Vietnam’s SOE equitisation needs to move into high gear

The equitisation of state-owned enterprises (SOEs) has been alarmingly slow this year with only nine enterprises having their equitisation plans approved, compared with a total of 85 being required to complete their equitisation in 2018.

SOE equitisation must not be delayed in order to speed up overall economic reform. (Photo: VGP)
SOE equitisation must not be delayed in order to speed up overall economic reform. (Photo: VGP)

Not only the fact that progress is sluggish but the transfers of ownership, stock exchange listings and financial reporting have also not been strictly enforced.

To date, more than 500 equitised SOEs remain unlisted on the stock exchange as required, while thousands of billions of Vietnamese dong in public assets are being lost due to inaccurate calculations of land use and lease rights.

The reasons for such a situation are due to the imperfect legal system, limited awareness, and a lack of determination and responsibility from the SOE leaders and agencies responsible for managing SOEs.

In order to accelerate SOE equitisation, encourage private investment and attract foreign participation in the process, it is necessary to establish individual responsibilities, determine detailed equitisation plans, make information transparent, step up promotion activities targeted at strategic investors, and abolish the mindset of evading collision with “dark zones” in the legal, land, debt and financial relationships of SOEs.

Recent realities in SOE equitisation also call for careful consideration to be given to the ratio of shares to be sold and the disinvestment roadmap in order to maintain a controlling stake only when necessary.

It is also crucially important to refine the machinery of the Committee for State Capital Management as the largest representative owner of state capital at enterprises in order to further push through the progress and efficiency of SOE equitisation, helping to ensure that state capital is managed strictly and utilised effectively.

SOE equitisation and state capital divestment are an important measure to restructure and reform the operation of SOEs. This process should not be accelerated at all costs and regardless of effectiveness, especially at large SOEs, and also must not be delayed which could lead to losses of public assets and hinder overall economic reform.