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Equitization transparency to be improved

Released at: 12:20, 07/01/2017

Equitization transparency to be improved

Photo: Viet Tuan

Many SOEs set to be equitized but not those in sectors like national defense and security, nuclear power, and money printing.

by Uy Vu / 3

The government has announced the total rate of State ownership in firms that are set to be equitized, instead of fixing rates by sector, as has been the usual practice, under Decision No. 58/2016/QD-TTg issued by the Prime Minister on December 28.

Attached to the Decision is a list of 103 State-owned enterprises (SOEs) in which the State will hold a 100 per cent stake and another 137 that will be equitized in the 2016-20 period.

Among those to be equitized, the State will hold over 65 per cent of charter capital in four, 50-65 per cent in 27, and less than 50 per cent in 106.

SOEs operating in sectors such as national defense and security, nuclear power, and money printing will not be equitized.

Decision No. 58 replaces Decision No. 37/2014/QD-TTg dated June 18, 2014 and will take effect on February 15.

Mr. Dang Quyet Tien, Deputy Director of the Ministry of Finance’s Corporate Finance Department, was quoted by Vietnam News Agency (VNA) as saying that it proves the government’s determination to improve transparency and the effectiveness of the equitization process.

He said that publishing the names of equitized companies and specific rates of State ownership would help avoid enterprises’ petitions for maintaining a higher rate of State ownership, as had previously happened.

Previously, the government only regulated the extent of State ownership rates by sector, not specific SOEs, leading to low divestment, Mr. Tien said.

He said that the average divestment rate at SOEs is now 8 per cent, meaning that the State still holds 92 per cent of charter capital post-equitization.  

SOEs are not willing to equitize because their leaders fear they may be unemployed if a controlling stake falls into private hands, according to Mr. Tien.

Due to poor preparations for equitization, private investors are also not provided with sufficient information and many stakes languish “on the shelf”.      

To ensure that the equitization process benefits both the State and private investors, the government will require better information disclosure by SOEs and may lift the cap on the number of strategic shareholders so as to increase the number of bidders, Mr. Tien added.

He also said that the government would not rush the sale of stakes at one time. Instead, divestment would be divided into many phases, depending on the market situation.

“I think the Vietnamese market is still small, so if we don’t have policies to attract foreign capital it will be difficult for us to reach the SOE equitization targets,” he said.

The Steering Committee for Enterprise Renovation and Development reported on December 28 that the government had sold stakes in 55 enterprises during 2016, bringing the number of SOEs equitized in the 2011-16 period to 554.

The 55 were under the management of the Ministries of National Defense, Industry and Trade, and Agriculture and Rural Development, as well as the Vietnam Rubber Group and the Vietnam Southern Food Corporation.

The State has now sold shares worth more than VND4.493 trillion ($199.69 million) in book value for more than VND7.098 trillion ($315.46 million).

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