Establishment of State-owned Enterprise and Shareholding Agency.

China is now reforming state-owned enterprises according to the motto "grab the big, let go of the small".

In the program of restructuring small enterprises, China attaches great importance to the form of converting part of state ownership into a cooperative economy owned by collectives of workers and civil servants (still belonging to the public economy).

China attaches importance to the form of joint stock companies in which the State holds controlling shares in large enterprises, important economic sectors, and pillars. China considers this a reasonable form to bridge the relationship between the Government and enterprises, between the State economy and the private economy, and an organizational form that can effectively bring SOEs into international competition, protecting national interests in the international market.

China clearly stipulates the types of SOEs that need to be equitized. In particular, SOEs operating in the defense, oil, nuclear energy, aviation, water supply, electricity, postal services, railways, currency, and banknote printing sectors must be held by the State and not equitized. Other types of enterprises are subject to equitization, and the State's shareholding ratio is determined depending on the nature of the industry. In industry, the State can hold 25-30% of shares.

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3.5 Establishment of a state-owned enterprise and ownership of state shares.

This agency, on behalf of the Government, directly organizes and directs the implementation of equitization, appraises enterprise values to propose and organize bidding; resolves the consequences after equitization; manages the State capital portion when SOEs are transformed into joint stock companies. In addition, it also establishes a network of financial institutions to serve equitization.

China also attaches great importance to propaganda and education work through many forms to achieve unified awareness.

3.6 Develop a CPH process and comply with this process.

The CPH process includes:

- Identify a list of SOEs that meet the conditions for equitization (profitable business, not in the category of 100% state capital);

- Determine actual business assets;

- Promote advertising and perfect policies so that people can understand the real operations of the business and make decisions to buy shares;

- Choose the method of selling shares (selling widely to the public or to identified subjects, selling at preferential prices to the company's employees, etc.).

- Solving social problems after CPH.

3.7 The Government accepts a cost for the SOE equitization program

It is necessary to properly resolve social issues when transforming state-owned enterprises into joint stock companies, such as employment issues, workers' wages, social benefits, profits and income issues, etc.

3.8 The speed of the equitization process of SOEs depends on the level of development of the market economy.

With a developed market economy, an orderly stock market, and a strong private economic sector, the equitization process is simpler and more convenient.

In short, China's experience offers us both successful and unsuccessful lessons, as well as unresolved problems.

4. Lessons learned for Vietnam

Vietnam and China are two neighboring countries with many similarities in economy, culture, history... In particular, in modern times, Vietnam has also followed the same socio-economic development path that China has gone through. From the successful practice of reforming state-owned enterprises in China, Vietnam can learn some valuable experiences such as:

- Experience in encouraging the development of non-state economic sectors to reduce the burden on the State economy.

- Experience in state asset management.

- Diversify the implementation forms of the public ownership regime, promote property rights reform and equitization of state-owned enterprises.

- Closely combine reform with state-owned enterprise management, and state-owned enterprise reform with adjustment of the structure and layout of the state economy.

4.1 Applying international CPH experience to specific conditions in Vietnam:

The restructuring of SOEs in Vietnam is closely linked to management mechanisms and policies such as import-export, capital, tax, exchange rate, credit and investment mechanisms... The implementation of the formation of a stock market will create conditions to promote equitization and dynamism for Vietnam's capital market.

4.2 Establish a State management agency responsible for the implementation of the CPH process:

This agency must manage the entire process from a strategic perspective in assessing, drafting, directing implementation, checking and adjusting.

4.3 Learning from experience in implementing CPH:

This process of adapting and perfecting as it goes along is suitable both for a Government that needs time to grasp and control and for a public that needs time to believe in the long-term stability of Government policy.

4.4 Creating the necessary legal environment for implementing CPH:

These are important laws to establish and stabilize the macro economy, creating a legal framework for the transformation and operation of equitized enterprises and companies in general.

4.5 Financial planning is needed for the implementation of CPH.

For our country, it is also necessary to estimate the costs that cannot be reduced, especially the issues of new jobs and retraining, social insurance in equitized enterprises, consulting issues, advertising audits, domestic and foreign investment brokerage for equitization issues.

