SOE restructuring focuses on quality

The state took drastic measures in the SOE restructuring during the 2011-2015 period. A series of policies was issued to resolve difficulties facing enterprises and accelerate the equitization as well as capital withdrawal outside key sectors such as Prime Ministerial Decision 51/2014/QD-TTg dated September 15, 2014 on capital withdrawal, stock sales and registration of shares traded and listed on the stock market of SOEs; Decision 41/2015/QD-TTg dated September 15, 2015 on selling shares in blocks; and Resolution 15/NQ-CP dated March 6, 2014 on solutions to boost the equitization and capital withdrawal in enterprises. However, Minister of Finance Dinh Tien Dung said that there were only 459 enterprises equitized during the 2011-2015 period, completing around 90 percent of the plan.

State capital withdrawal in 10 enterprises continues to be implemented with the plan to collect VND40 trillion. Of which, VND10 trillion are used to compensate for the 2015 state budget deficit, while the remaining is added to this year’s state budget to invest in a number of key projects.

The Vietnam Institute for Economic and Policy Research (VEPR) announced the Q2 macroeconomic report on July 14, indicating a clear change in the structure of budget revenues. Accordingly, revenues from crude oil and export-import activities fell sharply compared to the same period in 2014 and 2015, forcing the government to earmark revenues from other sources. The VEPR suggested the state to strongly implement capital withdrawal in large SOEs, especially in some state-owned commercial banks. “Capital withdrawal can help replenish the state budget, while enabling commercial banks to have sufficient capital to expand their operations,” VEPR Director Nguyen Duc Thanh said.

The restructuring of SOEs had not met expectations. Total revenues from capital withdrawal remained low compared to total investment as the majority of investments brought low efficiency, even losses.

Domestic and foreign experts agreed that a reason leading to slow equitization and unexpected capital withdrawal in many groups and corporations was due to mechanisms and policies. In addition, the proportion of capital held by the state in SOEs is too high although many of them are not needed. Therefore, organizations and investment funds hesitate to pour capital as they will be difficult in making decision.

Enterprises have also faced many difficulties in the evaluation of assets such as land use rights, brand and intellectual property valuation as well as challenges in handling outstanding debts and seeking strategic partners. The Ministry of Finance’s Corporate Finance Department Deputy Director Dang Quyet Tien said that specific roadmap and plans to accelerate the equitization are needed with a main focus on quality.

Strengthening transparency in information of SOE performance is mentioned as a necessity to achieve high efficiency in the equitization in the coming time, Nguyen Thi Ha from the Academy of Finance said. In addition, redefining the structure of the types of businesses in the economy is also needed as the 2016-2020 period will see almost full implementation of international commitments by Vietnam in new-generation free trade agreements.

To accelerate and achieve higher efficiency in the equitization and capital withdrawal, the role and responsibilities of leaders need to be enhanced, State Bank of Vietnam Former Governor Cao Sy Kiem said.

Quang Loc