After some time of carrying out equitisation, many contrary viewpoints have been raised from statistics figured out in the first day of the 11th meeting session of the Standing Committee of the National Assembly on 21st August 2008. In practice, only a short time since the beginning of equitisation, many businesses have “diluted” their shares in many different forms: Increasing the charter capital by issuing additional shares, trying to reduce or sell state-owned shares (which often happens in businesses having effective operation), paying share-dividends with shares, distributing bonus shares, etc... As a result, state capital in the businesses is diluted and the national economy suffers losses.
Inconsistency
"Since the equitisation, we have collected a great amount of State properties, the loss in State land and properties happens in negligible rate...”, said Mr Phung Quoc Hien, Chairman of the National Assembly’s Committee of Finance and Budget. In practice, proper attention is sometimes yet paid to the State interest while shortcoming remains in the State management, which leads to negatives for some individuals to seek for private benefit. Economic experts says despite the achievement, the equitisation has caused some problems that have yet been solved especially in dealing with unpaid finance, properties and debts; the issues relating to land during the business evaluation, the issues relating to share sale and acquisition of employees and State capital management upon the equitisation.
On the other hand, the property evaluation in some localities (at the time prior to the issuance of Decree No.187/2004/ND-CP) was not practical. The advantages in land and position of businesses were not considered in the evaluation (especially in big cities and towns), causing loss to the State, complaints and queries which posed bad effect to the equitisation. More dangerously, people also complain for the fact that 30 percent remaining State shares in the companies upon the equitisation are “sold off”. The land re-arrangement during equitisation is also made corrupt use by having the land leased by individuals at low price for the purpose of private benefit. Additionally, some localities withdraw land of the equitised companies and change the land use purposes at a price much lower than the market price, then the State has to suffer losses and lose advantaged business positions...
At present, when businesses and investors rush into securities investment and posting in securities trading centres, State owned businesses have also jumped into this rotary. Right after decision on charter capital increase, many State corporations issued shares to develop. However, the insiders and those who understand the situation carefully know that capital increase and additional share issuance may pose many risks instead of potentials as they may seem. Certainly, at the beginning, shareholders may gain benefits as they have the right to buy preferential shares. However, the securities price shall drop when their value is diluted and the market faces up with complicated changes in long-term. Anyway, leaders of the equitised companies do not suffer big difficulties in this case as they invest with the State budget. It’s the employees to suffer loss because their labour is traded.
Under a latest report of the State Capital Investment Corporation (SCIC), upon the equitisation and before being transferred to SCIC, the capital has been “diluted" in similar ways. If the State does not spend the budget buying more shares, its capital proportion shall be seriously reduced then the State may lose its control in the businesses. The loss causing dilution has happened in the case of the Cultural Work Construction Joint Stock Company (subordinated to the Ministry of Culture, Sport and Tourism where the remained State capital is reduced from 30 percent to 9 percent; the case of the Construction Joint Stock Company No. 2 (Quang Ninh) from 52 percent to 20 percent; the case of Phu Yen Pharmaceutical Joint Stock Company from 51 percent to 19.7 percent...
By 25th June 2008, SCIC has received the State ownership for 876 companies with the total capital of VND7,974 billion. SCIC has rejected the capital in 35 companies with the total recorded value of VND61 billion. However, some local businesses tend to keep their shares and share dividends; some localities have yet transferred the amount gained from selling shares to SCIC (around VND1,600 billion).
Appropriate attention has not been paid to post-equitisation, awareness about joint stock company laws is limited, the ownership of shareholders and employees have somewhere failed to be developed. After the equitisation, instead of making renovation in their management, many companies keep using old management methods and habits, hence the productivity remains low. The post-equitisation State-owned enterprises management is not strict enough. While, SCIC yet affords to manage such a great number of assigned businesses, some localities tend to loosen the management over businesses after their equitisation.
To protect benefit of employees
Equitisation is in fact the capital contribution and mobilisation from different external sources and from in-office officers and employees of the company. However, many employees are at disadvantage during the capital mobilisation for equitisation in many companies.Namely, most of Northern garment and textile businesses such as Chien Thang Garment Company, Hanosimex, Thang Long Garment Company, Dap Cau Garment Company, Garco 10 Company and Duc Giang Garment Company... have finished their equitisation. A Trade Union officer in a garment company said: The real shares held by employees is very modest, only between 5 and 15 percent of the charter capital. Under the regulations that a maximum of 100 shares is reserved for one working year, young workers have the right to buy few hundreds of shares in maximum and may enjoy only some hundreds of thousand dongs per year, so most of them have sold the shares in ears. They would rather sell the shares in ears to get some million dongs of price difference. Only employees having seniority of over 25 years have the right to buy 2,500 preferential shares or more. However, most of these employees retired upon the equitisation!
Under the statistics released by the Vietnam General Confederation of Labour, 356,648 employees in 1,340 equitised businesses have the right to buy shares at preferential price. However, 60,331 among these 356,648 employees have sold their preferential shares or the right to buy preferential shares (accounting for 16.9 percent). Nevertheless, these data is generalised basing on the reports from Confederation of Labour in cities, provinces and the Central Trade Union. The real number must be much bigger. Upon the equitisation, most of the businesses have no exact idea about the remained shares held by their employees. The share proportion held by employees tends to go down, mostly transferred to others in and outside the company. Shares often come to the hand of rich people especially members of the company’s management board, chief accountant, heads of departments and divisions... This situation has made poor employees become real stipendiary right inside the company with whom they have strong attachment for years.
The report dated 21st August 2008 of the National Assembly’s Standing Committee made a proposal to allow employees in the companies to acquire specific shares over the company’s total charter capital even in deferred payment method; allowing the use of commend and reward fund and welfare fund to establish a share acquisition fund by the company’s Trade Union to pave the way for the Trade Union involve in the management and protect the employees’ interests. These may be thrifty solution to ensure economic benefits for employees.
Anh Phuong
Vietnamese
