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SCIC needs clearer operation mechanism
It turns out that SCIC, the most powerful corporation in Vietnam, which is now managing thousands of billions of VND worth of capital the state invests in enterprises, still does not have a clear mechanism for its operations.
Managing book capital
Commenting about the efficiency of SCIC’s operations, Le Dang Doanh, a senior economist, said that most of the capital SCIC is managing is capital on books, which seems very big, but the liquidity is limited.
Hoang Nguyen Hoc, Deputy General Director of SCIC, said that the biggest obstacle for SCIC is that the state’s capital is scattered in many enterprises. Hoc said that it is necessary to sell a part or all of the state’s capital in the enterprises in which the state does not need to hold stakes. The money collected from the purchases would be invested in more effective projects. The book capital of enterprises SCIC is managing is estimated at VND7,500bil, while the market value may reach VND20tril. In the context of the well-developing stock market, the market capitalisation may reach VND40tril.
Complicated procedures and unclear mechanism
Hoc said that to date, SCIC has withdrawn investments from 85 enterprises, which shows that the process of investment withdrawal has been going very slowly.
Hoc said that it is because of the currently applied mechanism, which only allows it to sell capital under the mode of share auctions or sell on the bourse. It takes at least three months to prepare for an auction. In some cases, expenses for hiring consultants gobble up all the state capital SCIC is managing in the enterprise at the time.
Hoc said that SCIC is now seeking approval for a new mechanism of selling capital, adding that the state should allow it to sell capital based on direct negotiations between sellers and buyers. The prices of stocks on the market would serve as the basis for SCIC to conduct negotiations with partners.
An investor recently wanted to buy 10% of Bao Minh’s shares at high prices, but SCIC could not make the deal as the current mechanism does not allow sales under the mode of direct negotiations.
Opinions still vary over the SCIC’s proposal to sell capital based on direct negotiations. Nguyen Minh Phong, an economist at the Hanoi Socio-Economic Institute, said that the scheme of direct negotiation, if approved, could create a new kind of corruption and the resumption of the ‘ask-and-grant’ mechanism if it was not accompanied by a suitable supervision mechanism.
Meanwhile, Dr Nguyen Dinh Cung with the Central Institute of Economic Management (CIEM) thinks that SCIC, representing the state, should be given enough power. SCIC should not have to ask for permission from the government for every deal it makes, provided that the decisions can bring benefit to its owner, the state.
VNN
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