Hanoi (VNA) - Speedingthe equitisation of State-owned enterprises (SOEs) and development of the stockmarket is important to secure a Government policy to restructure businessesover the next five years, a finance official said.

Hoang Van Thu, DeputyDirector of the Ministry of Finance’s Corporate Finance Department, told aconference held by the Hanoi Stock Exchange last week that the acceleration inequitisation was needed for the sake of enterprises and investors.

A report by thedepartment said the nation has had 5,950 SOEs reorganised, with 4,460 of themequitised and the remaining firms restructured through mergers andacquisitions, dissolution, bankruptcy or conversion into limited companies withtwo members or more.

Forty-eight firms wereequitised in the first 10 months of this year, after 591 companies wereprivatised during 2011-15. As many as 718 SOEs remain to be equitised.

The reportsaid that in the five years until 2015, some 350 equitised companiesshowed better business performances, compared to the results they posted inpre-equitisation phases.

The combined chartercapital of these firms increased 72 percent, and their total assets rose by 39percent. Their combined pre-tax profits were up 49 percent, and jointcontributions to the State budget were 27 percent higher.

The average workers’income at these companies also increased 33 percent.

Also, the local presscited several cases where equitisation notably improved operational efficiencyof businesses.

The Vietnam DairyProducts Joint Stock Company, or Vinamilk, has seen charter capital increase by13 times from the 1.59 trillion VND (71.95 million USD) level recorded beforeit was equitised in December 2003.

Revenues of the companygrew by more than 10 times, from 451.6 billion VND in 2003 to 40.2 trillion VNDin 2015, and its after-tax profits increased from 56 billion VND in 2003 to 7.8trillion VND last year, posting an average growth of 29 percent per year.

The Vietnam NationalSeed Joint Stock Company, also known as Vinaseed, posted revenues of 1.36trillion VND last year, a rise of 20 times from the pre-equitisation figurerecorded more than 10 years ago.

Its after-tax profitsreached 157 billion VND in 2015, growing by 40 times; and asset values were up22 times at 1.56 trillion VND, while equity was 40 times higher at more thanVNĐ1 trillion.

The Vietnam NationalPetroleum Group, better known as Petrolimex, obtained more than 3 trillion VNDin profits last year, compared to a loss of 1.67 trillion VND the companysuffered before it was equitised in 2011. The firm also paid dividends at arate of 12.14 percent in the first year of equitisation.

On the other hand, someequitised enterprises have reportedly shown declining performances.

The Vietnam Rubber Groupsaw profits fall from 11.84 trillion VND in 2011 to 2.2 trillion VND in 2015,while its debt amounted to 21.22 trillion VND, compared to an equity of 35.21trillion VND last year.

In 2015, the averagedebt to equity ratio of SOEs was 1.23. However, 25 companies, including theMilitary Petroleum Corporation, the Vietnam Machinery Installation Corporationand construction firm Corporation No 36, had a ratio greater than 3.00.

Le Manh Ha, ViceChairman of the Government Office and deputy head of the National SteeringCommittee for Corporate Renovation and Development, told newswebsite Infonet that equitisation has, overall, benefited varioussubjects.

The State had moreresources for socio-economic development, enterprises were better financed, andmanaged to improve production and business activities, and workers’ interestswere more assured. Investors also saw more investment opportunities emerging ina manner closer to market rules.

Pham Hai An, anotherofficial from the Corporate Finance Department, said authorities must continueto complete policies and institutions needed to speed up equitisation.

Hundreds of companies,though equitised, have not yet listed shares on the stock market, as required.This makes SOE share auctions unattractive to investors and impedestransactions, he said.

On June 30, theMinistry of Finance issued Circular No 115/2-16/TT-BTC providing guidelines forinitial public offerings and the use of money raised from SOE equitisations.

Last November, theGovernment issued Decree No 145/2016/NĐ-CP revising a former decree ontreatment for administrative violations in the stock market, includingviolations of listings and transaction registering regulations.

A better legal frameworkis expected to boost the transparency of stock transactions and enable morestable and healthy operations of the market, said Pham Thi Thanh Huong, DeputyChief Inspector of the State Securities Commission./.-VNA