Experience of Some Countries on Equitization, Protecting Workers' Rights and Lessons for Vietnam

1.3. Experience of some countries on equitization, protecting workers' rights and lessons for Vietnam

Equitization of state-owned enterprises is an inevitable objective trend of economies in the world. Each country when carrying out equitization aims to achieve different goals, in which one of the important goals is to solve the problem of rights and regimes of employees when equitizing enterprises - this becomes even more necessary for countries with transitional economies. Therefore, according to the author, it is very necessary to research and evaluate the laws of some countries on the rights of employees when equitizing and from there draw experiences to apply to Vietnam.

1.3.1. Privatization in Russia

After the collapse of the socialist regime in the Soviet Union, the program of transferring ownership of state-owned enterprises and protecting the rights of workers during the equitization process in Russia was assigned to the State Property Committee. The State Property Committee was responsible for supporting enterprises that had undergone corporatization and was responsible for selling shares in accordance with the equitization plan. The branches of the Committee and the Fund in the regions were, in fact, mainly responsible for the massive equitization in Russia under the decentralized system.

In Russia, the transformation of SOE ownership is carried out in two steps: Step one, quickly and compulsorily corporatize SOEs, through which the enterprises are fundamentally legally changed, from a SOE to a part of an enterprise operating under the Law on Companies but the state still owns 100% of the shares. Step two, the enterprise proposes a plan for equitization. The Russian government creates opportunities for employees to participate in the program of transforming SOE ownership and forms the initial foundations for the capital market by selling shares to all Russian citizens who come of age at a symbolic price through the nationwide savings bank network. These shares are tradable, are securities of the owner; can be canceled when

Maybe you are interested!

in exchange for shares in state assets and is valid for a certain period of time. This solution has created the necessary motivation for people to participate in the Government's SOE equitization program.

The equitization of state-owned enterprises in Russia also has some limitations: From these equitizations, in just five years, a new class of billionaires has emerged in Russia: national assets have gone from being public property to being the private property of a class of people who are “sitting first” and “eating first” [13]. Besides the disadvantages, the rapid and strong reforms in Russia have also created a fairly open economic environment, a dynamic private sector, rapidly developing markets, especially financial, monetary and stock markets, although chaotic at first, but later on they have become more and more disciplined and law-abiding, thanks to which economic growth is tending to recover and gradually accelerate [14].

1.3.2. Equitization in China

Privatization in China has been carried out since 1984 with the establishment of Tianqiao Department Store (Beijing). Then, in an important document issued in December 1986, the State Council of China allowed localities to select a few large and medium-sized enterprises with conditions under the state-owned system to pilot privatization.

By the end of 1996, China had more than 9,200 state-owned enterprises transformed into joint-stock companies, with a total capital of 600 billion yuan, more than

4,300 limited liability companies registered to operate under the Enterprise Law, with a total capital of 358 billion yuan, of which 150 billion yuan is capital mobilized from society, 35 billion yuan is the value of shares issued internally within the enterprise, and 80 billion yuan is foreign direct investment [15]

As part of the ownership diversification program, the equitization of state-owned enterprises in China includes forms such as: establishing joint stock companies with shareholders including the state, collectives and individuals. For large and medium-sized enterprises, the state still holds controlling shares; the state invests in and encourages the development of private enterprises in certain industries and scopes. These enterprises contribute to promoting the production of goods and services, stimulating the market, solving employment; developing enterprises based on foreign investment in the forms of: Enterprises investing in production or trade cooperation, enterprises with 100% foreign capital.

In addition, China also applies the form of diversifying small SOEs such as calling for additional capital contributions from other investors to become limited liability companies, or selling the entire enterprise to employees in the enterprise to form joint-stock industrial cooperatives.

With the concept that equitization is mainly to find the most effective business management mechanism, not to seek different forms of ownership, China has affirmed: The state economy is the main one, the public economy including the state economy and the cooperative economy is the subject. The main one is qualitative, the subject is quantitative. The equitization of enterprises absolutely does not affect that principle. The important thing is to choose the right industry and enterprise for the State to hold controlling shares, choose the right industry and enterprise that can issue shares widely to the public. Therefore, equitization is not an end in itself, cannot be done massively or use capital for illegal actions to gain illegal profits. Enterprises that are always passive in equitization, under pressure from the trend of dividend distribution without being proactive in effective business plans will certainly fail.

To protect the rights of workers during and after the equitization process, China also established an equitization fund to retrain young and capable cadres.

development, after training can work at the old enterprise or new joint stock companies; Solving subsidies for people who are unable to work at the company so that they can find jobs themselves; Investing in establishing joint stock companies with simple qualifications to attract this number of workers. For enterprises implementing equitization and meeting the standards for issuing shares to the public, employees have the right to buy before selling on the stock market (TTCK), but the total number does not exceed 5% of the issuance value. For state-owned enterprises converted to joint stock industrial cooperatives, employees have the right to buy the entire enterprise, but this type of enterprise is not allowed to issue shares to the public. If employees want to buy many shares, they can buy on the stock market.

1.3.3. Equitization in Korea

The Korean government has equitized 11 SOEs since 1968.

