How to remove the delay in equitisation and divestment? Part 5: Enough mechanisms and policies, but it must drastically organise implementation

It can be said that equitisation and divestment are effective tools to innovate and rearrange the operations of SOEs. In the past, as an adviser, the Ministry of Finance has done good work in building and perfecting mechanisms and policies to implement this activity, bringing many benefits. Could you tell us about these positive effects?

The first thing to admit is that awareness has changed. Representative agencies, owners and businesses have complied and ensured market principles, publicity and transparency. They also analyze clearly which tasks belong to the equitisation process and which tasks belong to the regular operation of SOEs to link with the progress and responsibilities of the heads of enterprises.

When formulating policy mechanisms and following the Party Central’s Resolution, we reviewed and found problems in land asset management.

Enterprises in general and SOEs in particular must carry out the management and use of land assets in accordance with the provisions of the land law (specifically, the current 2013 Land Law). Therefore, the review and rearrangement of housing facilities is a regular task for enterprises when they manage this property.

SOEs that have not yet completed the land use rights under the names of new legal entities must implement them under the provisions of the Land Law. Through review, some SOEs have been transformed into one-member limited liability companies with 100% state capital under the Law on Management and Use of State Capital Investing in Production, Business in Enterprises, Land Law. However, land and house management documents are still named SOEs under the 2003 Law on SOEs.

Because enterprises do not strictly abide by the land law, when equitising enterprises – converting state ownership into multiple ownership – it is imperative to clarify the plan for using housing and land facilities before carrying out the first stage – the preparation stage of the equitisation process of SOEs. That means it must comply with the law from the first step.

We believe that the preparation stage is very important for a normal state-owned enterprise to do – this is a regular duty of SOEs. One of the messages of the Law on Public Asset Management, the Government's Decree 167/2017/ND-CP stipulating the restructuring and handling of public assets and Decree 01/2017/ ND-CP amending and supplementing a number of Decrees guiding the Land Law requiring SOEs to actively arrange. If enterprises arrange in accordance with the provisions of the Land Law, ensuring publicity and transparency, we will meet the progress when there is an equitisation decision.

The second thing is in the organisation of implementation, with the new regulation that allows consulting companies not limited in cost and in providing services of domestic or foreign enterprises, the correctness and adequacy of enterprise values of the consultants are improved. In fact, when applying the new regulations on equitisation, enterprises sell shares at a higher value than the book and par value. Thus, surplus revenues paid to the state budget are also higher. For example, three equitised enterprises of Vietnam Oil and Gas Group sold more than VND16,000 billion, a surplus of VND7,000 billion which was contributed to the state budget.

In the divestment, we also see big deals such as Sabeco and Vinamilk. This is part of the success.

The third is that many enterprises after equitization, such as the Rubber Group also boldly listed on the Ho Chi Minh City Stock Exchange, and following the Vietnam Airlines Corporation (Vietnam Airlines) and Vietnam Textile and Garment Group (Vinatex). When listing on the stock market, the value of businesses is reflected by the market, especially businesses must comply with the regulations on corporate governance of listed companies. This is the “playground” with the supervision of the market to ensure transparency and ensure that the money is used effectively.

The most important thing is that the value of state capital is recognized by the market. When we have divested, there is a comparison. We believe that these corporations will gain success like in the cases of Vietnam Dairy Products Joint Stock Company (Vinamilk), FPT Group and Hau Giang Pharmaceutical Joint Stock Company which have huge added value in the market and lead in corporate governance.

This is one of the positive effects of mechanisms and policies in recent years, which have been well received by enterprises, especially SOEs, after equitisation. Recently, oil and gas companies when listing on the stock market, such as PV Power and PV Oil have brought positive signs, not only for businesses but also for the market. This is one of the positive and effective points, not only in terms of awareness, the increase in the state revenues and value of enterprises, but also in the innovation of corporate governance and manner to improve the competitiveness of businesses in the future. We believe that if complying with laws, the equitisation process will be shortened.

According to the report of the Ministry of Finance and the Steering Committee of SOE arrangement and innovation, the equitisation and divestment progress of the period 2016-2020 is stagnant. The biggest obstacle pointed out is the regulation on approving the land use plan and determining the value of enterprises before deciding to equitise. What is causing this problem, sir?

Regarding the equitisation issue, when changing the manner, it will focus on reviewing land before equitisation. However, in fact, due to the large number of houses and land of state-owned enterprises, the review and rearrangement will take a long time.

If businesses fail to comply with the provisions of the Land Law and guidelines on housing and land arrangement, it is hard to prove that the housing and facilities are used for the right purposes and effectively. If it is not effective, it must be returned to local authorities to auction for other economic sectors to exploit effectively.

The current inadequacy is the coordination between the representative agency and the People's Committees of the provinces and cities that have not been synchronized. Even in big cities, when equitising enterprises in the area, if the Chairman of the City People's Committee and also the representative of the owner is not efficient, the departments and agencies will also be slow. Land records are related to many departments. We believe that it is time to strengthen the responsibilities of the agencies assisting local authorities, linking the responsibilities of officers with the progress and results of processing enterprises' dossiers.

What will the Ministry of Finance do to solve this issue, sir?

Regarding the function of a state management agencies, we have suggested that all owner’s representatives must actively coordinate with the local People's Committees and the Ministry of Finance to direct and urge enterprises to set up documents to review and arrange their existing housing and land facilities for approval in accordance with the land law. Agencies, People's Committees of provinces and cities will approve land-use planning and send them to the representative offices, then unify and make decisions on land planning.

In the future, the amendment direction of the Ministry of Finance for Decree No. 167/2017 / ND-CP regulating arrangement and handling of public assets, we will carry out a stronger decentralization, which will decentralize responsibility for localities in cooperation with owner’s representatives and enterprises. At the same time, following the directions of the Deputy Prime Minister, the Ministry of Natural Resources and Environment will soon provide specific guidance on the order of approving land planning. Thus, enterprises will calculate the amount of time, workload and human resources to prepare sufficiently. This is one of the things that the Government and the Steering Committee for Enterprise Innovation and Development will direct closely.

If we solve this problem, we will accelerate the approval of land use schemes. I think that the policy mechanism is sufficient, but we need more implementation and guidance. In that way, we will accelerate equitisation. In fact, many businesses are proactive in deploying, this process requires many procedures and many steps, if it is not unified the process will be slow. But if enterprises, leaders and representative agencies are determined, it will accelerate the equitisation process.

Since 2016, more than 160 enterprises have been equitised, including many large-scale enterprises such as Power Generation Corporation 3, Southern Food Corporation, Maritime Corporation and Vietnam Rubber Industry Group. There are businesses worth more than VND10,000 billion and are big brands and big deals. The divestment of state capital from Sabeco alone has paid VND100,000 billion to the state budget.

In just 3 years, revenue from equitisation and divestment of state capital into the state budget reached about 60% according to the Resolution of the National Assembly for the period 2016-2020. This proves that the quality of equitisation of state-owned enterprises from 2016 has been greatly improved.

By Hong Van/Kieu Oanh