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Revenue from equitization and divestment in the remaining months of the year are "looking forward" to divestment from a number of businesses. Photo: ST.

Hardly feasible

According to the Department of Corporate Finance, the Ministry of Finance, in the first eight months of 2020, six enterprises submitted reports for approval of equitization plans, of which one enterprise was under the equitization plan in the Prime Minister’s Decision No. 26 / 2019 / QD-TTg regarding the list of enterprises under equitization by the end of 2020, namely Hai Duong Breed Cattle Company Limited. The Commission for the management of State capital at enterprises also completed the announcement of the corporate value of an enterprise as the mother company – Power Generation Corporation 2 (EVENGENCO2).

In the past five years, 177 enterprises were approved by the competent authorities for their equitization plans with a total value of VND443,503 billion, of which the value of State capital was VND207,116 billion. However, of the 177 equitized enterprises, only 37 of 128 equitized enterprises were in the equitization list as planned, reaching 28%.

The number of enterprises to be equitized according to the plan in the remaining four months in 2020 is 91, of which their value for equitization of 90 enterprises will be determined and announced..

Thus, the progress of equitization of enterprises remains slow. The units have many enterprises under the equitization plan in 2020: Hanoi has 13 enterprises, accounting for 14% of the plan; Ho Chi Minh City has 38 enterprises, accounting for 40% of the plan; the Commission for the management of State capital at enterprises has six enterprises; the Ministry of Industry and Trade has four enterprises; and the Ministry of Construction has two corporations.

Regarding divestment, from 2016 to the end of August 2020, the divested capital was VND25,634 billion, revenue was VND172,877 billion. Recently, the Prime Minister has issued Decision No. 908/QD-TTg dated June 29, 2020 approving the list of State-owned enterprises (SOEs) to implement divestment of State capital in 2020. Accordingly, by the end of 2020, the owners’ representative agencies will divest capital in 120 enterprises, of which some agencies are being urged such as the Ministry of Construction is required to divest capital in four corporations before November 30, 2020.If the divestment is not completed, it will be transferred to the State Capital Investment Corporation (SCIC). 14 enterprises of other units are also in the process for transfer of divestment to the SCIC.

In general, the equitization and divestment progress in the 2016 – 2019 period and the first eight months of 2020 is still slow, so the completion of the equitization and divestment plan for the rest of 2020 is said to be unlikely.

Responsible for the delay

The slow equitization and divestment will lead to the revenue to the State budget being unable to reach the plan.

According to Resolution No. 26/2016 / QH14 dated November 10, 2016 of the National Assembly, in the 2016 – 2020 period, the revenue from equitization to the State budget for the medium and long-term investment is VND250,000 billion. In 2019, the Ministry of Finance transferred VND50,000 billion and in the first eight months of 2020, transferred VND6,500 billion from the support fund for enterprise arrangement and development to the State budget. From 2016 to June 2020, VND211,500 billion was transferred from this fund to the State budget, reaching 85% of the plan. The rest to be transferred from the fund to the State budget in 2020 according to the National Assembly’s Resolution is VND38,500 billion.

The slow progress in equitization and divestment led to revenue from equitization and divestment in the first eight months of 2020 reaching only VND830 billion. Meanwhile, the support fund for enterprise arrangement and development had other necessary spending tasks under the policy, with an expected amount of VND63,600 billion, including the amount transferred to the budget.

According to calculations by the Ministry of Finance, to fully meet the amount paid to the fund in 2020, it is expected that the main revenue will come from the divestment of state capital at Saigon Beer - Alcohol - Beverage Corporation (Sabeco), joint stock corporations of the Ministry of Construction and enterprises divested by SCIC under the direction of the Government.

To solve this problem, the acceleration of the equitization and divestment is a key. The Ministry of Finance has proposed to the Government and the Prime Minister to instruct the units to deploy solutions as quickly as possible. In the immediate future, SOEs under the equitization will urgently review the entire land fund under their management and use to develop land use plansto submit to the People's Committees of provinces and cities for comments on land plans and prices for approval before determining the corporate value.

In addition, the representative agencies of state capital owners in state-owned enterprises in the list of enterprises under equitization by the end of 2020 have to complete the determination of corporate value, financial settlement, and announce corporate value by the end of 2020.

In addition, the representative agencies of state capital owners in state-owned enterprises must divest in 2020, deploy the divestment according to regulations and promptly report to the competent authorities to synthesize and submit to the Prime Minister for reviewing regulations causing difficulties for capital divestment to revise.

Heads of ministries, ministerial-level agencies, government-attached agencies, chairpersons of People's Committees of provinces and centrally-run cities shall drastically direct the implementation of equitization, divestment, and restructuring of SOEs according to the proposed plan; be responsible for the results of SOE restructuring; and be accountable to the Prime Minister for failing to fulfill the tasks assigned by the Prime Minister and at same time, regularly urge, supervise, promptly remove or report to competent authorities to remove difficulties and problems in the process of equitization and divestment.

Regarding the revenue from equitization, with the difficulties in completing the plan, the leader of the Corporate Finance Department said that the most important task is choosing the right time for equitization for the first time (for the enterprises subject to equitization) and divestment, not selling shares and divesting capital at any cost to ensure the interests of the State.

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In necessary cases, it needs to reduce investment spending from equitization and divestment of enterprises to ensure the balance of the State budget. Enterprises which were equitized and converted to operate as joint stock companies are proposed by the Ministry of Finance to make a settlement of the equitization; determine the payable or temporary payable to be paid to the fund; for enterprises failing to meet the deadline, they must report to the Prime Minister, clearly explain the reason and take responsibility for this delay and handover enterprises subject to transfer of the right to represent the owner of state capital to SCIC in accordance with prevailing regulations.