New driver for State-owned enterprise equitisation

Tuesday, 2017-02-14 11:55:34
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NDO - Prime Minister Nguyen Xuan Phuc last year issued a new decree known as Decision 58 aiming to equitise 240 State-owned enterprises (SOEs) from now until the end of 2020.

There are several important components in this decision. First the government will reduce the number of SOEs where it holds a 100% stake to 103 in eleven fields including lottery, power transmission, national railway infrastructure management, production and trading of explosives, air traffic control and money printing. Meanwhile government stakes are flexible between below 50% to over 65% in other enterprises.

Secondly, the equitisation method is also reformed with the abolition of restrictions on the choice of strategic investors and a requirement that State stakes be sold completely, which means unsold State shares after equitisation will be listed on a stock market to be sold. An equitised SOE must register to list and trade on a stock exchange at an appropriate time within a year of the initial public offering of its shares.

A detailed catalogue of SOEs to be equitised has also been publicised to help investors make informed investment decisions. Particularly the information on the stake that the government will hold in each enterprise and specific responsibilities of each ministry, agency, corporation and local government in determining the roadmap and deadline has created a legal framework to end delays in SOE equitisation when relevant parties intentionally put off the process or ask for adjustments to equitise stakes due to local interest disguised as public service.

The reality shows that SOE equitisation has been rather slow and failed to meet the target of stepping up the mobilisation of other resources for enhancing the performance of enterprises. Aside from external reasons, the above-mentioned situation is also attributed to SOE managers’ lack of awareness, reluctance to market competition and uncertainty about their interest in such enterprises.

SOE equitisation in the time ahead needs to be accelerated via breakthrough measures in attracting capable strategic investors, building a sound business strategy for each enterprise, determining the accurate value of SOEs when equitising, enhancing the capacity of corporate managers, and ensuring transparency in salary distribution, recruitment and appointment. It is also necessary to promptly uncover and strictly discipline those who represent State stakes but commit negligence of duty and cause losses to the State during equitisation.

It has been demonstrated that SOE equitisation can only be expedited in the right direction with the utmost efficiency when appropriate measures are taken in line with the law, market principles and when interests of relevant parties are harmonised in which priority must be given to the goal of sustainable development.