Sluggish progress in state-owned enterprise equitisation

None of the 19 enterprises that had received approval for their equitisation plans have managed to complete the process, despite having a year to do so, a report from the Ministry of Planning and Investment (MPI) showed.

The Prime Minister had previously approved a plan for 2022-2025 that called for the equitisation of 19 enterprises and the reorganisation of five enterprises nationwide.

Out of the 19 with approved equitisation plans, only five have so far established steering committees and working groups to oversee the process. The remaining 14 are still in the preparatory stages of implementation.

Bumpy road

The report cites various obstacles faced by the enterprises that are hindering their progress. For example, NEAD Co., Ltd, under the Ministry of Science and Technology, is struggling to determine an appropriate plan for utilising its land assets.

Other enterprises need to first resolve outstanding issues related to finance, assets and real estate reorganisation, before they can move forward with equitisation.

Regarding the five enterprises approved for reorganisation, three have already completed the merger process, while the other two are in the process of carrying out their reorganisation plans.

According to the MPI, the process of enterprise restructuring and equitisation of state-owned enterprises is still facing several obstacles and limitations. The main reasons cited for the slow progress are delays to local authorities approving appropriate land use plans, especially for enterprises that hold land across multiple localities.

The current legal regulations on state-owned enterprise equitisation do not fully cover all the complex scenarios that have arisen in practice, particularly regarding the determination of enterprise valuations.

The lengthy processes involved in assessing the value of land and other assets, as well as restructuring and handling land-related issues, have led to significant delays in completing the equitisation plans within the targeted timelines.

While the Law on Management and Use of Public Assets has been issued, the supporting guiding documents for implementation are still inadequate and lack specifics. This has impacted the ability of enterprises to properly restructure and handle public assets as part of the equitisation process.

Some enterprises are facing difficulties in their business operations, with owners holding negative equity and outstanding social insurance debts, affecting their progress. These companies include TVET Equipment Co., Ltd under the Ministry of Labor, Invalids And Social Affairs and Agrexport Hanoi Co., Ltd under the Ministry of Agriculture and Rural Development.

Additionally, some ministries and localities have not been actively implementing the equitisation of enterprises under their management. The process of developing and approving decisions related to equitisation is then prolonged.

Future plans

According to the MPI, based on opinions compiled from ministries, sectors and localities, most units have asked for a continuation to implement their equitisation plans or a strategy for enterprises included in the 2022-2025 schedule.

Some localities have proposed developing a mechanism to increase the state's equity ratio in enterprises providing water supplies, where the current state equity ratio is below 50 per cent.

Alternatively, they proposed to categorise the extraction, production and supply of clean water and urban and rural drainage as state-owned enterprises, with a state equity ratio of 65% or more. The purpose is to ensure the ability to control and effectively provide water to the people.

As a result, the ministry has asked the Prime Minister to instruct ministries, sectors and localities to seriously and resolutely implement the equitisation and divestment plan for the 2021-2025 period as stipulated in relevant government decisions.

This is particularly important for localities with many state-owned enterprises that need to be equitised and divested in the 2021-2025 period.

For enterprises that have yet to carry out equitisation, they must complete the process as a matter of urgency. In case of any difficulties, they should report specific issues to competent authorities for guidance.