Vietnam Airlines plans to sell shares at an initial public offering in September. The national carrier is one of the 432 state-owned companies scheduled to be partially privatized by the end of next year. PHOTO COURTESY OF HANOI MOI NEWSPAPER
State-owned enterprises should be forced to go public as their slow privatization has hampered Vietnam’s economic reform and growth, top economists say.
Vietnam started to partially privatize, or equitize, state companies in 1992. Though the equitization process has accelerated since 2001, its pace remains much slower than planned.
The country now plans to equitize 432 out of 949 enterprises wholly-owned by the state by the end of next year.
That target is considered unattainably high, given that just 99 companies went public between 2011 and 2013.
“It is very difficult to partially privatize 432 state companies in two years,” senior economist Cao Si Kiem said during the Spring Economic Forum in the northern province of Quang Ninh late last month.
Tran Dinh Thien, head of the Vietnam Institute of Economics, agreed, saying that it is necessary to use legal processes to force these companies to sell shares to the public during the planned period.
Luu Bich Ho, former head of the Development Strategy Institute, suggested that an agency be set up to manage the assets of all state-owned enterprises and the process of selling of shares.
“[Equitized] state companies should not be assigned to perform political tasks along with social tasks. They should carry out only social tasks like other types of enterprises,” said Ho.
After equitization, the government will maintain a controlling stake (at least 51 percent) in each of the companies.
In his remarks, Thien pointed out that the largest obstacle to the economic growth is Vietnam's stable exchange rate policy. The government has kept the rate stable for so long, in spite of fluctuations in inflation, he said.
“The policy of keeping the exchange rate stable is often described as ‘flexible, not fixed’. But in fact, it's only flexible in a very narrow sense -- one that doesn't align with the actual rate of inflation.
“This policy, which appreciates the dong, encourages imports, gives little support to local production and doesn’t boost exports. That’s one of the key reasons to explain why Vietnam, after decades of effort, can’t develop supporting industries and the economy more and more heavily depends on imports.
“Since 1975 when the South was liberated and the country was united, local industry has continued to focus on natural resource exploitation, assembly and outsourcing for foreign companies,” said Thien.
Vietnam has targeted 5.8 percent growth this year--its seventh straight year for expansion of less than 7 percent.