Nghe An Province: 7-Year Process of SOE Equitisation Revised

According to a report by the Nghe An Equitization Board, since 1998, the province has equitized 72 State-owned enterprises (SOEs), leased eight, dissolved four, transformed five and merged 28 (18 with central government and 10 with localities). Currently, seven SOEs are undergoing the process, four are being equitized, two dissolved and one sold.

 

After equitization, the enterprises have improved their business efficiency, increasing the output, turnover, profit, and revenue as well as income of the workers. Production has been reorganised with new equipment : Rao Gang brick and tile joint stock company has a new production line, Nghe An bus company 36 new cars, the drivers training centre has more workshops and facilities, Nghe An mechanics and chemicals company mow has two additional plants in Hue and Nam Dinh worth VND20 billion, and the pharmaceutical and medical equipment company has built a new production line worth VND12 billion.

 

As most of the enterprises were mired in loss and debt prior to equitization, these problems had to be fully addressed. As a result equitization in Nghe An required a heavy workload by the province and related agencies. For instance, in 2004, 38 SOEs needed to be equitized, but by the year’s end, 9 enterprises remained incomplete due to difficulties. Vietnam-Laos economic cooperation company was waiting for the payment of debts on the purchase of trucks. The minerals company had to negotiate on the joint venture. The botanical protection company was waiting for a new office to be built. The cement 12/9 company was bogged down by bad debts (VND49 billion). The textile and garment company turned to the equitization process only after failing to join the textile and garment corporation.

 

Even after equitization, certain enterprises were confronted with difficulties such as Hoang Long food processing joint stock company and Aquatic products import-export company which needed continued assistance.

 

Unlike some other provinces, enterprises often merged to avoid equitization. The merging in Nghe An required certain conditions and intervention by local authorities. For instance, Thong Nhat wood-based products enterprise joined with Tien Phong plastics corporation. The corporation wanted a new production line. The province had to intervene to maintain the production of wood-based products alongside new products of plastic pipe. For Nghe An, 28 enterprises have merged successfully and maintained the same production : Vinh mechanics plant joined the Mechanics and motors corporation; Nghe An food company merged with the Northern Food corporation; Anh Son tea enterprise with Nghe An tea company; and Nghia Dan agricultural processing plant with Song Hieu agriculture-forestry company.

Although with certain difficulties and somewhat late in schedule, the equitization process in Nghe An is duly regarded by the Central Commission of Enterprise Reform and is expected to be more successful in the coming years.