Why is equitization slow? Vinacomin is "forced" to restructure

Labor restructuring has helped Vinacomin reduce from 126,000 laborers to 110,000 ones. Source: The Internet.

Withdrawal of capital outside the industry

Implementing the restructuring plan approved by the Prime Minister in Decision 314/QD-TTg dated February 7th, 2013, according to Vinacomin's assessment, the Group basically completed this project. Specifically, from 1998 to the present, Vinacomin has equitized 61 enterprises in the Group, of which in 2001-2005 equitized 31 units, in the period 2006-2010 equitized 16 units and from 2011 up to now has carried out equitization of 11 units. Of the 61 units equitized, Vinacomin also proceeded to sell the capital at 16 companies to reduce the percentage of holding down below the level of control, which has withdrawn the entire capital in 10 enterprises. Currently, the weighted average share of the state capital in 61 enterprises is only 45.3%. In the coal sector, Vinacomin has increased its holdings in three coal production units, of which two have increased their holdings to over 65%.

As for the divestment, Mr. Dang Thanh Hai, Vinacomin 's General Director, said that Vinacomin completed divestments in non-core business areas, of which early divestments were completed in the sectors of banking, finance, insurance. Remarkably, from the end of 2014, Vinacomin 's capital was not invested in these areas and the process of divesting the total amount of 2,009 billion VND, a surplus of 389 billion VND.

Adding information, Mr. Nguyen Van Bien, Deputy General Director of Vinacomin, said that after equitization, arranging enterprises, the number of enterprises in Vinacomin has decreased sharply from 66 subsidiaries (in 2012) to 49 subsidiaries (2016). Besides, Vinacomin considers the restructuring of internal management a central task in the process of restructuring enterprises. Accordingly, Vinacomin has implemented synchronous measures on internal management such as consolidating the management model, actively applying the mechanization in mining, perfecting the management mechanism for increasing productivity, reducing costs, renovate and restructure labor quality. "Labor restructuring will help the Vinacomin reduces from 126,000 employees (2012) to 110,000 ones (early 2017)," said Mr. Bien.

Equitization of Holding Company - Group in 2019

In addition to the results achieved by Vinacomin, the current structure of the Group still has many clues, some units are fragmented, labor is crowded, labor productivity increases slowly; the conditions for coal production are increasingly difficult, the transportation has to go further, the profits decline etc. In face of risks and challenges of reducing the competitiveness of Vinacomin on the market, Vinacomin has to continue restructuring.

In the Directive No. 04/CT-TTg on accelerating the reorganization and renewal of state-owned enterprises in the period of 2016-2020, the Prime Minister instructed "Enterprises must focus on implementing the plan and scheduling progress. Renovation, equitization, and divestment of state capital approved by competent authorities to ensure the highest interests of the State". According to this request, Mr. Bien said, Vinacomin's members have approved the orientation and solution of the restructuring of Vinacomin up to 2020. The Group has also set up a task force to deploy capital restructuring of Vinacomin. Specifically, Vinacomin will divest its capital to 51% of the charter capital of Viet Bac Mine and Geological Geology Joint Stock Company. Vinacomin also stepped up capital divesting in the Investment and Infrastructure Development Corporation and Electricity Corporation, Minerals Corporation with the rate of divestment to 36% and 65%, respectively.

He added that from March 3th, 1977, Vinacomin officially submitted a report to the Ministry of Industry and Trade, and now the second phase of restructuring of Vinacomin has been submitted by the Ministry of Industry and Trade and the Ministries of assessment and preparation to submit to the Prime Minister. According to the project, Vinacomin continues to focus on three core areas of coal, minerals, electricity production and mining chemical industry. "Especially equitizing the Holding Company - Group is an important task in the period 2017-2020. According to the Prime Minister's decision, the Holding Company's equitization mission will be completed by 2019", Mr. Bien said.

Despite many difficulties in equitization process, the capital withdrawal (for example, the withdrawal of capital at the Electricity Corporation - Vinacomin is difficult when the power output mobilized at a time, there are still low levels of the difference, the exchange rate has not been fully recorded and paid yet), but Vinacomin has set a specific target for 2017-2020. Specifically, the Group's organizational structure was streamlined in the direction of the number of branches and representative offices of the Holding Company - Group decreased from 30 units to 20 units, the number of subsidiaries decreased from 47 companies down to 32 companies, the number of affiliated companies decreased from 7 companies to 2 companies. Composite labor productivity has increased by 10-15% due to the reduction of the number of branch and subsidiary branches and the socialization of some service and auxiliary jobs resulting in a decrease of about 10,000 persons.