Blair: SOE equitisation makes economy stronger

07-Mar-2015 Intellasia | TBKTSG | 6:00 AM Print This Post

Vietnam’s economy will grow stronger and local firms can grasp business opportunities from the free trade agreements (FTAs) with the nation if the government effectively equitises State-owned enterprises (SOEs) and fosters private sector development, stressed former British prime minister Tony Blair.

Blair made the point at a seminar in Hanoi City yesterday on new roles of SOEs in an economy and lessons for Vietnam.

Vietnam will soon conclude negotiations over and sign new FTAs with foreign partners, which will create more opportunities for local enterprises, he said, and reform and equitisation of SOEs will help the nation achieve the goal.

He said the privatisation of SOEs attracted internal objections at the start in Britain and many other Western countries, but they later realised its benefits.

SOE equitisation started in Vietnam long ago and not all equitised firms have been running at a profit. However, effective equitisation plans will bring about good results, Blair said.

The lessons of Britain and other countries are that reforming SOEs helps attract many investors and contribute to developing a strong economy, Blair said, adding reforms always go with objections but nations must make changes, and SOE equitisation should go hand in hand with the development of the private sector.

Minister of Planning and Investment Bui Quang Vinh said there are some 800 enterprises wholly owned by the State in the country. They still hold huge assets, worth more than VND3,000 trillion, and total State capital at these enterprises is VND1,100 trillion.

SOEs now hold 85 percent local fuel and oil market share, 90 percent in telecom, and 56 percent in financial services though they account for a mere 1 percent of the total number of enterprises in the country.

More than 140 SOEs went public last year, double the number in 2013, according to the Steering Committee for Enterprise Reform and Development. The equitisation target for the 2014-2015 period is 432 SOEs.

The committee noted the equitisation process is progressing well at major State business groups and corporations such as military-run telecom group Viettel, Vietnam National Textile and Garment Group (Vinatex), Vietnam Electricity Group (EVN), Vietnam Posts and Telecommunications Group (VNPT) and Vietnam National Chemical Group (Vinachem).

SOEs had divested around VND8 trillion (US$374 million) from 233 non-core businesses as of late year, or nearly VND2 trillion higher than book value. Of the total amount, VND204 billion was from securities, VND297 billion from insurance, VND185 billion from real estate, nearly VND1.5 trillion from finance and around VND1.3 trillion from banks.

Reform does not work if it is without objections, Vinh said. “Opposition will make reform better. If reform is accepted by everyone, it is not at all reform,” Vinh commented.


Category: Economy, Vietnam

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