Remove “bottle-neck” for transferring enterprises to SCIC

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Regarding the question of “selling State capital for spending”, Mr. Hoang Van Thu, Vice–Director of Enterprise Finance under the Ministry of Finance shared that if the mechanism of SCIC operation was not known, the raising of the above question would be very dangerous.

The SCIC operation mechanism is regulated in the Government’s decree. Accordingly, the State capital shall be ensured when the SCIC takes handover. The remaining amount due to the difference in the figures shall be put into investment by the SCIC. Hence, there is no fact of “selling the State capital for spending”.

Delayed handover

According to the Central Institute for Economic Management (CIEM), transferring the representation rights of the owners of the State capital in enterprises to the SCIC is a vital measure in the process of restructuring the State enterprise sector, contributing to enhancing the efficiency in managing State property which is invested in production and business, improving the business environment in an equal and fair manner for various types of enterprises.

That is the reason why the Prime Minister has many times directed and requested the SCIC, ministries and provinces to reach an agreement on the list of enterprises and transfer representation rights of owners. In reality, the transferring has taken place slowly.

Mr. Nguyen Hong Hien, Vice Director of the SCIC revealed the transfer even urged by the Prime Minister was still slow, especially since 2009. The reason could be explained that different ministries and localities have not paid sufficient attention to directing the shifting of State capital owners’ rights to the SCIC. Some ministries and localities have delayed the transfer or only handed over few enterprises of the total number of enterprises subject to transfer. Besides, ministries, provincial people’s committees have slowly approved the final accounts of the State capital at the time enterprises officially turned into joint stock companies (under the final accounts for the second time); these enterprises’ financial problems have not been solved, leading to failure of transferring the capital as regulated. In reality, conforming to Decree No. 59/2011/ND-CP on shifting enterprises of 100% of the State capital to joint stock companies and item e of Article 5 of Resolution No. 40/2015/NQ-CP, the period for the second account is 60 days since the date when the enterprises officially become joint stock companies.

Nevertheless, ministries and provinces supposed that slow transfer derived from other reasons. Mr. Do Thai Hung of the Department of Enterprise Management (Ministry of Transport) said that “the duty is good for enterprises and help them manage State capital better but do they want to take the duty? Certain enterprises do not want to leave from their ministry because they think the ministry understand them well and enable them in terms of markets”. This was also the viewpoint raised by Ms. Nguyen Thi Hoa, Deputy Director of the Standing Committee of Reform and Development of Enterprises (Ministry of Trade and Industry). From reality, she added the difficulties in capitalization before the time of transfer. For example, Vietnam Steel Corporation was capitalized in 2008 but has not completed their final account over the last 9 years. Meanwhile, this corporation has plenty of subordinate companies and land, so they have met numerous difficulties in implementing Decision No. 09/2007/QD-TTg on re-arranging and settling the matters concerning State owned land

“We have submitted to the Prime Minister a document to urge the enterprise to produce final accounts and complete the equitization. However, we have not received the Prime Minister’s direction in this matter” said Ms. Hoa.

Remove bottle-neck

From reality, the representative of the Ministry of Trade and Industry said that they supported the amendment of the Decree No. 59 in the direction of handing over the property in the same status. That means the SCIC is willing to receive the enterprises despite remaining difficulties in manufacture and business. With the same view, Mr. Hien proposed to amend several contents of Decree No. 59 and Circular No. 118/2004/TT-BTC in the direction that enterprises which have completed equitization shall be promptly transferred to the SCIC without waiting for the approval of the final accounts for the second time. On receiving enterprises, the SCIC shall further coordinate with the related agencies to verify the final accounts for submitting to competent authorities for approval.

This is also the matter the Ministry of Finance has taken notes. In a recent workshop on transferring enterprises to the SCIC, Mr. Hoang Van Thu, Deputy Director of the Enterprise Finance Department (Ministry of Finance) said that Decree 151/2013/ND-CP and Circular No. 118 issued by the Ministry of Finance stipulated the objects and procedures of transferring enterprises to the SCIC. During the equitization process, some provinces reported to the Prime Minister their actual problems. After the Government issues the Decree amending Decree 151, the Ministry of Finance would draft a circular to replace Circular 118 in the direction of pushing the handover progress of which there are measures in terms of technique and procedures. “On behalf of the leading agency, we would like to listen to ministries and provinces’ difficulties in techniques and procedures relating to amending Circular No. 118” said Mr. Thu. Actually, in the light of Circular No. 118, enterprises having capitalized must complete their final accounts at the time of production and business before performing handover. The fact shows that equitization and the final accounts by ministries and enterprises have been very slow due to financial matters. This issue would be incorporated into the drafted decree replacing Decree 151.

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Mr. Thu added more information about amending Decree 151. Based on proposals made by the provinces and directions by the Prime Minister, the Ministry of Finance has supplemented some contents in the draft decree replacing Decree 151, of which supplementing local lottery and farming companies as the two objects that do not have to conduct the transfer is significant. These enterprises have impacts on local economic and social stabilization as well as arrange land in localities. Enterprises which continuously gain their turnover of above 50% for 3 years for the purpose of stabilizing the local economic and social situation .