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Dang Quyet Tien, deputy director of the Corporate Finance Agency under the Ministry of Finance (MoF), said the ministry was drafting a new decree to supplement and revise some articles of the government’s Decree 59/2011/ND-CP on the conversion of state-owned enterprises (SOEs) into shareholding companies.
“The new decree,” Tien said, “will give some new rules on defining the value of geographic position advantages when evaluating corporate value, and on choosing strategic investors which is a big obstacle for many state-owned enterprises’ (SOEs) equitisation that Decree 59 fails to address.”
Decree 59 enables SOEs to select strategic investors before or after an initial public offering (IPO). Whether the strategic investor subscribes before or after an IPO, the decree legislates for a minimum subscription value by the strategic investor. It cannot be lower than the lowest price of any shares issued in connection with the IPO or the tender floor price determined by the SOE before the IPO.
Tien said the new decree would allow SOEs to negotiate with the strategic investors to sell stakes with an agreed price before the IPO.
Compared to existing regulations, the new regulation is intended to enhance the role and rights for strategic investors, thereby encouraging them to invest more in SOEs.
Regarding defining business values, many procedures under Decree 59 were considered unreasonable and delayed the equitisation process. Vietnam Airlines chairman Pham Viet Thanh said the carrier had many properties and member companies which complicated the defining of its business value.
If the government could resolve this matter, Thanh said, the equitisation progress would be enhanced remarkably.
Tran Van Hien, from the Corporate Finance Agency, suggested that the regulations regarding land management need to be addressed.
“Amended regulations should address entanglements to define the value of geographic position advantages included in enterprises’ value before equitisation,” Hien said. “However, the state also needs a reasonable mechanism to treat costs that SOEs previously paid to have land use rights.”
According to the MoF, only 12 SOEs were equitised in 2012, far below the state’s goals of 93. As of the end of 2011, some 4,000 SOEs had undergone equitisation, most of which were managed by local governments. During the 2008-2011 period, only 117 SOEs were equitised.
Many experts said Vietnam should make greater effort to reach the ambitious goal of equitising more than 600 SOEs wholly-owned by the state by 2015.