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Equitisation needs basic changes
The government has announced its determination to continue following the equitisation roadmap set previously for 2006-2010. It will focus on equitising big enterprises in 2009 and 2010, despite worries that the weakened stock market won’t attract many investors.
Government enthusiastic
According to Dang Van Thanh, former Chairman of the National Assembly’s Economics and Budget Committee, the equitisation process went very slowly in 2008 with just 10 enterprises put into equitisation, half of which failed.
However, Thanh said, equitisation still can bring big benefits to enterprises. Firstly, it helps restructure state-owned enterprises, renovate their production and business, thus helping improve their competitiveness.
The number of state-owned enterprises has decreased from over 12,000 in 1993 to over 2,000 now. The average capital of every state-owned enterprise, which was VND24bil in 2001, has increased to over VND70bil.
Secondly, the production and business efficiency of enterprises after equitisation is considerably improved. A survey of 1,000 equitised enterprises conducted by the National Assembly showed that 85% of equitised enterprises make profit and have high dividends. The chartered capital levels of the enterprises have increased by 44% on average, turnover 23.6%, profit 39.7%, labourers incomes by 12%, average dividends 17.11%.
Vietinbank’s IPO, which took place on December 25, was considered moderately successful. However, the Vietnam Association of Financial Investors (VAFI) still believes that it is necessary to draw lessons from the IPO to speed up the equitisation process; there is no need to wait for the stock market to recover and economic difficulties to pass.
The association said that at this moment, just small IPOs which bring small volumes of shares to the public would be enough to obtain the basic purpose of equitisation – changing the corporate governance scheme. This method will not influence the supply of shares on the stock market.
VAFI believes that the equitisation of big state-owned corporation will bring good commodities to the stock market, ensuring the vitality and attractiveness of the market.
VAFI highly applauded the recent move by the Vietnam National Petroleum Corporation to ask for permission to equitise to develop into an economic group.
Experts concerned
The government has affirmed its determination to push up the process of equitisation despite the falls of the stock market. However, experts have pointed out that equitisation regulations remain very complicated.
Thanh said that it takes 437 days on average to equitise one enterprise. Less than 15% of state capital in state-owned enterprises has been equitised, of which only 24.1% of stakes are being held by outside shareholders. This means that only 3.6% of state capital has been sold to the public, while companies’ staffs are holding 29.6% of stakes, and the state 46.3%.
In fact, equitisation in Vietnam remains a closed process which does not attract many strategic investors. Therefore, equitisation has not helped much in renovating technology and changing corporate governance skill, Thanh said.
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