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The Road to Privatization: 19 Businesses Still Striving for their Target

26 June, 2024

(Illustration by Trung Kiên/VNA)

According to the Ministry of Planning and Investment, none of the 19 enterprises approved for equitization have achieved this goal during the 2022-2023 period.

This result was mentioned in a report on the implementation of the rearrangement, equitization, and state capital divestment in enterprises during the 2022-2023 period, which was submitted to the Government leaders by the Ministry of Planning and Investment.

As per the plan approved by the Prime Minister, 19 enterprises were scheduled for equitization and 5 enterprises for rearrangement during the 2022-2025 period nationwide.

However, the Ministry of Planning and Investment reported that none of these enterprises have completed the equitization process in the first two years of this period (2022-2023).

Out of the 19 enterprises approved for equitization, 5 have established steering committees and support groups, while the remaining 14 are still in the preparatory stages of implementation.

These enterprises are facing various obstacles, such as the Limited Company for Application and Development of Science and Technology NEAD (under the Ministry of Science and Technology), which is facing challenges in determining land-use plans.

Several other enterprises are dealing with financial and asset issues and are in the process of rearranging their land use.

Regarding the 5 enterprises approved for rearrangement, 3 have completed the merger process, while the remaining 2 are implementing the rearrangement plan (with 1 enterprise undergoing dissolution and the other preparing for a merger).

The Ministry of Planning and Investment attributed the challenges and limitations in the equitization of state-owned enterprises to delays in land-use plan approvals by local authorities, especially for enterprises with land in multiple provinces.

Additionally, the legal provisions on state-owned enterprise equitization do not cover all scenarios that arise in practice, particularly regarding enterprise valuation, leading to prolonged equitization plan development and failure to meet the set deadlines.

Enterprises are facing various obstacles. (Illustration by Minh Hưng/VNA)

While the Law on Management and Use of Public Assets has been promulgated, its implementing documents are still inadequate and lacking in specificity, impacting the rearrangement and handling of public assets in state-owned enterprises.

Furthermore, some enterprises are facing difficulties in their production and business operations, negative owner’s equity, and social insurance debt, which affect the equitization process. Examples include the Limited Company for Vocational Education Equipment (under the Ministry of Labour, Invalids and Social Affairs) and the Limited Company for Import and Export of Agricultural Products and Food Agrexport (under the Ministry of Agriculture and Rural Development)

Additionally, some ministries and localities have not been proactive in implementing the equitization of enterprises under their management. The process of developing and approving decisions related to equitization has also been prolonged.

Based on the feedback from ministries, sectors, and localities, the Ministry of Planning and Investment reported that most units have requested to continue implementing the plan or the equitization scheme for enterprises included in the 2022-2025 plan.

However, some localities have proposed mechanisms to increase the state capital ratio in water supply enterprises with a current state capital ratio of less than 50%, or to include the fields of water exploitation, production, and supply, as well as urban and rural drainage, in the group of state-owned enterprises holding 65% or more of the charter capital.

This proposal aims to ensure state control and effective water supply to the people (in Hanoi, Can Tho, and Ha Tinh).

Based on the synthesis and evaluation of the implementation of the rearrangement, equitization, and divestment of state capital in enterprises during the 2022-2023 period, as well as the recommendations and proposals of ministries, sectors, and localities, the Ministry of Planning and Investment has proposed that the Prime Minister direct ministries, sectors, and localities to seriously and drastically implement the tasks to complete the equitization and divestment plans for the 2021-2025 period, as stipulated in Decision No. 22/2021/QD-TTg and Decision No. 1479/QD-TTg.

This is especially important for localities with a large number of state-owned enterprises that need to undergo equitization and divestment during the 2021-2025 period (Hanoi and Ho Chi Minh City)

For enterprises that have not yet started the equitization process, it is necessary to urgently implement it. In case of any difficulties, specific reports should be submitted to the competent authorities for guidance.

Regarding enterprises included in the divestment plan for the 2022-2023 period that have not completed the process, it is essential to clarify the difficulties and continue implementing the plan. If ministries and localities are unable to divest capital and propose transferring these enterprises to SCIC, detailed reports should be submitted to the Prime Minister for consideration and decision-making.

Thuy Hien