SOE Restructuring: Slow Progress, Limited Results

Speaking at the conference, Nguyen Van Ngoc, Permanent Deputy Secretary of the Block’s Party Committee, said that currently, the Party Committee of the Block of Central Enterprises has 32 groups, corporations, and banks. In the period 2011 – 2015, there are 28 units which need a restructuring scheme. Up to now, all 28 units have completed building their restructuring scheme, in which 24 projects have been approved.

 

Under the scheme, all 24 units are organised in the model of the parent company-subsidiary; including 15 parent companies the State holding 100 percent charter capital; 9 parent companies which need to conduct equitisation. So far there are 3 parent companies which have conducted equitisation including Bao Viet Corporation, Vietnam National Petroleum Corporation and Vietnam Steel Corporation. The parent companies that will be equitised in 2014 include Vietnam National Garment and Textile Group and Vietnam Airlines. In 2015, the 4 remaining corporations will be equitised including Vietnam National Shipping Lines, Song Da Corporation, Housing and Urban Development and Investment Corporation, and Vietnam Cement Industry Corporation.

 

On divestment, the total number of enterprises which need to withdraw state capital under the scheme is 642, the number of enterprises which have completed divestment so far was 167, total divested capital was VND7.8 trillion. From now until 2015, it needs to continue to divest the entire 472 enterprises.

 

At the meeting, the Standing Committee of the Party assessed that the restructuring progress, especially equitisation and rearranging enterprises, was very slow, and reaching very limited results such as in Northern Food Corporation and Vietnam Railway Corporation. Until now, there should have been total of 80 enterprises to be equitised but only 10 enterprises completed the work.

 

According to Mr Nguyen Van Ngoc, the objective reason is that most of the restructuring proposals were newly approved (18 schemes in 2013, 5 schemes in 2012, and 1 scheme in 2011). The mechanisms and policies were not issued timely and comprehensive. At the same time, in the 3 recent years, the stock market declined economic and financial faced difficulties unfavourable for equitisation and divestments. Additionally, the units themselves have not worked firmly and lacked financial resources to implement the restructuring.

 

The rearrangement of labour also faced problems, a number of enterprises such as Shipbuilding Industry Corporation, Vietnam National Coal and Minerals industries Holding Corporation (Vinacomin Group), Vietnam Electricity Group and Vietnam Bank for Agriculture and Rural Development (Agribank) have thousands of workers to be rearranged, but the problems have not been resolved so it affected the life of the employees and the effectiveness of businesses.

 

Facing the difficulties and obstacles in the process of equitisation and corporate governance, the Party Committee of the Block of Central Enterprises proposed for consideration amendments to the Law on Enterprises, additional adjustments on regulations and operational management of SOEs or review new legislation for SOEs to be suitable with their characteristics of owners, operational objectives, positions and roles.

 

On divestment for crossed funds between groups, corporations and banks, the Party Committee proposed to allow these units to acquire or transfer capital under book value or agreement, and not through the auction of securities exchanges, in order to shorten the time of divestment.

 

For a number of foreign investments, it proposed that the units responsible for their projects, or units designated by the government divest the capital.