No SOEs equitised in five months, Gov't's plan likely missed
The rate of equitised State-owned enterprises (SOEs) for the 2017-20 period has remained at 28 per cent for several months, the latest update from the Ministry of Finance shows.
|A beer production line at Sài Gòn Beer-Alcohol-Beverage Corporation (Sabeco). Sabeco was one of the effective divestments. — Photo courtesy of Sabeco|
The figure is equal to 37 SOEs, which have successfully been equitised, while the total number of SOEs asked to complete equitisation in 2017-20 is 128.
In the 11 complete months of this year, the total value of company shares offered for sale was VND979 billion (US$42.3 million) and the total income earned from selling those shares VND2.03 trillion.
The rate of successfully equitised SOEs has remained still in the last five months and with only two weeks to go until the end of 2020, it is impossible for the other 91 companies to accomplish their plans.
Of the 91 companies, 13 are located in Hanoi and 38 in HCM City, six are managed by the State Capital Investment Corporation (SCIC), four are run by the Ministry of Industry and Trade, and two are overseen by the Ministry of Construction.
There are still obstacles with the equitisation process, Dang Quyet Tien, director of the finance ministry’s Corporate Finance Department, said.
Some companies have not been serious enough to execute the equitisation plans and meet the Government’s request, he said.
The valuation of the SOEs has been challenging as it is difficult to evaluate their assets, debts and equities, he said.
Minister of Finance Dinh Tien Dung said land issues remained the biggest problem for SOE equitisation.
Many of those SOEs only start valuing their land when they have to complete equitisation plans, the minister said.
“No one takes the responsibility for the slow evaluation of land properties, even the companies or the local authorities,” he said. “Many land-related issues have been unsolved and unsettled.”
The ongoing COVID-19 pandemic has pulled down market demand and business performance, therefore, it is difficult for SOEs to look for potential investors, the minister said.
The finance ministry will adjust several legal documents to help SOEs speed up their equitisation plans, especially when dealing with land issues, minister Dung said. For example, the ministry will complete a draft decree to amend Decree 126/2017/NĐ-CP to increase equitisation pace for 2021-25.
According to economist Vu Dinh Anh, the Government should review the policies to oversee the way by which land properties are managed, especially “golden locations”.
According to the Ministry of Finance, Government agencies controlling the State capital at SOEs must report difficulties to the ministry and the Government for solutions and avoid any delays.
SOEs that must be equitised should immediately review their land properties and develop land use plans, and submit the plans to local authorities for feedback and approval prior to corporate valuation.
Local authorities must act more aggressively and have stronger actions to support SOEs to complete their equitisation plans. They are also urged to take accountability before the Government if failing to meet the requirements. VNS
Vu Dinh Anh, a respected economist, has pointed out that in many cases, investors decide to buy shares of equitized enterprises because the enterprises have many land plots in advantageous positions, or ‘golden land’.
Equitisation should be a magic wand to improve the performance of a State-owned enterprise (SOE), but in some cases, it is not.