Blair: SOE equitization makes economy stronger

Tu Giang

Minister of Planning and Investment Bui Quang Vinh (R) speaks at a seminar on new roles of SOEs in an economy and lessons for Vietnam in Hanoi City yesterday while Tony Blair looks on - PHOTO: TU GIANG

Blair made the point at a seminar in Hanoi City yesterday on new roles of SOEs in an economy and lessons for Vietnam.

Vietnam will soon conclude negotiations over and sign new FTAs with foreign partners, which will create more opportunities for local enterprises, he said, and reform and equitization of SOEs will help the nation achieve the goal.

He said the privatization of SOEs attracted internal objections at the start in Britain and many other Western countries, but they later realized its benefits.

SOE equitization started in Vietnam long ago and not all equitized firms have been running at a profit. However, effective equitization plans will bring about good results, Blair said.

The lessons of Britain and other countries are that reforming SOEs helps attract many investors and contribute to developing a strong economy, Blair said, adding reforms always go with objections but nations must make changes, and SOE equitization should go hand in hand with the development of the private sector.

Minister of Planning and Investment Bui Quang Vinh said there are some 800 enterprises wholly owned by the State in the country. They still hold huge assets, worth more than VND3,000 trillion, and total State capital at these enterprises is VND1,100 trillion.

SOEs now hold 85% local fuel and oil market share, 90% in telecom, and 56% in financial services though they account for a mere 1% of the total number of enterprises in the country.

More than 140 SOEs went public last year, double the number in 2013, according to the Steering Committee for Enterprise Reform and Development. The equitization target for the 2014-2015 period is 432 SOEs.

The committee noted the equitization process is progressing well at major State business groups and corporations such as military-run telecom group Viettel, Vietnam National Textile and Garment Group (Vinatex), Vietnam Electricity Group (EVN), Vietnam Posts and Telecommunications Group (VNPT) and Vietnam National Chemical Group (Vinachem).

SOEs had divested around VND8 trillion (US$374 million) from 233 non-core businesses as of late year, or nearly VND2 trillion higher than book value. Of the total amount, VND204 billion was from securities, VND297 billion from insurance, VND185 billion from real estate, nearly VND1.5 trillion from finance and around VND1.3 trillion from banks.

Reform does not work if it is without objections, Vinh said. “Opposition will make reform better. If reform is accepted by everyone, it is not at all reform,” Vinh commented.

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