Despite a pilot program in 1992 and a decree in 1996 to further encourage the process, by 1998, only 17 Vietnamese State-owned enterprises (SOEs) had been equitized (privatized) into joint stock companies (JSCs). This MPDF-commissioned report delivers the results of a study done by its authors for Vietnam’s Ministry of Finance (MOFI) on the process of equitization in Vietnam and the status of the country’s then 17 equitized firms in order to identify the key issues facing future equitization programs. A summary report was presented to a seminar organized by the MOFI and World Bank held in Hanoi in February 1998. This final report incorporates relevant contributions made by seminar participants.
The survey team divided the issues into two groups: equitization issues and post-equitization issues. Main equitization issues identified were: valuation methodology and procedures; use of proceeds from sales of shares; credit provisions for share purchase; business plans; company statutes and management; governance; public awareness; and the equitization procedures for very small SOEs. Post-equitization issues involved: working capital financing; investment capital financing; and the post-equitization role of state representatives.
The authors claimed that the equitization process was too lengthy and cumbersome to accommodate the large number of firms the government hoped would equitize. They proposed a simplified, streamlined process. They also suggested that without significant reform of the business environment, newly equitized firms would face the same constraints on development as the rest of the private sector. Proposed reforms included: allowing easier access to sources of credit; making the legal/regulatory framework more pro-business; and eliminating regulations and practices that discriminate in favor of state-owned enterprises.
March 1998
Full report English 
(151kb) | Full report Vietnamese 
(201kb)
