Prevent asset losses during the equitization of state-owned enterprises.

(Baonghean) - At the conference on implementing the restructuring of state-owned enterprises (SOEs) for the 2014-2015 period, recently held in Hanoi, the Prime Minister affirmed that the Government's key task for the next two years is to restructure SOEs and accelerate equitization.

The goal was to complete the equitization of 432 state-owned enterprises (SOEs). A strong message was sent by the head of government with the statement, "Anyone who hesitates in restructuring and equitizing SOEs should be asked by the minister to take on another job; they should not be promoted to a higher position." This demonstrates the government's determination to implement equitization and also shows that equitization is a fundamental and important part of restructuring SOEs.

The equitization of state-owned enterprises (SOEs) is the most important task in restructuring SOEs, aiming to create a more rational structure for SOEs, focusing on key sectors and core elements of the state economy; enhancing competitiveness and return on equity; and fulfilling assigned responsibilities effectively. Therefore, the equitization process must be accelerated to achieve the set goals. However, equitization should not be pursued at all costs to ensure progress. The rapid equitization of a large number of SOEs within such a short period raises concerns about the potential loss of state assets. In fact, in Eastern European countries, after the equitization of SOEs, a large amount of national assets fell into the hands of a few individuals, making them globally renowned billionaires in a very short time. In Vietnam, in the early 1990s, nearly 4,000 SOEs were equitized, and a significant amount of state assets ended up in the hands of a small group of people. A prime example is the prime real estate of Trang Tien Ice Cream or Phu Gia Hotel in Hanoi, whose true value is in the trillions of dong, but whose shares are valued at only a few tens of billions of dong and fall into the hands of a few individuals.

Of course, all steps in the equitization process are considered to have been carried out "correctly" and legally. There are quite a few tricks to transform public assets into private ones through equitization. But the easiest and most common method is to undervalue assets before equitization, much lower than their true value. This is cleverly concealed under the guise of public bidding, but in reality, it's a group dividing the assets and playing a game of "dummy bidders." After a few roundabout maneuvers, the land, assets, and machinery return to the hands of those with influence within the enterprise. Not to mention that every state-owned enterprise has intangible assets including brand, relationships, market reputation, and signed agreements. However, these high-value items are often not fully listed in the balance sheet, and if they are, they are valued very inaccurately, much lower than their true value.

Thus, once again, state assets continue to fall into the hands of someone else. Land owned by state-owned enterprises (SOEs) is also a type of asset that is easily undervalued, often based on land price lists published by local authorities. These prices are always significantly lower than market prices or only reflect the land lease fees already paid to the state budget. This creates another loophole that allows for easy appropriation of state assets. A series of well-known SOEs with enormous tangible and intangible assets will soon be privatized, such as the Vietnam Post and Telecommunications Group, the Vietnam Chemical Group, the Vietnam Bank for Agriculture and Rural Development, the Vietnam Paper Corporation, the Northern Food Corporation, the Southern Food Corporation, the Vietnam Cement Corporation, the Northern Power Corporation, the Central Power Corporation, and the Southern Power Corporation...

Furthermore, a number of enterprises in the construction sector are also subject to equitization. Without effective preventive measures, the amount of state assets lost after equitization will be very high. The most effective and feasible measure to prevent this is to ensure transparency in asset declaration and valuation. This, coupled with the active and resolute involvement of the State Audit Office and the close supervision of internal affairs, judicial, and inspection agencies, is necessary to minimize the risk of state asset loss during equitization.

Duy Huong