The proposal is offered as one measure to help accelerate the sluggish process of equitisation and improve the efficiency and competitiveness of these enterprises, according to the National Steering Committee for Enterprise Renewal and Development.

The legal requirement that SOEs have their assets independently appraised prior to privatisation has been a major hold-up in the process.

The current appraisal criteria were also rather ambiguous and counter-intuitive, said Tran Tien Cuong, head of the Enterprise Renewal and Development Board under the Central Institute for Economic Management.

The value of land use rights, for instance, has been excluded from the listed assets of SOEs.

Appraisals are currently carried out by a Valuation Board consisting of experts drawn from the ministries.

Some experts have suggested that appraisals should be done by recognised intermediary organisations, even foreign ones, such as international auditing firms.

Under the new proposal by the Ministry of Finance, enterprises with capital of less than VND20bil would be allowed to perform their own appraisals and declare the value of their assets themselves. The valuation would then simply be approved by a Valuation Board.

This would be expected to considerably streamline the equitisation process as many of the SOEs awaiting reorganisation have capital of less than VND20bil.

Revising plans

HCM City will revise its plans for equitising State-owned enterprises in the city in recognition of current problems and delays in the equitisation process, said Tran Ngoc Phuong, deputy head of the HCM City branch of the National Steering Committee for Enterprise Renewal and Development.

Although the equitisation target has been reduced from 43 to 34 enterprises, it is not likely to be met as many SOEs have not yet fulfilled the requirements to be equitised, said Phuong.

The city's revised plans would not only adjust the schedule for equitisation but also focus on developing the quality of enterprises prior to equitisation.

Hung Vuong Frozen Food Co, for instance, has been in stagnation for nearly ten years. It has been listed in the city's equitisation plans but due to its losing financial position, the company cannot be equitised.

The company has plans to auction its land use rights to raise capital, but there are no specific regulations in place on how to proceed. The company has been at a standstill for many years, generating losses for the city.

Other SOEs in similar situations include the Sai Gon Industrial Engineering Co (under the Sai Gon Agriculture Corp), Sai Gon Automobile Co and Construction Co No 2.

Many SOEs would likely need to declare bank-ruptcy or be merged with other enterprises due to their lack of profitability, said Phuong.

Under the city's new proposal, SOEs would report their difficulties to superior management levels, which would seek flexible solutions to tackle the problems of enterprises, said HCM City People's Committee vice chairman Nguyen Huu Tin. Enterprises would be assisted to complete necessary procedures for equitisation.

Settling the financial situation of enterprise, appraising assets, and other procedures for equitisation needed to be accelerated, Tin said, and enterprises should be required to make regular progress reports on the process.

After 15 years of equitisation, 3,365 enterprises have been equitised nationwide. During 2006-07, equitisation is planned for another 1,460 SOEs. However, only 14% of this figure had been reached by the first half of the year.

Source: Viet Nam News