Can you be more specific about the Party’s directions on equitisation of SOEs which had been implemented for more than 15 years now?

Restructuring, developing and increasing the efficiency of SOEs to ensure that the State-owned economic sector maintains a decisive role in the socialist-oriented market economy is an important element in the Party and State policies of economic renovation. In this process, equitisation of SOEs is a major solution of great importance which was initiated since 1991 and was stated in the Resolution of the Party Central Committee’s second Plenum (seventh tenure.) This orientation continues to be developed through later resolutions of the Party’s congresses.

Through equitisation of SOEs, Vietnam aims to reduce the number of less effective ones and also reduce the number of SOEs in sectors that do not need the presence of SOEs, and pour State capital in key sectors, ensuring that the State-owned economic sector plays a decisive role in the economy. This will help create multi-owned enterprises in which the State will occupy a majority of stakes and employees also owns part of the enterprises. So, employees will have a closer links with the enterprises they are working for as now they are also the owners of their enterprises.

There were different types of equitisation of SOEs. The State holds a majority stake in corporations and those joint stock companies operating in essential economic sectors to ensure the balance of the economy. The State will only hold 100% stake in enterprises ensuring security and defence and those producing essential public benefit services that other economic sectors are yet to be able to replace.

Those 100% SOEs will be restructured to joint stock companies, one-member or multi-member limited companies which the key owner is the State.

Those big corporations have yet to be equitised. However, all their member enterprises will be equitised. And these corporations will operate under the parental-subsidiary model.

The assessment in the value of SOEs to be equitised, including the value of the rights to land use, will be carried out according to the market mechanism.

Equitisation of SOEs is a key measure to restructuring, developing and increasing the efficiency of SOEs. It is not privatisation.

What are the results of the equitisation of SOEs

Most of the equitised SOEs have recorded high growth and effective business operations, thus contributing actively to the general national economic achievements. The debut and development of equitised enterprises have helped boost the stock market and increase the competitiveness in the economy, contributing to high and sustainable development. That there are about 200,000 redundant workers resulting from the equitisation of SOEs has been well settled, contributing to social and political stability.

In addition, the positive results from equitisatiton of SOEs have helped consolidate the people's trust in the Party and State’s policies on developing the market economy, making a change in the awareness and thinking of production relations and the role of SOEs in the socialist-oriented market economy.

Equitisation has also helped consolidate SOEs, economic groups and State-owed corporations, thus contributing to increasing their competitiveness in the context of international economic integration.

However, there remain difficulties and obstacles in the process of equitisation of SOEs.

There have been weaknesses in the assessment of the value of SOEs (including the value of trademarks, business advantages, human resources, and value of rights to land use). Thus, in some cases, there have been losses of State property through equitisation, thus benefiting a small group of people and creating pressing social issues.

Other activities supporting the process of equitisation of State-owned enterprises (auditing, consultancy, intermediate financial institutions) have yet to be developed in a comprehensive manner.

The attraction of social capital sources to production and business through equitisation of SOEs is still low. Enterprises are still puzzled about implementing the policy of attracting strategic foreign partners to buy their shares. The sale of shares to employees to ensure their rights has yet to be carried out well.

The managerial mechanism within the equitised enterprises and State management in those which State has occupied a lion's share of stakes in some cases are still the same, thus limiting the right of self-control and equality in doing business of these enterprises compared to enterprises of other economic sectors.

In most equitised SOEs, there are difficulties in the operations of the Party and mass organisations. The co-ordination between them and the Management Board and the Directors of these enterprises is limited.

What measures will be taken in the coming time to better implement the Party's guideline on equitisation?

In order to effectively implement the goals and tasks in equitising SOEs, the Politburo has outlined the following orientations, tasks and measures:

Equitisation needs to be further grasped and better implemented to meet the goals and requirements outlined in the resolutions adopted at the Party Central Committee's third and ninth plenums (ninth tenure) and in the tenth National Party Congress's resolution. It is necessary to correctly rate the value of businesses through the market, thus avoiding the loss of State property, promoting workers' contributions and mastership at equitised businesses and maintaining the leading role of the State-owned sector in the socialist-oriented market economy.

The equitisation, especially in large groups and companies, must be closely carried out including firm and careful steps depending on specific nature, sectors and business activities so as to reach high political, economic and social effectiveness. Attention should be paid to the fact that the targets in terms of progress and number of SOEs to be equitised until 2010 and 2015 are outlined to support the management. Therefore, the implementation should be based on actual results to work out specific plans so as to avoid low quality implementation, economic loss and reduction of the leading role of the State-owned sector. Discrepancies and negative activities during the process of equitisation must be fully prevented in combination with thorough application of market mode in equitising SOEs, making correct estimations of their value on the basis of the openness and transparency of assets, production results, trading, trademarks, business advantages and share auction. Those businesses having all necessary conditions are supported to be listed on the stock market for value assessment, avoiding the loss of State property. State agencies and organisations in charge of managing State capital will co-ordinate with businesses to select appropriate time and plans to issue shares in the market on the basis of demand-supply connection, ensuring highest efficiency for the State.

It is necessary to encourage businesses, especially large groups and corporations, to attract partners with great potential in capital, high abilities in science, technology and management, prestigious trademarks in international markets as well as widespread international relations to become their strategic shareholders.

The difference in money between the business's value in accordance with the share face value when issued and the collected amount of money from auction in the market should be reserved for partial reinvestment, thus creating new productive capability and at the same time ensuring the leading role of the State-owned sector in the economy. This money should not be returned to the budget revenue for regular spending.

The selling of shares to workers in SOEs is of great importance, helping promote their right to mastery and their long-term relationship with businesses. However, the equitisation work has not been well implemented recently. The Government will review the implementation of this guideline so as to issue more appropriate policies to encourage employees' contributions and prevent the equitisation leading to privatisation as defined by the Party's resolution.

Great efforts should be made to reform the managerial mechanism in SOEs and the State management toward businesses which the State holds 100% capital or controlling shares. The State control should be maintained in those businesses which are required to be under the rule of the State. The Government is responsible for transferring the right to manage the State capital in equitised businesses from administrative agencies to the State Capital Investment and Trade Corporation. The mode of investing State capital into businesses needs to be renewed to reach higher results.

The Party's bodies will co-ordinate with relevant agencies of the State to research and summarise the practice of equitisation so as to issue rules on the organisation and operation of Party cells, trade unions and other political and social organisations in SOEs after being switched to joint stock companies in order to achieve higher efficiency.

Source: Nhan Dan