The number of equitised State-owned enterprises (SOEs) each year hasbeen on the rise since 2011, but those in need of equitisation,including large economic groups and corporations, remain enormous, NhanDan (People) newspaper reported.
As Vietnam seeks to restructureits economy and shift from extensive growth to intensive growth,maintaining quality when equitising a large number of SOEs is asignificant challenge.
According to a Government plan, 432 SOEsare to be equitised in the 2014-2015 period. The number of enterpriseshaving completed equitisation in 2014 was 143, leaving 289 enterprisespending equitisation in 2015, a number significantly higher than inprevious periods.
In addition, the quality of performance fromequitisation remains an issue. The performance of equitised enterprisescan be improved only if there are innovations in corporate managementand participation of strategic shareholders in large economic groups andcorporations.
However, corporate governance has not seen muchchange in SOEs-turned-joint stock companies, especially in enterpriseswhere the State still holds a controlling stake. Adequate attention hasnot been paid to post-equitisation measures, market principles,accountability and equal treatment to all shareholders.
Inaddition, for enterprises in which the State holds a controlling stake,it is difficult to find strategic shareholders who are capable ofaddressing existing shortcomings to bring about innovation in technologyand market penetration.
As the economy has just begun torecover, demand is rising but at a slow and unsustainable pace. The goalof equitising 289 enterprises in 2015 is a significant challenge on allthree indicators: the number of equitised enterprises, implementationprogress, and equitisation quality.
There are good grounds forthis concern. First, the number of SOEs in the 2015 equitisation plan ismuch higher than the annual average during 2011-2014 when the economywas in serious slowdown and equitisation was not really beneficial forSOEs and the State.
Second, substantive SOE equitisationrequires them to be restructured prior to equitisation, which isabsolutely necessary for economic groups and corporations. Much timeshould be given to restructuring instead of trying to equitise as manyenterprises as possible.
Third, what is important to equitisedenterprises is not only their transition to joint stock companies, butmainly how to improve corporate governance to increase theircompetitiveness. This also requires more time and effort during andafter equitisation.
For economic groups and corporationsoperating in important areas, the equitisation process must be selectiveand implemented in accordance with the specific conditions of thecountry and the Party’s economic development orientations. Differentfrom other SOEs, the equitisation of these important companies cannot beimplemented in a rush, but must follow a multi-stage roadmap with thegoal of phasing out the State stake.
A law on SOE equitisation isneeded and should have been formulated years ago as SOE equitisation isa major issue affecting State ownership in enterprises and its role inthe economy. However, to date no laws or detailed regulations on SOEequitisation have been issued. Meanwhile, the National Assembly hasadopted numerous laws on the use of State capital as well as formation,management and organisation of SOEs.
As Vietnam is pushing forSEO equitisation, a law on this process is needed more than ever tocreate a solid legal foundation instead of applying sub-law regulationsto large enterprises such as economic groups, corporations, majorcompanies and companies related to land, security and defence.
Currentlyrestructuring measures are mainly focused on wholly State-ownedenterprises while not enough attention is being paid topost-equitisation enterprises, especially ones where the State stillholds a controlling stake. In addition, ministries, agencies andprovince-level people’s committees are concerned with the equitisationprocess while largely ignoring post-equitisation governance.-VNA
As Vietnam seeks to restructureits economy and shift from extensive growth to intensive growth,maintaining quality when equitising a large number of SOEs is asignificant challenge.
According to a Government plan, 432 SOEsare to be equitised in the 2014-2015 period. The number of enterpriseshaving completed equitisation in 2014 was 143, leaving 289 enterprisespending equitisation in 2015, a number significantly higher than inprevious periods.
In addition, the quality of performance fromequitisation remains an issue. The performance of equitised enterprisescan be improved only if there are innovations in corporate managementand participation of strategic shareholders in large economic groups andcorporations.
However, corporate governance has not seen muchchange in SOEs-turned-joint stock companies, especially in enterpriseswhere the State still holds a controlling stake. Adequate attention hasnot been paid to post-equitisation measures, market principles,accountability and equal treatment to all shareholders.
Inaddition, for enterprises in which the State holds a controlling stake,it is difficult to find strategic shareholders who are capable ofaddressing existing shortcomings to bring about innovation in technologyand market penetration.
As the economy has just begun torecover, demand is rising but at a slow and unsustainable pace. The goalof equitising 289 enterprises in 2015 is a significant challenge on allthree indicators: the number of equitised enterprises, implementationprogress, and equitisation quality.
There are good grounds forthis concern. First, the number of SOEs in the 2015 equitisation plan ismuch higher than the annual average during 2011-2014 when the economywas in serious slowdown and equitisation was not really beneficial forSOEs and the State.
Second, substantive SOE equitisationrequires them to be restructured prior to equitisation, which isabsolutely necessary for economic groups and corporations. Much timeshould be given to restructuring instead of trying to equitise as manyenterprises as possible.
Third, what is important to equitisedenterprises is not only their transition to joint stock companies, butmainly how to improve corporate governance to increase theircompetitiveness. This also requires more time and effort during andafter equitisation.
For economic groups and corporationsoperating in important areas, the equitisation process must be selectiveand implemented in accordance with the specific conditions of thecountry and the Party’s economic development orientations. Differentfrom other SOEs, the equitisation of these important companies cannot beimplemented in a rush, but must follow a multi-stage roadmap with thegoal of phasing out the State stake.
A law on SOE equitisation isneeded and should have been formulated years ago as SOE equitisation isa major issue affecting State ownership in enterprises and its role inthe economy. However, to date no laws or detailed regulations on SOEequitisation have been issued. Meanwhile, the National Assembly hasadopted numerous laws on the use of State capital as well as formation,management and organisation of SOEs.
As Vietnam is pushing forSEO equitisation, a law on this process is needed more than ever tocreate a solid legal foundation instead of applying sub-law regulationsto large enterprises such as economic groups, corporations, majorcompanies and companies related to land, security and defence.
Currentlyrestructuring measures are mainly focused on wholly State-ownedenterprises while not enough attention is being paid topost-equitisation enterprises, especially ones where the State stillholds a controlling stake. In addition, ministries, agencies andprovince-level people’s committees are concerned with the equitisationprocess while largely ignoring post-equitisation governance.-VNA
