SOE equitisation in 2008: high prices not top priority

Viet Nam planned to equitise 349 state-owned enterprises (SOEs) in 2008, including 151 economic groups and general corporations. Meanwhile, only 33 enterprises were equitised in the first seven months of the year of the 62 SOEs which initiated restructuring and ownership conversion.

A representative of the Rubber Economic Group said that the group has asked to halt its equitisation as the stock market has been falling for a long time. The official said that the market price of rubber shares is five times higher than face value and the average dividend is 60%. If more shares are sold to the public, the prices of rubber shares could fall.

The Viet Nam Textile and Garment Group (Vinatex) is moving ahead with its equitisation programme. 61 dependent units of the group have been equitised, and the remaining five units will be equitised from now till the year’s end. However, the group’s representative said that a lot of problems have arisen in the equitisation process.

March 8 Textile Company, a member of Vinatex, has to do two things at the same time: equitise and move from the inner city of Hanoi. The problem lies in the fact that if the company relocates while it is still an SOE, it will be able to use the VND5bil collected from the land use right auction to serve the relocation. If the relocation is carried out after the equitisation procedures are completed, the company will not have the right to use that sum of money. If so, according to Vinatex, the relocation would become impossible.

The chairman of the Viet Nam Coal and Mineral Industries (Vinacomin) has proposed stopping the equitisation of coal mines, saying that other countries in the world, like Russia and Venezuela, are nationalising coal mines. He said that Vietnam should set up one-member limited companies instead of joint-stock ones, as natural energy resources are running out.

Meanwhile, General Director of the Electricity of Viet Nam (EVN) Pham Le Thanh said that EVN could not sell stakes to the public to get VND8tril as previously planned, as the stock market has been falling down for a long time.

However, Phan Viet Muon from the National Steering Committee for Enterprise Renovation and Development said that the Prime Minister has asked for the acceleration of equitisation in the last months of the year.

He said that despite the difficulties caused by the falling stock market, economic groups and general corporations still have to speed up equitisation as the equitisation will bring money to the groups and corporations for re-investment.

In the last five months of the year, equitisation will not set the task of collecting as much money as possible as the top priority. The top priority for now is to renovate corporate governance skills and select suitable strategic shareholders.

The National Steering Committee for Enterprise Renovation and Development has estimated that eight more state-owned general corporations will be equitised by the end of 2008. (Lao dong)