Production at the Nam Đinh Textile Garment Jsc.’s factory in Nam Đinh City. (Photo: VNA)Hanoi (VNA) - The Central Institute for Economic Management (CIEM)released a report on October 30 on the actuality of strategic shareholders’involvement in State-owned enterprises’ (SoEs) equitisation process, which theyconcluded to be below expectations.
The CIEM reported that since 1992, Vietnam has equitised over 4,500enterprises, though the process has yet to meet the economy’s growth rate, withsome targets missed, including subpar sales of shares to investors.
The number of strategic investors participating in SOEs’ equitisation has beenlower than expected, and attracting strategic shareholders is crucial inaccelerating SOEs’ restructuring process, said Pham Duc Trung, head of CIEM’sCorporate Development and Reform Department.
Trung also commented that the National Assembly set 2017’s goal for SoEequitisation and divestment at the 60 trillion VND (2.67 million USD) mark.
In the first nine months of 2017, estimated total equitised and divested valuewas about 12 trillion VND (534,000 USD), with roughly half coming fromequitisation.
In summation, most State level corporations and State-owned enterprises havenot been successful in attracting strategic shareholders.
As reported by the CIEM and the State Securities Commission, results from SoEs’sale of shares have not achieved the estimated goal of reducing the level ofstate budget in SoEs’ charter capital and attracting private investmentinstead.
The State still holds 81 percent of total shares across SoEs, leaving the levelof private investors’ involvement at only 9.5 percent, as compared to thedesired 16.7 percent, with strategic investors’ participation at an even lowerlevel of 7.3 percent, not even half the designated level of 15.8 percent.
Reports from 46 corporations’ approved equitisation process for the period from2011 to 2016 shows that total charter capital of these 46 corporations reached 171.2trillion VND (7.6 billion USD), of which the total charter capital held by theState accounted for 73 percent, while strategic shareholders only held 16.57percent of total charter capital.
Furthermore, the percentage of SoE’s shares sold to foreign investors was just8.7 percent across these 46 enterprises.
According to Trung, there are five reasons why strategic shareholders are notinterested in the equitisation of Vietnamese SoEs, causing difficulties forSoEs to find strategic shareholders and slowing down the equitisation process.
The biggest obstacle named by the CIEM is the State’s tight control over theownership ratio of foreign strategic shareholders, thus reducing investmentincentives for shareholders as they do not guarantee the right to thesecorporations’ business management.
Other reasons include unreasonable evaluation of enterprises and prices oftheir stocks, lack of attractiveness towards strategic shareholders, lack ofopenness, transparency of information, and a complex, rigid selling method.
According to Adam Sitkoff, Managing Director of the American Chamber ofCommerce (Amcham) in Hanoi, foreign investors want to participate inequitisation in Vietnam but have been deterred by unresolved issues in thematters listed above.
Nguyen Dinh Cung, Director of CIEM, said that for SoEs to attract strategicshareholders, it is necessary to change their thinking towards the perspectiveof investors instead of administrative authority.-VNA
VNA
