Revenues collected from divestment mainly on social security expenditures

Mr.Đặng Quyết Tiến

Can you tell us the progress of equitization and divestment in State-owned enterprises to the present time?

According to statistics of the Ministry of Finance, by 20-8-2016, there were 48 enterprises approved for equitization by competent authorities, namely: 6 Corporations (TCT) including Machinery and Equipment Corporation, Movers and agricultural machinery Corporation under the Ministry of Industry and Trade; Vietnam Construction Consultancy Corporation under the Ministry of Construction 36 Corporation of the Defense Ministry; Forestry and Agricultural Materials Corporation under the Ministry of Agriculture and Rural Development. The total actual value of 48 enterprises approved for equitization was 31,905 billion vnd and the actual value of the State capital of these enterprises was 23,280 billion vnd.

Regarding the divestment of capital, in the first 8 months of 2016, these enterprises withdrew 2,921 billion vnd and collected revenues of 5,767 billion vnd. In detail, Corporations and State-owned enterprises withdrew 381 billion vnd and collected 424 billion vnd, State capital investment Corporation (SCIC) divested 1.277 billion vnd and collected revenues of 3.374 billion vnd in 5 sensitive areas (security, insurance, finance and banking, real estate, investment funding). Outside the above sensitive areas, corporations and State-owned enterprises withdrew 1,261 billion vnd and collected revenues of 1,968 billion vnd.

Many people said that the progress is still slow, so what is your opinions?

As the number of remaining enterprises for equitization is not high, mainly large enterprises, the current progress of the equitization plan is still "acceptable". The key point in the current period is the quality of the equitization and efficiency of corporate governance. Moreover, it is necessary to focus on divestment in businesses with high performance in accordance with the Politburo resolutions.. Therefore, the main point here is to implement the process effectively in order to make best use of State funds and collect as much as possible by selecting right investors and buyers.

Agriculture is one of the major areas using revenues collected from selling shares of State- owned Enterprises to reinvestment.

Although there have been some results, equitization has been not implemented in full capacity. What are the reasons?

There are both subjective and objectives reasons.

0bjectively, the limitations of equitization are mainly due to the severe influences of the slowdown in global economic growth in addition to current difficulties of the domestic economy on Security and Fund markets which limit the demands and the flows of funds and the purchases of Stocks.

More importantly, it is necessary to pay attention to the attitudes of officers in charge. Have they handled the work drastically and radically yet? Because the mechanisms and policies on equitization are regulated in both Business Law and Land Regulations. Besides, the divestment and financial sanctions including the responsibilities of the Head are also detailed in the regulations.

On the other hand, advisory staff are not well–qualified. In order to improve the quality of equitization, the Government and Ministries have proposed the State Auditor - an independent Agency, to check all values in order to avoid large losses. This measure also enables authorities to reassess the quality of consulting services.

What are the punishment sanctions to the equitized enterprises not listed on the stock market?

Equitization associated with listing on the stock market has been regulated in Decision No. 51/2014 / QD-TTg by the Prime Minister specifying some contents of the divestment and sale of shares and transaction registration, listing on the stock market of State enterprises. Later, Decree No. 60/2015 / ND-CP amending and supplementing some articles of Decree No. 58/2012 / ND-CP of the Government detailing and guiding the implementation of some articles of the Law on Securities securities and the Law amending and supplementing some articles of the securities Law was asked to compel SOEs after equitization to perform listings or register trades on the stock mark

As proposed by the Ministry of Finance and the issuance of specific punishment sanctions, those who are late for listing transaction registration have been directed and urged to comply with regulations, unless there are objective factors.

In the context of completing punishment sanctions and lacking dissuasion, State bodies can only recommend the enterprise to strictly comply the instructions and be fully aware that the listing on the stock market is to ensure transparency - one of the goals of enhancing enterprise management after equitization.

Back to divestments, recently, in order to urge the process, the Prime Minister has given instructions on the sale of state capital in a number of effective operating businesses such as Habeco, Sabeco, Vinamilk, etc. Could you give the detail of the implementation?

The Government requested the State Capital Investment Corporation (SCIC) to develop a roadmap for divestment of 10 large State-owned enterprises.

The 10 enterprises are: Bao Minh Corporation; Vietnam National Reinsurance Corporation; Ha Giang Engineering and Mineral Resource Joint Stock Company; Tien Phong Plastics Joint Stock Company; Vietnam Infrastructure and Real Estate Company; Binh Minh Plastics Company; Vietnam Dairy Products Joint Stock Company; FPT Joint Stock Company; and Sa Giang Import-Export Joint Stock Company and FPT Telecom.

After receiving the tasks assigned by the Government, SCIC has firstly developed a plan and roadmap for divestment of Vinamilk in 2016. The 9 remaining enterprises shall be divested in this year and early next year.

The divestment of these State-owned enterprises should comply with an appropriate roadmap to maximize the benefits to the State, develop the market and to not cause large fluctuations in other smaller scale businesses.

How to use revenues collected from divestment?

As decided by the Parliament, a small portion of the resources will be reinvested in the remaining enterprises which are still under the control of the State and under the Law on management and usage of State capital in production and trade investment.

The rest will be used primarily to fund the construction of key projects, especially for social security purposes such as hospitals at all levels; investment support for rural enterprises, combating climate change programs, etc.

I strongly recommend that in the shortage of current State budget, these expenditures will be of great significance.

Thank you!