Due to problems with the auction of capital contribution rights, 3 agricultural companies in Nghe An still cannot convert.

Organize and transform to improve operational efficiency

In Nghe An, there are 12 agricultural and forestry single-member limited liability companies (LLCs) that need to be restructured and converted (7 agricultural companies and 5 forestry companies). Since 2004, implementing the decrees and circulars of the Government and relevant ministries and branches onreorganize, innovate and improve the operational efficiency of agricultural and forestry companiesThe Provincial People's Committee has developed a master plan to arrange and convert agricultural and forestry companies and has been approved by the Prime Minister.

Since 2017, the Provincial People's Committee has appraised and approved the reorganization and renovation plan for 12 agricultural and forestry companies. In addition to the agricultural and forestry companies that have been reorganized, consolidated and continued to maintain and operate, there are 3 agricultural companies in Nghia Dan, Quy Hop and Tan Ky districts that have been reorganized in the direction of contributing their assets, finance, labor, and land to establish LLCs with 2 or more members.

It is worth mentioning that these 3 units have completed the appraisal of the project to convert the dossier to determine the enterprise value; however, due to the lack of documents guiding the auction of capital contribution rights to establish a 2-member LLC from the competent authority, the Provincial People's Committee is currently suspending the approval of the arrangement and innovation. This has caused many consequences.

"Hang" until when?

At Xuan Thanh Agricultural Company Limited (Quy Hop), through investigation, it is known that the unit is managing 1,772.57 hectares. Currently, this unit also has 627 workers, with 21 indirect workers working at the company office.

Since 2018, the Provincial People's Committee has issued Decision No. 121/QD-UBND on converting Xuan Thanh Agricultural One Member Co., Ltd. into a limited liability company with 2 or more members. On this basis, the company has hired a consulting unit to determine the enterprise value, review the current status of land and assets, prepare documents to submit to departments and branches for appraisal and submit to the Provincial People's Committee for approval. In addition, Xuan Thanh Agricultural One Member Co., Ltd. proposed Nghe An Agricultural Materials Company to be a long-term strategic shareholder. However, the arrangement and innovation here have not been completed yet. The fact that the conversion plan is hanging "in limbo" has caused many difficulties in production and business activities here.

Mr. Le Viet Minh - Director of Xuan Thanh Agricultural One Member Co., Ltd. said: Although the current model of a one member limited company creates better conditions for State management, it is revealing weaknesses in participating in the market mechanism. The way of operation is still not flexible, unable to maximize the profits and potential of the agricultural sector.

According to Mr. Minh, the restructuring or transformation of agricultural companies is a correct policy, helping State-owned enterprises operating in the agricultural sector to improve production and business efficiency. In particular, the participation of strategic investors will help units have more capital to invest in machinery systems and upgrade modern equipment to meet the requirements in the new situation.

"Currently, the conversion to a 2-member LLC is being stopped, so investment in production is facing many difficulties. Meanwhile, investment in developing industrial crops and fruit trees requires a large amount of capital and a long cycle. If during this process it is converted into a 2-member LLC, the enterprise value will have to be re-determined, which will be very inconvenient. Not to mention, if it continues, it will discourage many strategic investors," Mr. Minh emphasized.

Recently, on October 31, 2023, the Provincial People's Committee issued Decision 3541/QD-UBND approving the Project of Restructuring Xuan Thanh Agricultural One Member Co., Ltd. for the period 2021-2025. Accordingly, the Provincial People's Committee agreed to maintain the one member LLC with 100% state capital, with the People's Committee of Nghe An province as the representative agency of the owner, until there is a new policy on the arrangement and conversion of enterprises operating in the agricultural sector. This means that the path to becoming 2 members of this unit still has to wait.

At Nghe An 1/5 LLC, located in Nghia Dan district, which currently has 164 employees and manages 824.07 hectares of land, the situation is no better. In 2019, implementing the conversion policy, this unit hired a consultant to develop a plan to determine the value of the enterprise, but it has not been approved yet for the same reason as above.

It is worth mentioning that at the time this unit made the plan, Nghe An Sugarcane Company Limited proposed to become a strategic shareholder. However, due to the delay, Nghe An Sugarcane Company Limited once asked to withdraw from being a partner.

Mr. Nguyen Van Thuat - Chairman and Director of Nghe An 1/5 LLC said: "Due to the prolonged approval time, it is difficult to convince strategic partners. We hope that the Central Government and the Provincial People's Committee will soon have mechanisms and policies to guide the implementation of the auction of capital contribution rights to establish LLCs with 2 or more members. If there are no instructions, then for now, we will allow the implementation of joint venture and association capital contribution plans for production and business through the system of documents and guidance outlines according to regulations", Mr. Thuat shared.

Similarly, An Ngai Agricultural Company Limited, although having completed the appraisal of the conversion project and organized the determination of the enterprise value, has so far suspended the conversion.

In order to implement the policy of converting and restructuring agricultural and forestry companies, the Department has also guided units to carry out tasks in accordance with regulations. At the same time, it has advised the Provincial People's Committee on documents, recommendations, and proposals to remove difficulties in the process of restructuring agricultural and forestry companies in the area, and sent them to the Government and relevant ministries and branches.

Mr. Nguyen Quoc Son - Head of Personnel Organization Department, Department of Agriculture and Rural Development

Mr. Son also said that regarding the problems that prevented the approval of the conversion plan of the units, the department has also sent a report to the Ministry of Agriculture and Rural Development, at the same time, proposed to amend and supplement Decree 118 and related documents to soon complete the arrangement and innovation. While the plan has not been approved, it will continue to direct the units to issue plans and schemes to ensure that production and business are not disrupted.

It can be seen that the arrangement, innovation, and contribution to improving the operational efficiency of agricultural and forestry companies is a correct policy. In the implementation process, it is inevitable that there will be difficulties and problems. What the units and localities want is that the relevant levels and sectors need to base on the actual conditions of each enterprise to have solutions to help the enterprise develop.

The approval of the plan also needs to be done early, otherwise the enterprise value will have to be determined. Because after only 6 months, the enterprise value has changed. Not to mention, if the unit invests in growing fruit trees or industrial trees with a long cycle, the determination of value becomes even more complicated.

Besides, it is necessary to create a clear and tight corridor, soon have guidelines for auctioning capital contribution rights and have flexible policies to attract strategic investors to participate...