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SOE equitization unlikely to meet 2018 target

Released at: 14:05, 20/11/2018

SOE equitization unlikely to meet 2018 target

Photo: vov.vn

Only eleven of 85 SOEs slated for equitization this year had done so by end of September.

by Linh Chi

The equitization of State-owned enterprises (SOEs) is unlikely to meet this year’s target, as only eleven had completed the process as at the end of September, the English online newspaper Vietnam News reports.

Vietnam plans to complete the equitization of 85 SOEs this year, 64 of which are large concerns.

The newspaper quoted Mr. Dang Quyet Tien, Director General of the Ministry of Finance’s Corporate Finance Department, as telling a press briefing in Hanoi on November 19 that “according to the initial plan, in 2018, Ho Chi Minh City had to equitize 39 enterprises while the figure for Hanoi was eleven, but not a single firm from either city has been equitized yet.”

Regarding State capital divestment, according to the official, the divestment process during the first nine months was also sluggish and might fail to meet the goal for the year.

“Under the plan, there were 135 SOEs that had to undergo a divestment process in 2017 and 181 in 2018,” he said. “However, the State has divested capital from only 31 firms, 13 of which conducted the process in 2017 and 18 of which did so in 2018.”

The country reaped VND5.06 trillion ($216 million) from divestments by 18 SOEs in the first half of this year.

Mr. Tien also identified units that did not complete divestment in 2017, including divestment by the Ministry of Industry and Trade from the Vietnam Engine and Agricultural Machinery Corporation totaling VND7 trillion ($300.6 million), divestment by the Ministry of Health from the Vietnam Pharmaceutical Corporation totaling VND829 billion ($35.7 million), and divestment by the Ministry of Construction from eight enterprises totaling VND2.4 trillion ($103 million).

He attributed the delay in equitization and State capital divestment to inadequate measures from ministries, branches and localities involved in the process.

“Leaders’ hesitation and lack of assertiveness are the cause,” he said, adding that the economy’s capacity to absorb the capital of these businesses remains weak.

According to Vietnam News, equitization and divestment encountered many obstacles, notably the influence of special interest groups and difficulties in the search for consultants, enterprise evaluations, and approval of land use plans, as well as complicated pre-equitization auditing processes at major corporations.

The newspaper quoted Mr. Nguyen Hong Long, Deputy Head of the government’s Steering Committee for Enterprise Renovation and Development, as saying it is necessary to revise the list of SOEs awaiting equitization and divestment and urge them to follow the plan.

If enterprises registered to equitize in 2017 fail to do in 2018, they should be transferred to the State Capital Investment Corporation, the government agency that oversees most SOEs, Mr. Long said.

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