CHAPTER II: CURRENT STATE OF EQUITIZATION OF STATE-OWNED ENTERPRISES.

I. The process of CPH and current situation in Vietnam

In addition to measures to arrange, reorganize, merge, and dissolve SOEs to reduce inefficient and loss-making enterprises, the State advocates diversifying ownership, converting a part of SOEs into joint stock companies, and implementing the policy of equitization of SOEs.

Converting a number of SOEs into joint stock companies was first proposed at the Second Conference of the Central Executive Committee of the Communist Party of Vietnam (VIII term) in November 1991. This policy was further affirmed in many subsequent documents of the Party, such as: Resolution of the Mid-term National Delegates Conference (VIII term), Resolution 10 of the Politburo on continuing to innovate to promote the leading role of SOEs dated March 17, 1995, Resolution of the 8th National Congress of the Communist Party of Vietnam, Resolution of the 4th Central Conference (VIII term), Notice No. 63-TB/TW dated April 4, 1997 of the Politburo on continuing to actively and firmly implement the equitization of SOEs.

In the process of equitization of SOEs, the policies of the Party and the State have been increasingly improved, specifying the goals, objects and solutions, so the equitization process of SOEs has become more and more favorable.

1 Pilot phase (from 1992 to May 1996):

1.1 Legal basis for implementing CPH

The policy of CPH has been stated in the Resolution of the 2nd Central Conference - Session VII, Resolution 10 of the Politburo, Notice 63 TB/TW of the Politburo, Resolution of the 8th National Congress of Delegates, Resolution of the 10th National Congress of Delegates.

10th session - 7th National Assembly on December 26, 1991, Resolution of 4th session - 9th National Assembly on December 1993.

The Government (at that time the Council of Ministers) issued Decision 202/HDBT dated June 8, 1992 on: "continuing the pilot transformation of a number of SOEs into joint stock companies"; and Directive 84/TTg dated March 4, 1993 of the Prime Minister on: "promoting the pilot implementation of SOE equitization and solutions to diversify SOE ownership", these were the first legal bases of the Government to guide and promote the pilot implementation of SOE equitization. On the financial side, Circular No. 36/TC/CN dated May 7, 1993 was also issued to guide financial issues in the pilot implementation of SOE equitization. It can be said that the SOE equitization program in Vietnam actually started in 1992.

The main reasons for implementing SOE equitization in this period:

- There are still too many preferential policies for state-owned enterprises, especially financial and credit policies.

- There is no specific and clear guidance on handling financial problems in enterprises, and it is still a blank check for enterprises.

- There are no adequate incentive policies for businesses and employees in enterprises implementing equitization.

- Asset valuation is heavily subjective to the seller, the State, without taking into account the needs and interests of the buyer.

1.2 Implementing CPH in practice.

The pilot process of equitization of SOEs during this period was extremely difficult and slow. In 5 years, from June 1992 to May 1996, only 5 enterprises belonging to 3 ministries and 2 localities were equitized, namely:

- Joint Stock Transport Agency Company (under the Ministry of Transport)

- Hiep An Shoe Joint Stock Company (under the Ministry of Industry)

- Animal Feed Processing Joint Stock Company (under the Ministry of Agriculture)

- Refrigeration Electrical Engineering Joint Stock Company (under Ho Chi Minh City People's Committee)

- Long An Export Processing Joint Stock Company (under Long An Provincial People's Committee).

For this pilot phase, the effectiveness of the equitized enterprises has been clearly demonstrated, but the pilot phase has been relatively long (about 5 years). This shows that the awareness of SOEs on the issue of equitization is still limited, in addition, the ideology of officials and employees in the SOE sector has caused this process to be prolonged and the initiative of the ministries and branches is not high.

2. CPH expansion period (from May 1996 to June 1998):

Legal basis for expanding CPH

In the conclusion of the Politburo on the 5-year socio-economic development plan for 1996-2000 and 1996 (No. 30-1 BBK/BCT dated September 12, 1995), it was affirmed that equitization must maintain the socialist orientation and must classify state-owned enterprises for equitization.

