Vietnam urged to hasten equitization process

Vietnam should issue more regulations and a transparent mechanism to restrict monopolies and encourage healthy competition in the national economy as a measure to attract strategic investors and speed up equitization of state-run enterprises (SOEs).

The proposal was made by Le Song Lai, deputy general director of the State Capital Investment Corporation (SCIC) at a conference on Vietnam small and medium-sized enterprises 2010 held by Vietnam Chamber of Commerce and Industry (VCCI) and the U.S.-based Thunderbird University October 19.

More than 500 investors and representatives from investment funds and securities companies gathered at the three-day conference in Ho Chi Minh City.

Although SOEs contribute 40% of Vietnam’s GDP and 55.4% of the state budget, only 44.4% of these enterprises are financially healthy, and many of them benefit from their monopoly advantage.

Reforming SOEs to maintain economic sustainable development and hasten share sales is an urgent requirement in coming years, participants urged.

Learning from Vinashin case, Lai said the government should enhance supervision on the efficiency of state capital using at SOEs and help improve their corporate governance to facilitate share sales.

“While small and medium-sized enterprises need private equity to expand, continued slow equalization of SOEs may slow down private equity inflows,” said Frederick Burke, managing partner at law firm Baker& McKenzie.

Etienne Chenevier, Asia director of the Singapore-based City Star Private Equity, noted Southeast Asia will witness strong development in private investment funds beginning in 2011. Global venture funds are looking for potential markets and want to work closely with private equity investors in emerging markets such as Vietnam.

He added that new private equity will focus on real estate and information technology. Banking and financial organizations will play an important role in regulating the activities of private equity in these markets. (HCM City Law, Saigon Marketing)