VietNamNet Bridge – The Vietnamese government is taking various measures to boost sluggish equitisation and achieve the target of 432 equitised enterprises by the end of 2015.
Deputy director Dang Quyet Tien from the Ministry of Finance’s Corporate Finance Department shares the VIR about what exactly these measures are and what specifically they are planned to do.
Could you summarise the results of state-owned enterprises’ equitisation in the first half of this year?
The results were below expectations. In the first half of this year 38 enterprises were equitised, 138 enterprises set up steering committees for equitisation but have not yet implemented, and 135 enterprises have yet to make any significant progress.
The Steering Committee for Enterprise Innovation and Development [SCEID] has been collaborating with the ministries, branches and provincial people’s committee to supervise the implementation and tackle challenges arising during the equitisation process to boost its speed and effectiveness.
As such, the SCEID has required 159 enterprises to produce a reliable valuation within this year’s third quarter to complete approval of their equitisation plans by the end of this year.
For enterprises that have not yet established a steering committee for equitisation, within the third quarter they must work to establish such a committee and start the valuation process to submit results by the second quarter of next year and to approve their equitisation plans by the third quarter 2015.
Who will be responsible if the equitisation process does not achieve the desired results you mentioned before?
Deputy Prime Minister Vu Van Ninh, head of the SCEID, has chaired regular meetings with relevant departments to ensure equitisation goes forward and to promptly handle all problems and propose suitable solutions.
If enterprises fail to implement equitisation as per the plan, their leaders will be held responsible and they may be removed from their positions.
The SCEID will identify which enterprises are moving slowly as well as the cause of the delays. The Prime Minister has affirmed that the heads of such enterprises will be removed if they don’t achieve progress.
As proposed by the Ministry of Finance, SOEs that do not fulfil the requirements for an IPO will instead be transformed into joint stock companies with a diversified shareholder structure. Is this just a formality?
Demand on the stock market is still limited, while the number of enterprises slated for IPOs and equitisation is quite high. This could lead to unsuccessful share offers. In this context, if the policy is that firms must hold an IPO at all cost, it could result in low share prices and even capital losses.
Therefore, the option to transform SOEs into joint stock companies is aimed at improving the quality of management and transparency to prepare for a later IPO.
The State Securities Commission is implementing measures to increase the attractiveness of IPOs and improve demand on the stock market. If these are successful, IPOs will be more frequent and more successful.
These steps should boost the equitisation process and help bring more added value to state capital while avoiding an overabundance of supply on the stock market.
VIR/VNN