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“Big guys” restart equitization plan in 2011
Big state-owned economic groups and general corporations have stated that they are striving to complete the equitization process in 2011. However, doubts have been raised about the feasibility of the plan, since the stock market is still facing big difficulties.
Under the plan of equitizing state-owned enterprises (SOEs) which has been approved by the Prime Minister, in 2011-2012, the Vietnam Construction Industry Group (VCIG) will equitize nine SOEs, including Lilama, Licogi and Coma. Meanwhile, Duong Khanh Toan, General Director of VCIG, said that the group’s leaders have decided that the equitization of the three big general corporations will be completed in 2011.
However, Toan admitted that he is not sure if the plan can be fulfilled in this year because the success of the equitization plan will still depend on the macro economy and the stock market’s performance. One of the most important goals of equitization is to bring the highest possible surplus to the State.
Meanwhile, it is not very likely that the stock market will be bustling in 2011. As the inflation rate is forecast to be high in 2011, the interest rates will not go down as expected. This means that the cash flow to the stock market will slow down, thus making the market gloomy, and a gloomy stock market will badly affect the equitization of SOEs.
After a lot of delays, MobiFone has shown its determination to complete its equitization this year. Meanwhile, Minister of Information and Communication Le Doan Hop has also affirmed that MobiFone must be equitized in 2011 in order to improve the competitiveness of the enterprise.
In order to make the equitization plan realistic, according to Hop, in March, the ministry’s leaders will sit together with MobiFone’s managers and relevant ministries to discuss the detailed plan on equitizing MobiFone.
The Vietnam Airline Corporation, which also made a lot of delays, has also announced that it will restart the equitization plan.
According to Nguyen Si Hung, Chair of the Board of Members of Vietnam Airlines, said that the air carrier was named in the list of the SOEs that needed to be equitized in the 2007-2010 period. However, due to many reasons, including the unfavorable conditions in the stock market, which might badly affect the IPO (Initial public offering) plan, the equitization plan has been delayed many times.
As instructed by the government, Vietnam Airlines once again is building up an equitization plan that it will submit to the government and ask for permission to equitize in 2011-2015. If the plan is approved, Vietnam Airlines will kick off the plan in 2011.
However, Hung said that the equitization plan will still depend on many factors. Especially, the success of the plan will much depend on the “support” from the stock market.
The “equitization quality” is always the top priority for all the equitization deals, and enterprises need to be sold at the best possible prices. This means that big economic groups and general corporations need to keep a close watch over the market and grab opportunities to make IPOs successfully.
Nevertheless, the calculations of big enterprises may not come true especially when there are two big problems.
First, to date, the document, which is expected to replace the currently valid Decree 109 on equitizing SOEs and help settle the current problems in the equitization process, has not been issued yet. The management agency has not given the final answer about when the legal document will be issued.
Second, the moves conducted recently by the government to control inflation will surely have negative impacts on the stock market, which will badly affect the equitization process. Therefore, people have every reason to doubt that the big guys may once again fail to keep their equitization appointment in 2011.
Ngoc Ha
vietnamnet
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