Draft on equitising SOEs

The rapid growth in the stock market over the last few years may become even more frantic as the Government drafts a new policy on equitising large-scale State-owned enterprises (SOEs).
Lawmarkers are in the process of drafting a new decree to replace Decision 155/2004/QD-TTg, which thus far has focussed on equiptising smaller SOEs that do not control large chunks of State capital. The shift in focus to larger companies, especially those that are or plan to become private limited companies, could create a frenzy on the country’s two stock markets, says analysts.

Tran Tien Cuong, head of the Central Institute for Economic Management’s Enterprise Renewal and Research Board, says abolishing regulaltions on the size of SOEs that are eligible for equitisation is a great breakthrough for the securities market.

The prospect of larger State companies listing shares in the near future could make the market in general more attractive to investors, say analysts, especially considering officials are contemplating whether to loosen controls on certain sectors that control vital assets, like telecommunications.

The State, though, will continue to hold controlling shares in these SOEs, says Cuong.
According to the board assigned to draft the new SOE decree, easing controls on the telecommunications sector is due to regulations by the Ministry of Post and Telematics and international commitments, namely those under the World Trade Organisation agreement.
Analysts, though, are concerned that SOEs in the public service sector will not attract investors, due to poor financial results.
Cuong says there have been difficulties with public service sector enterprises as well as with their equiptisation processes.
If the State does not find a solution, there is a slim possibility the companies will be able to stablise their business activities and services, he says.