Nha Be Garment, 10 Garment and Duc Giang Garment, prestigious members of the Vietnam Garment and Textile Group (Vinatex), are expected join the stock market in 2006.
This is considered an important step in carrying out the policy to reshuffle and renew enterprises of Vinatex. By the end of 2005, the group equitised 53 units, including 34 companies and 19 divisions of companies. The total chartered capital of equitised enterprises reached VND1,213.45 billion (US$75.8 million).
US$10 billion capital in need
The upcoming official joining of Vietnam to the World Trade Organisation (WTO), the Decision on Strategies to Support the Development of the Garment and Textile Industry was compulsorily eliminated. From that point of time, this industry had to go on its own feet and the hardest issue was seeking capital.
According to Mr. Le Quoc An, Chairman of Vinatex, his group needs around US$10 billion investment capital from now until 2010 for developing fabric and accessory production. This is a huge investment amount and must be mobilised from various sources and the stock market is an important channel.
At the meeting discussing the measures to speed up the equitisation of Vinatex’s companies, Vinatex plans to totally equitise five companies, partially equitise six companies and rearrange and sell State stakes in 26 other companies in the last six months of 2006.
Besides, Vinatex continues calling up capital contributions to set up three joint stock companies, namely, Construction Consultancy and Investment Service Co., An Thinh Vinatex Construction Investment Co. and Ha Dong Garment-Textile Supermarket.
As for equitised units, Vinatex will continue selling State stakes in 22 units with the finishing deadline in October. The group has sent notices to its units and issued instructive documents for the selling of the State shares. At present, Gia Lam Garment, Dap Cau Garment and Phuong Dong Garment are tendering their shares. Nam Dinh Garment, Ha Dong Wool and Hung Yen Garment are submitting IPO plans. These six units will sell additional 11-21 per cent of the State stakes.
Equitisation pace slowdown
Mr. An said the equitisation pace and reshuffle schedule of enterprises were slowed down for various reasons, especially the process of corporate evaluation. Many enterprises are not totally aware of their rights and interests, leading to the corporate evaluation slowdown. The poor professional knowledge and skills are also attributable to the sluggish pace.
As for the approach to capital sources after being equitised, Vinatex’s report said many had difficult access to banking system. In spite of operating as joint stock companies, many still hesitated to approach capital sources from the stock market.
At the profit-making enterprises, profits were shared immediately among holders. This report said most enterprises had an annual dividend of over 12 per cent. The annual dividend in some enterprises even reached 20-50 per cent.
The six-subsidiary Viet Tien Garment Co. encountered equitisation hardship as it previously joint-ventured with local enterprises. To guarantee labour mechanism, Vinatex proposed to equitise six member units of Viet Tien in accordance with the Decree 187/2004/ND-CP.
As regards post-equitisation redundant workers, the shortage of documents to instruct the Government’s Decree 41/2002/ND-CP also leads to the slowdown.
Meanwhile, according to Vinatex’s proposal, the Ministry of Industry allows staff of mother company Vinatex to buy a part of shares of equitised units. Vinatex also proposed providing incentives of equitised companies for two joint stock companies of Construction Consultancy and Investment Service Co., An Thinh Vinatex Construction Investment Co. to avoid damages to workers. If any unit lacks capital, it will issue shares when being equitised.
P.V
Vietnamese
