“Too Many SOEs is a Headache”

According to the commander of Vietnamese transport sector, “equitisation will help relieve the “headache” for state management. Too many SOEs means more stress for the government in governing their business.”

According to Minister Dinh La Thang, to successfully equitise SOEs in this difficult market conditions, it’s crucial to find a strategic investor to buy shares before doing IPO.

 

Speaking from experience of the Ministry of Transport, Minister Thang said that out of 11 corporations that the ministry had equitised, Vietnam Airlines included, only two had not yet selected a strategic investment, Vietnam Motors Industry Corporation and Civil Engineering Construction Corporation No. 6. All the others had strategic investors; some even had to decide among multiple investors.

 

“When successfully selecting strategic shareholders, the equitisation can be said to have 99 percent completed” affirmed Minister Dinh La Thang.

 

Another thing, according to Mr Thang, the SOEs which the State does not see necessary to hold dominant shares, it will not hold dominant shares, because that will be unattractive. In the Minister’s views, equitisation with the state governance is merely an ​​arrangement, a half-hearted innovation, because it is still owned by state and under the management of the government.

 

As observed by Minister Dinh La Thang, those who want to keep the states governance are often companies with Chairmen, CEOs afraid to be removed from the office. Because without the state control, leader’s position will be decided by shareholders, fairly based on individual’s capability.

 

“Those doing well usually have no hesitation in equitising, in removing state’s governance and keeping governmental shares less than 36 percent, while unstable businesses insist on 51 percent or more. So it’s unnecessary to keep the SOEs governance, especially in construction companies including companies under the Ministry of Transport, state governance can even be reduced to zero percent. Money collected will be used to invest in transport infrastructure development, creating jobs for the construction and transportation market” Mr Dinh La Thang said.

 

The fast pace of the SOE equitisation of the Ministry of Transport is mostly thanks to the Ministry’s strict direction, in particularly the issue of a resolution on restructuring and equitisation of SOEs, which focus on drastic measures and clearly defined personal responsibility. The Ministry has assigned one deputy minister in charge of certain enterprises’ restructuring and equitisation. If an enterprise fails to complete the process, the deputy minister in charge will be held responsible. Those do not implement the restructuring and equitisation in accordance with its objectives will be dismissed.

 

At the conference, Minister Dinh La Thang also talked about the SOEs restructuring plan period 2014-2015 of the Ministry of Transport. Accordingly, all remaining SOEs will perform 100 percent equitisation, except for three public-benefit enterprises ensuring aviation and maritimesafety. Affiliates of these enterprises, which should be equitised, will be equitised.

 

There are ten enterprises set to finish their equitisation in the first quarter of 2014, except for Vietnam Airlines who plans to complete it in the 2nd quarter. Privatisation then will continue to 25 other companies, business units including three ministerial companies. Ten corporations, two schools and ten operating in management of waterways will be turned into joint stock companies.

 

There’s also the privatisation of maritime pilots, the separation rail transport management and rail transport business, establishing a state-owned corporation to manage infrastructure and equitise 100 percent railway companies.

 

In the 2014-2015 period, the Ministry of Transport will continue to accelerate equitisation of nine remaining ports after successfully equitising Quy Nhon Port in 2013.

 

There will be a pilot equitisation of an airport under Vietnam Airlines. Minister Dinh La Thang also reported to the Prime Minister on the preparation of equitisation procedures of Vietnam National Shipping Lines (Vinalines), Shipbuilding Industry Corporation (Vinashin) by 2015.

 

 “Many think that equitisation of these two units is going to be hard work, but I argue otherwise, the key is an efficient arrangement and reasonable price” asserted the Minister.

 

The Minister also asked for the Prime Minister’s permission to equitise Vietnam Airlines in order to innovate business management mechanisms. Obtained capital will be used for business if needed, for example to invest in Long Thanh International Airport; the first phase is US$7 billion.

 

Additionally, Minister Thang also proposed equitising ten hospitals under the Ministry of Transport. According to the Minister, medical ethics is closely linked with ownership. If hospitals are monitored by private shareholders, there’s a high chance that service will get better and the issue of hospital bribery will be eliminated. Pilot equitisation of transport hospitals will soon start this year, its success will pave way for the remaining hospitals.

 

“The current hospital socialisation is half-hearted, the money mobilised is used to buy machine after machine, being neither open nor transparent, which leads to suspicion and then lawsuits. Let’s just equitise them all then things will surely be open and transparent, benefit the people” added Minister Thang.

 

For equitisation to be more efficient, Minister Dinh La Thang also suggested the Government supplement and amend bankruptcy law to be in accordance with reality. Many businesses who are not capable of equitisation and have no other way but to go bankrupt but cannot because of the current difficult bankruptcy conditions.

 

Alongside with that, the Minister also suggested the Prime Minister direct relevant ministries and agencies to research and amend regulations to facilitate the restructuring and equitisation process. For example, regulations on the service cost for equitisation, business purchase should be more specific and better meet practical requirements. Each ministry should review documents of laws and regulations to generalise them, promoting the work of restructuring and equitisation.

 

“If the Prime Minister, the government and leaders of ministries and sectors, and especially leaders of enterprises have the determination, the SOE restructuring and equitisation for sure will soon reap success” confidently said Mr Dinh La Thang.