On April 4, 1997, the Politburo issued Notice No. 63/TB-TW "actively and firmly implementing the equitization of state-owned enterprises to mobilize more capital, creating more motivation to promote effective business operations of state-owned enterprises, not for privatization".

The Government issued Decree 28/CP dated May 7, 1996 on converting a number of state-owned enterprises into joint stock companies. The relevant ministries and branches continued to issue documents guiding the implementation of Decree 28/CP.

Decree 28/CP and Decree 25/CP have shown a step of openness in the equitization of state-owned enterprises such as the issue of determining the objectives, objects, methods of determining the value of equitized enterprises, forms of equitization, preferential policies for enterprises and employees...

With more open and flexible policy mechanisms, the equitization process of SOEs during that time had positive changes, within just 2 years.

In 2015 (from May 1996 to June 1998), the whole country equitized 25 SOEs (5 times more than the 5-year pilot period).

However, the process of implementing SOE equitization in the above 2 years has also shown that the system of mechanisms and policies on SOE equitization, especially the financial mechanisms and policies issued with Decree 28/CP and Decree 25/CP, still has many issues that need to be studied to improve the selection of SOEs for equitization, the form of equitization, determining the value of equitized enterprises, preferential policies, etc.

Practical implementation to businesses.

Provinces, cities, ministries, branches and 91 corporations have registered more than 200 enterprises to carry out equitization, accounting for over 3% of the total number of SOEs. As of early June 1998, 25 SOEs had been transformed into CTPs, mainly concentrated in the two major cities of Hanoi and Ho Chi Minh City. In addition, a number of enterprises are carrying out equitization in the steps of determining enterprise value, auditing, etc.

The scale of the enterprises conducting equitization this time is also larger than in the pilot phase: 1 enterprise has capital of 120 billion VND and 5 enterprises have capital of 10 billion VND or more (in the pilot phase, there was only 1 large enterprise with capital of 16 billion VND). Among the 25 equitized enterprises, there is 1 State-owned enterprise that does not hold shares, which is Hanoi Investment, Production and Trade Company. Among the remaining 24 companies, the State holds at least 10% and at most 60.62% of the company's shares. Shareholders who are employees in the company own from 10 to 70% of the shares, the rest are shareholders outside the company.

The slow and sluggish implementation has resulted in the Party and State's policies not being implemented, causing people to lose confidence in the Party's policies. At the same time, the slow equitization has caused the economic efficiency of the State economic sector to remain ineffective, not promoting the overall development of the economy, and State capital is still not invested effectively...

3. Period of promoting CPH or proactive phase (from July 1998 to present)

Party and State policies

Resolution of the 4th Conference of the Party Central Committee (8th tenure) in December 1997: "Classify public service enterprises and business enterprises, identify the list of enterprises that need to hold 100% state capital; types of state-owned enterprises that need to hold a controlling stake; types of state-owned enterprises that only need to hold a low stake".

On June 29, 1998, the Government issued Decree 44/1998/ND-CP replacing Decree 28/CP dated May 7, 1996. The relevant ministries and branches also issued guiding circulars.

Important innovations in this Decree are shown in terms of the subjects of equitization, the authority to decide on equitization, the subjects of selling shares, preferential policies for employees in equitized enterprises, the form of equitization, determining enterprise value, and the management and use of money from selling State capital in enterprises.

If in 7 years (from 1992 to June 1998) the whole country only equitized 30 enterprises, then in the last 6 months of 1998 alone, 87 enterprises were successfully equitized and in 1999, equitization was carried out in over 300 enterprises, of which 250 enterprises were completed to become joint stock companies.

Regarding the situation and results of production and business activities of enterprises after equitization: According to the report of the Central Enterprise Management Innovation Board, all 370 enterprises after equitization improved production and business efficiency, the average revenue of enterprises increased by 30% compared to the previous year, the average profit and budget payment both doubled compared to before equitization, and the average capital growth was about 15%/year.

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