Econ
Increase efficiency in equitization process
After 15 years of carrying out state owned enterprises (SOE) equitization, the number of SOE has significantly reduced, from 6,000 in 2001 to 700 in 2016.
However, this result does not fully reflect the overall picture of equitization. In particular, the result of accounting in 2016 showed that the value proposition of 8 SOEs still remain many loopholes.
After being consulted through the asset-evaluated method, State audit office of Vietnam has suggested to increase the state capital at 8 SOEs with nearly 9 trillion VND (equivalent to 400 million USD). In which, there are big SOE with the difference up to trillion VND such as Binh Son Refining and Petrochemical Company Ltd., (the difference between the number reported by the company and the factual number after accounted of above 4.5 trillion VND, or equivalent to 200 million USD), or more than 10 billion VND at least.
In reality, one of the most important phase during the SOE equitization process is value proposition. However, due to some factors such as: legal issues, pricing method, brand value defining, business advantage, intangible assent, financial investment, capital contribution in foreign currency, land ownerships, capabilities of experts doing the evaluation process, even with current policies and regulations, there are many loopholes damaging the state budget up to trillion VND. This would require in the coming time calculating methods to fully reflect the tangible and intangible assets of enterprises, properly defining brand value, as well as business advantages, upgraded technology, land value and invention certificates. The solution also have to take into account enterprise after equitization process suggesting on changing the method to calculate the enterprises’ assets flexibly.
Objective of SOE equitization is to diversify shareholdings in enterprise to meet the operational trend of modern market. However, SOE equitization is not privatization, turning state owned assets into private assets of a few people as what happened recently. This requires more transparency during the process of developing and issuing equitization plan for SOEs. During the period of 2017-2020, the list of enterprises to be equitized will be expanded to big corporation with complicated financial situation. Therefore, defining enterprise value is proving essential. As such, it is necessary for the government to finalize mechanism with regard to this matter, with a view to completely deal with pending financial issues before defining enterprise value. The value would need to fully reflect market price with clarity and transparency, so that minimizing the loss to state budget.
After being consulted through the asset-evaluated method, State audit office of Vietnam has suggested to increase the state capital at 8 SOEs with nearly 9 trillion VND (equivalent to 400 million USD). In which, there are big SOE with the difference up to trillion VND such as Binh Son Refining and Petrochemical Company Ltd., (the difference between the number reported by the company and the factual number after accounted of above 4.5 trillion VND, or equivalent to 200 million USD), or more than 10 billion VND at least.
In reality, one of the most important phase during the SOE equitization process is value proposition. However, due to some factors such as: legal issues, pricing method, brand value defining, business advantage, intangible assent, financial investment, capital contribution in foreign currency, land ownerships, capabilities of experts doing the evaluation process, even with current policies and regulations, there are many loopholes damaging the state budget up to trillion VND. This would require in the coming time calculating methods to fully reflect the tangible and intangible assets of enterprises, properly defining brand value, as well as business advantages, upgraded technology, land value and invention certificates. The solution also have to take into account enterprise after equitization process suggesting on changing the method to calculate the enterprises’ assets flexibly.
Objective of SOE equitization is to diversify shareholdings in enterprise to meet the operational trend of modern market. However, SOE equitization is not privatization, turning state owned assets into private assets of a few people as what happened recently. This requires more transparency during the process of developing and issuing equitization plan for SOEs. During the period of 2017-2020, the list of enterprises to be equitized will be expanded to big corporation with complicated financial situation. Therefore, defining enterprise value is proving essential. As such, it is necessary for the government to finalize mechanism with regard to this matter, with a view to completely deal with pending financial issues before defining enterprise value. The value would need to fully reflect market price with clarity and transparency, so that minimizing the loss to state budget.
