack of information transparency, and a complex, rigid selling method.
Nguyen Dinh Cung, director of the Central Institute for Economic Management, said strategic investors bring not only new financial sources but also added value for enterprises, such as advanced technologies, management skills, new networks and markets.
To increase attractiveness and encourage strategic investors to participate in SOE equitization, there should be clear and transparent criteria for selecting strategic investors. In addition, the state should loosen control over the ownership ratio of foreign strategic shareholders, he said.
The determination of business value should be conducted independently by experienced international and domestic agencies on the basis of current laws and international practices.
Share values should be based on real business value instead of the transaction value listed on the stock exchange, as such value only represents a minority of the shares being traded and also depends on external factors and short-run market patterns.
Information about equitized SOEs must be publicized within a sufficient time frame to allow investors to inspect the information and evaluate the business value prior to the bidding process.
According to the report on equitization, corporations, groups and SOEs withdrew VND3.838 trillion and earned nearly VND16 trillion in the first nine months of the year.