- 1973, including Korean Airlines, Inchon Steel Company, Korean Commercial Bank... Most of the above enterprises were formed from the nationalization process, so the Government wanted to reform these enterprises to make them operate effectively by selling their unrestricted shares to private companies and financial institutions. In the years 1981-1983, the Government implemented the second equitization program as part of the policy of further promoting the market-oriented economy. During this period, the Government sold its shares in 6 State-owned enterprises and 4 financial institutions through public auctions. The money collected through the equitization rounds was invested by the Government in enterprises that were deemed necessary to be controlled to regulate the economy to achieve rapid and stable growth. The national equitization program of 7 large State-owned enterprises of the Korean State aimed at the following goals:

- Distribute profits of state-owned enterprises to low-income people to achieve greater fairness among the people. The government has

All shares for sale of the above enterprises are divided according to the following ratio: workers working in equitized state-owned enterprises are entitled to buy 20% of the value of the shares for sale; poor families with low income (under 600,000 won/month - that is, nearly 900 USD/month), farmers with no more than 2 hectares of cultivated land and no more than 20 dairy cows, fishermen, retirees... are entitled to buy 75% of the value of the shares for sale; the remaining 5% of the value of the shares is sold to everyone at the agreed value on the stock market. The shares sold to workers and the poor are 30% lower in value. In particular, the shares of Pohang Iron and Steel Company are sold at 15,000 won, while the price on the stock market is 40,000 won. With this distribution method, workers in enterprises selected for equitization are very welcome, because they have the opportunity to earn a significant income while still ensuring job security for them. Those in the national equitization program also welcome it because they are interested in the difference between buying and selling prices on the market, because the Government gives priority to selling at low prices to them.

- Through the above implementation, the Government wants to capitalize the workers, creating opportunities for them to improve their income . Low-income people who want to participate in the national equitization program are recommended to open savings accounts through people's equity funds for pre-audit and to create conditions for capital support for these people. Those who buy shares with the help of people's equity funds must hold those shares for at least 3 years.

- Improve business performance in enterprises that are equitized by the whole people because they are large companies with strategic positions in industry and in public consumption of society. In enterprises that are equitized by the whole people, the Government still plays the role of majority shareholder, but the share prices

The stock market will act as an indicator and put significant pressure on the effective management of these enterprises.

- Increase public participation in the management of state-owned enterprises, create pressure from shareholders so that enterprises can operate autonomously, limit government intervention with bureaucratic orders that harm the efficiency of enterprises. At the same time, this is considered a strategy to prevent possible disagreements among workers during the equitization process.

- With the process of national equitization, the Government wants to promote the steady development of the domestic stock market, creating conditions for the reasonable and effective distribution of capital in regions and economic sectors of the country.

- Another important goal of this program is to prevent the possibility of increased concentration of power among a few large business groups if these important SOEs are in the hands of private groups with dominant resources and financial strength.

1.3.4. Lessons learned for Vietnam:

From the experience of equitization in some countries in the world mentioned above, we can suggest some general issues for the process of equitization of SOEs in Vietnam.

- The CPH process is popular.

The equitization process is being implemented strongly and globally. It is considered a necessary and objective solution, originating from the assessment of the potential advantages of joint stock companies in the market economy. Equitization solves the weaknesses of state-owned enterprises such as capital, labor, state administrative management mechanism, owner responsibility and organizational structure. Therefore,

Equitization of state-owned enterprises in our country is an objective requirement and is common in other countries in the region and the world.

- The CPH process is specific.

The specificity of equitization is reflected in the organization of implementation, selection of methods, objectives, and ways of organizing equitization of SOEs... In countries with developed market economies (with strong stock market activities), equitization is much easier than in countries with underdeveloped market economies and unformed stock markets. The concept of the role and areas that the state economic sector needs to hold or the form of organization of SOEs in each country is different, thus leading to the equitization process of these enterprises being different, depending on the characteristics of each country. In Vietnam, it is also necessary to pay attention to the specificity of the conditions for stipulating objectives, methods, and steps in the equitization process of SOEs, because our country's stock market has just been established, has not really developed, and is still small in scale. In addition, the state economic sector still accounts for a large proportion. Vietnam can learn from the experience of implementing CPH in countries with similar conditions, but it needs to pay attention to the specific characteristics of each country to carefully screen and test it to suit the reality of our country.

- The CPH process is divided into stages.

The practice of equitization in other countries shows that equitization is a process consisting of many stages, but there is no clear distinction between them, but only relative, to prepare conditions for an organization, choose goals, use implementation methods, control and adjust the equitization process...

In our country, CPH is a complicated task, and is carried out in a situation where many conditions are lacking. Therefore, this process requires both doing and learning from experience and taking specific steps, avoiding subjectivity, impatience, willfulness, and wanting to complete it in a short time.

- The equitization process is strategic (therefore, it is necessary to establish a state management agency responsible for the equitization process).

Equitization is one of the measures to reform the entire economy, so it needs to be considered and acted upon with high strategic significance. Most countries have a representative agency at the top that is fully responsible for the equitization process. This is a factor contributing to the success of the equitization process in many countries.

For our country, equitization is an important task in the process of economic innovation, improving production and business efficiency. To successfully implement the equitization process, from the Central to the provinces and cities, the Steering Committees for Enterprise Innovation have been established, responsible for managing and directing the resolution of all issues related to the equitization process of State-owned enterprises.

- Legal environment of CPH implementation

To carry out equitization, countries must create a favorable and necessary legal environment, focusing on promulgating important laws related to equitization and regulating the operations of equitized enterprises such as the Law on Companies, the Law on Investment, the Law on Commerce, the Law on Securities Market, etc.

In Vietnam, the State continuously improves the legal system, creating a favorable legal environment for the equitization process, and has issued new related laws such as the Law on State-owned Enterprises, the Law on Enterprises, the Law on Investment, the Law on Commerce, the Law on Bankruptcy and sub-law documents such as Decree 109/2007/ND-CP dated June 26, 2007 directly regulating the equitization process of SOEs... However, the State also needs to regularly review, amend, supplement and perfect legal documents to create conditions for the equitization process of SOEs in Vietnam to achieve good results.

- Need to make a financial plan for the equitization process

Comment