Stagnant market hinders equitization process: Official

The equitization of State-owned enterprises is facing the tumbling block of stagnant trade on the country’s stock markets, although the Government has urged that 1,000 SOEs go public in the next five years, a finance official said.

Dang Quyet Tien, deputy director of the Enterprise Finance Department under the Finance Ministry, said the equitization process since 2008 had slowed down due to continuously-falling stock prices coupled with the global financial meltdown.

To date 4,000 State-owned enterprises (SOEs) have gone public, and there remain some 1,000 SOEs that must be transformed in the 2011-2015, Tien said.

“As instructed by the Government, all State enterprises have to register for equitization in the 2011-2015 period,” he told the Daily in an interview.

These enterprises, in fact, have put their names down for the process and have begun related procedures, including big State groups, according to Tien.

“For example, Vietnam Airlines will start the process early this year, while Mobifone will also go public late this year. The apparel group Vinatex has also equitized most of its subsidiaries, and will also transform the parent firm later this year,” Tien said, adding these conglomerates are looking for consultants for equitization.

It will take time for State enterprises to find appropriate consultants and to undergo the process of evaluation.

But the big problem is that sagging stock prices make it difficult for enterprises to attract investors.

“As macro-economic factors such as high inflation, interest rate and forex rate have dampened the stock market, State enterprises face the big question of how to launch their IPOs. Therefore, it is difficult to say whether their planned equitization process will take place as scheduled or not,” he explained.

Tien also mentioned the difficulty for State enterprises to look for strategic investors.

“The equitization process is aimed to help State enterprises to attract not only outside capital but also expertise, technology, and management skills from investors, especially strategic ones. Since many State enterprises to go public in the coming time are big conglomerates, it is all the more difficult to identify suitable strategic investors,” he added.- Saigontimes

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