VietNamNet Bridge – The equitization plan, the pillar of the State-owned enterprise (SOE) restructuring program, has gone out of attention this year as a result of the poor performance of the stock market and the economy as a whole.

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The recent monthly and quarterly reports of the Ministry of Finance, which is in charge of this plan, have no mention of SOE equitization.

The latest updates on equitization on the ministry’s web portal were posted in May this year, saying that a mere six SOEs had been equitized in 2011 and the first quarter of 2012.

The goal of equitizing 93 SOEs in 2012 is hard to achieve when the Finance Ministry reveals the list of equitized firms at the end of the year as usual.

Deepak Mishra, chief economist of the World Bank in Vietnam, said even the modest goal of equitizing 93 SOEs, including many small and medium ones, is hard to obtain.

Vu Bang, chairman of the State Securities Commission, admitted SOE equitization is a difficult mission given the dismal stock market.

In addition, the stock market suffered a terrible shock on August 20 following the arrest of Nguyen Duc Kien, a founder of Asia Commercial Bank (ACB), said Edmund Malesky, lead researcher for the Vietnam Provincial Competitiveness Index (PCI).

He said the market lost nearly US$6 billion in the first week after the incident broke out.

Meanwhile, political commitments to equitization seem to be inconsistent.

For instance, Decision 929, the most important legal document on SOE restructuring released by the Government this July, says that SOE equitization is the central task for the period from 2012 to 2015. However, at the recent Vietnam Business Forum, Deputy Prime Minister Vu Van Ninh said the Government would be able to finish SOE equitization by 2020.

“The equitization program seems to be forgotten,” said Nguyen Dinh Cung, vice president of the Central Institute for Economic Management.

Vu Bang said: “Obviously, we must accelerate this process, or else SOE restructuring and economic restructuring in general will be held back.”

As of end-2011, some 4,000 SOEs had undergone equitization. Most of them were managed by local governments.
In the 2008-2011 period, only 117 SOEs were equitized, said Mishra of the World Bank.

He said Vietnam should make greater effort to reach the ambitious goal of equitizing more than 600 SOEs wholly owned by the State by 2015.

According to the Economic Committee of the National Assembly, the number of SOEs has fallen significantly over the past 20 years, from over 12,000 to around 1,300 at the end of 2011. However, less than 15% of State stakes were transferred to other owners.

Meanwhile, State economic groups and corporations have kept expanding in recent years.

Source: SGT