At a recent conference on renovating the completely state-owned enterprises, it was reported that in 2007, 271 enterprises were reshuffled, raising the number of enterprises of this kind to more than 5,300, including nearly 4,000 equitised enterprises.

Reports from over 1,600 enterprises that have been equitised for more than one year show that there have been considerable increases in their registered capital, revenues, profits, contributions to the state budget, workers’ incomes and dividends. However, up to 109 enterprises (or 7.1 percent of the total) have suffered losses.

In the 2007-2010 period, more than 1,500 enterprises need to be reformed but only 271 have been reshuffled, accounting for one fifths of the set target.

The ministries and sectors have attributed this situation to the fact that most of target enterprises are in the public sector, facing limited capital and concerning land and financial problems.

Phi Thai Binh, Vice Chairman of the Hanoi city People’s Committee, said equitisation policies have led to new issues relating to land prices.

Reports also say that as much as nearly VND500,000 billion has been mobilized by firms themselves, which helps eased the burden on the state.

In fact, a number of corporations have high financial liability, such as the transport construction companies, the Vietnam Shipbuilding Industry Group (Vinashin) and the Vietnam Machinery Erection Corporation (Lilama). This may pose a risk to payment and reduce the efficiency of investment due to a large volume of bank’s interest rates.

It’s worth noting that pouring financial sources and getting involved in the stock market have become quite popular. Vinashin alone invested up to VND3,323 billion (1.1 time higher than its asset) into securities trading, banking, insurance and real estate sectors. Obviously, this group spent its loans on these activities. According to Vinashin General Director Pham Thanh Binh, since the group’s establishment, its total assets have now increased to VND80,000 billion from only VND200 billion 12 years ago, while its revenue rose from VND100 billion at the beginning up to VND40,000 billion at present. The group’s liability is currently estimated at nearly VND50,000 billion, he added.

Explaining why Vinaship spent a large amount of money on other sectors, Mr Binh said that it is impossible to make profits from the shipbuilding sector in a short period of time as it is a heavy industry. Therefore, the group must think of other way to earn money in the immediate period by investing in high-income sectors such as banking and insurance in order to serve its long-term strategy. However, he said this type of investment is banned by the Government.

In addition, the restructuring of agro-forestry farms is also facing many difficulties. Central Highland Dak Lak province planned to restructured and renewed eight agro-forestry farms. Up to now, only one of these farms has been restructured as most of them are suffering losses and seeking loans from banks.

Speaking at the conference, Deputy Prime Minister Nguyen Sinh Hung highly valued achievements of equitised businesses thanks to increases in revenue, profits, labour force and investment capacity. This has demonstrated the correctness of the Party and State’s policies and businesses should persist with the equitisation process.

Mr Hung also asked businesses, sectors and localities to review and boost the restructuring and renewing of State-owned enterprises so as to complete the etuitisation process by 2010. For State-owned agro-forestry farms, the Government has not yet mapped out equitisation plans, but will restructure and renew them, the Deputy PM added./.