http://atimes.com/se-asia/CI06Ae04.html
HANOI - Vietnam's Finance Ministry plans to cut the country's state-owned enterprises (SOEs) by half before 2005 as part of efforts to revitalize the sector. Finance Minister Nguyen Sinh Hung says the country now has close to 6,000 SOEs, including 730 involved in public utility.
But SOEs capitalized at 5 billion dong (US$333,000) or less make up nearly 60 percent and most of them operate inefficiently. Hung said the government was determined to restructure these small SOEs and either equitize, sell or lease them out to improve competitiveness.
"This is the fourth time the government has undertaken to reform the SOE sector, but their renovation will be implemented more resolutely and consistently than in the past," he said.
Some 2,620 SOEs of all sizes will be restructured over the next four years, 1,139 of them are slated for equitization. About 560 small SOEs will be sold or leased out, another 351 will be merged and 363 dissolved.
Seventy state-owned corporations will be reorganized to create 50 new powerful firms. The government will also consider the equitization of some SOEs capitalized at more than 5 billion dong. Various ministries and agencies have been charged with enhancing SOE productivity.
The finance ministry will overhaul the rules on leasing SOEs to increase the benefits to both contractors and lessees. The ministry of planning and investment will amend the bankruptcy laws to streamline the process. This would provide a legal framework for the dissolution of loss-making SOEs, Hung said.
The government has also issued preferential policies to encourage soon-to-be equitized SOEs to accelerate their restructuring. It will also draw up regulations to punish those enterprises which fall short of the equitization requirements.
The rules would clarify SOEs' production and training, as well as the role the state will retain in ownership and management. Hung said the recent third plenum of the party central committee agreed to give supreme power to SOE directors, but ensure that the enterprises remained under government supervision.
The executive boards of SOEs will act as representatives of the state. They will be permitted to choose directors for their affiliate companies. The government also plans to restrict state agency interference in the operations of SOEs.
After restructuring, the SOE sector should achieve a pace of growth similar to the national economy's, have healthy finances and make effective use of their capital. They will also contribute to the state budget effectively. "Finally, SOEs will be armed with modern production technology and management skills," Hung said. Finance ministry figures show that 700 SOEs have completed equitization, with a total chartered capital of 3.5 trillion dong. The State holds up to 30 percent of that capital. Eighty SOEs were restructured in the first half of this year, of which 70 were equitized.
Meanwhile, the demand for loans from enterprises in Ho Chi Minh City industrial parks and export processing zones is not being met by the city's commercial banks due to onerous borrowing regulations.
A joint report by the State Bank and the Ho Chi Minh City Industrial Park and Export Processing Zone Authority (HEPZA), has forecast that the city's industrial park infrastructure companies alone will require loans of up to 860 billion dong between now and 2003.
Furthermore, foreign invested enterprises in the city's two export processing zones are said to require additional funds of around $311 million. According to borrowing regulations, enterprises seeking loans are required to have been profitable for at least two years, or they must be able to secure a loan from a bank using a land-use rights certificate, where operations are based on a mortgage.
However, obtaining such a certificate has proved very difficult for many enterprises due to the lengthy tenure of most leasing agreements. Typically, enterprises will lease land for the same length of time as an investment license, which can have a duration of up to 50 years.
To secure the certificate, enterprises must either pay the lease in one lump sum or pay by regular installments. The latter option means that a certificate is not immediately forthcoming. The result is that enterprises that pay rent in installments are denied access to loans.
The problem is compounded by the fact that many enterprises are unable to mortgage their equipment, machinery or raw materials to raise equity. As a result, loans to enterprises in the industrial parks and export processing zones had reached only 1.408 trillion by the end of June. This represents only 2.8 percent of all the city's outstanding loans, or 6.6 percent of the total investment by enterprises in industrial parks and export processing zones.
Frustrated by the problems of conventional borrowing, various enterprises have turned to other investment sources to fund expansion and production. Some have borrowed capital from overseas commercial banks, which charge annual interest rates as high as 9.5 percent.
The Tan Thuan branch of Vietcombank has taken up the challenge and believes it can offer an alternative to enterprises wishing to raise additional capital. The bank advocates the establishment of a certificate that would be awarded by the management board of the export processing zone, and would verify the assets of borrowers.
However, Tsutomu Hashimoto, the director of Japan's Daiwa Plastics, believes that such a certificate would still lack clarity. "Even a certificate awarded by the management board does not ensure that figures will be exact. There is still a need to check that enterprises can be profitable."
Elsewhere, the Bank for Investment and Development in Ho Chi Minh City has suggested that the Ho Chi Minh City investment fund for urban development should provide a guarantee for enterprises without sufficient assets, provided that they are undertaking feasible development projects, so that they can gain access to loans.
To solve the current problems, banks and enterprises are expecting the State Bank to issue a lending policy specifically designed for firms operating in industrial parks and export processing zones. To date, the Ho Chi Minh City branch of the Bank for Investment and Development has provided 230 billion dong for infrastructure development in five industrial parks and the Linh Trung export processing zone.
(Asia Pulse/VNA)
http://atimes.com/se-asia/CI06Ae04.html
===== Kevin Dean Buffalo, NY ICQ: 8616001 http://www.yaysoft.com
__________________________________________________ Do You Yahoo!? Get email alerts & NEW webcam video instant messaging with Yahoo! Messenger http://im.yahoo.com