Over the past ten years, Ho Chi Minh City has equitised 238 enterprises. According to the city’s Board on Enterprise Management Renewal, local enterprises have applied various forms of equitisation, but mainly have opted selling part of the State’s assets in combination with issuing stocks. This is necessary for enterprises to use the State’s resources effectively while able to mobilise resources from the society.
In equitised enterprises, on average, the State holds 27 per cent. Forty one per cent comes to staff members and 32 per cent, outside investors. The enterprises have mobilised VND 878.939 billion. At the same time, the State earned VND 2,610 billion to invest in other enterprises as stocks were easy to be traded in the stock market. Among 32 enterprises listed in the stock market, Ho Chi Minh City has ten enterprises.
One of the advantages of equitisation, which has been developed by local enterprises, is to build a dynamic and effective management mechanism, suitable with the market’s requirements. Autonomy and self-responsibility in all production and business activities, instead of relying on the State, as well as a clarification of power and responsibility of members in enterprises have led them to success. Orderly and reasonable management mechanism has helped enterprises save up to 25 per cent of production costs. In terms of production and business, enterprises after being equitised have actively learnt and applied new and effective business methods, gradually adapting themselves with the market mechanism.
Statistics of 86 equitised enterprises in Ho Chi Minh City show that their charter capital has increased by 41 per cent. The Refrigeration Electrical Engineering Corporation (REE), for example, has had its charter capital increasing from VND 16 billion to 282 billion, and the Kymdan Rubber Joint stock Company, from VND 7.5 billion to 84 billion. Average revenues of the enterprises have increased by 64 per cent. The Tan Binh Cultural Company, for example, has seen its revenues increase from VND 30 billion to 122 billion; the Binh Thanh Import and Export Company, from VND 155 billion to 314 billion; and the Thu Duc Import and Export Company, from VND 191 billion to VND 389 billion. Their capital ratio is put at 33 per cent on average, while the figure was just eight per cent before they were equitised in 2005.
In comparison with the time before their equitisation, many companies have earned high profits. REE for example has had their profits increasing by 10 folds; HAXACO, from VND 88 million to 3.2 billion; the Thu Duc Housing Development Company, from VND 1.7 billion to seven billion and the Binh Chanh Construction and Investment, from VND 3 billion to 60 billion. Average income of workers has seen a high increase of 48 per cent, at around VND 2.3 million per person a month. In some company, monthly incomes of staff members are very high, at VND 4.7 million for the Bach Tuyet Paint Company, VND 6.2 million for East Saigon Toyota, and VND 4.5 million for the Tico Company. Average dividend is put at 15 per cent per annum. Those enterprises, which have high dividend, include the Tay Bac Cu Chi Industrial Park Development Company with 29 per cent, the Thu Duc Housing Development Company with 25 per cent and the Binh Chanh Construction and Investment with 31 per cent.
Apart from the successes, there are still shortcomings and obstacles during equitisation of State-owned enterprises (SOEs) in Ho Chi Minh City. Time required for equitisation is often long, taking each enterprise 12 months on average to complete. For some reasons, it takes some enterprises between three and four years. The piloting of putting part of the land use right value into assets of enterprises, considering it a contribution of the State to joint stock companies, which is not for sale, is an appropriate approach. However, there have not been any price lists close to the market. To calculate value of land use right, enterprises have to use services of consultancy services, which take much time and money. Therefore, companies have opted for renting land.
There are post-equitisation management problems, such as State management of equitised enterprises. Also, despite a high number of equitised enterprises, they have mobilised little amount of capital and few enterprises have been listed in the stock market. This may result in constraints in technology renewal, production and market expansion.
In the coming time, Ho Chi Minh City will more actively remove constraints and obstacles to accelerate the equitisation of SOEs, making a contribution to building strong and competitive enterprises at the threshold of international integration. Ho Chi Minh City has reformed administrative procedures to help enterprises save time and money, proposing central agencies and ministries to issue guiding documents on settling labour abundance, and concrete concepts on strategic investors, interest of shareholders, salary and allowances of those who represent the State’s capital in joint stock companies.
Thuy Tien
Vietnamese
