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Key Solutions to Solve Socio-Economic Problems During and After Equitization of Enterprises in the Transport Industry


in 2008), of which 550 enterprises (including about 20 corporations) must be equitized in 2007, the rest will be implemented in 2008-2009. According to Decision No. 1729/QD-TTg, dated January 29, 2007 of the Prime Minister on equitization of State corporations, 20 units will be equitized in 2007. However, by the end of November 2007, only 3 units have been equitized: Electronics and Information Technology Corporation, Import-Export and Construction Corporation - Vinaconex, Trade and Construction Corporation, Vietnam Insurance Corporation - Bao Viet. Bank for Foreign Trade of Vietnam - Vietcombank and Mekong Delta Housing Development Bank, Hanoi Beer and Alcohol Beverage Corporation, Saigon Beer and Alcohol Beverage Corporation... and are completing the determination of enterprise value, but have not yet issued shares for the first time.

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- Research forms and measures to promote socialization of activities

public service activities in the direction of equitizing public service enterprises or transferring them to localities for direct management, or establishing forms

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new investment

- Develop policy mechanisms associated with equitization in the direction of further promotion; expand rights for enterprises; not be closed to each enterprise; properly value and improve the economic and social efficiency of equitization.

Key Solutions to Solve Socio-Economic Problems During and After Equitization of Enterprises in the Transport Industry

- Accelerate the process of restructuring and innovating state-owned enterprises. Seriously and correctly implement the contents and roadmap of the State-owned enterprise equitization program of the government as well as of the ministries and branches approved by the government. The ministries and branches need to have detailed plans each quarter with specific tasks, assign responsible persons and direct the implementation of the plan.

- In addition to promoting equitization, it is necessary to build a program to strengthen and develop equitized SOEs. Summarize the results achieved

in equitized SOEs, clearly identify the existing problems and issues that need to be resolved to improve business performance in equitized SOEs.


become a joint stock company.

3.1.2.2. Objectives

* Common goals for all SOEs in the economy:

According to data compiled from ministries, localities, and corporations 91, as of December 31, 2005, the country had 2,176 100% state-owned enterprises with a total capital of nearly 260 trillion VND. Of these, 1,546 were enterprises engaged in production and business, 335 were enterprises engaged in national defense and security, production and supply of public utility products, and 295 were state-owned agricultural and forestry farms. If classified by ownership, there were 301 enterprises belonging to corporations 91; 408 enterprises belonging to corporations 90; 307 enterprises belonging to ministries and branches; and 1,160 enterprises belonging to localities (CP Report No. 133/BC-CP, October 16, 2006).

To direct the continued implementation of the work of restructuring, innovating and equitizing State-owned enterprises, the Government has launched a program to equitize State-owned enterprises for the 2006-2010 period. The program's objectives are:

- Continue the process of reforming State-owned enterprises, persistently equitizing in parallel with creating a new environment to promote the formation of large economic groups.

- Consolidate the Corporations to become the core to develop into groups.

economic groups. These will be multi-ownership economic groups, interwoven between the State economy and other economic sectors.

- Only retain 100% state capital in certain types of enterprises.

Some areas that have long been considered sensitive are now being re-determined by the Government to be equitized, for example in the banking and insurance sectors. The plan to equitize all state-owned commercial banks is

The government has clearly defined the structure, starting with the Foreign Trade Bank and finally the Agricultural Bank.


- The Government has decided that only 28 State corporations and groups will retain 100% of their capital in their parent companies, while the remaining nearly 80 corporations and groups will be equitized, including the Textile and Garment Corporation, the Shipbuilding Industry Corporation... which can be considered a breakthrough in equitization in the period.

The period 2006-2010 is the equitization of corporations and general companies.

- According to the above plan, from now until the end of 2010, our country will continue to equitize about 1,500 enterprises and by the end of 2010, the whole country will retain 554 enterprises with 100% state capital, including 26 large-scale economic groups and corporations; 178 enterprises operating in the fields of security, defense, production, and supply of essential products and services; 200 agricultural and forestry farms; 150 member enterprises of state-owned groups and corporations.

* Goals of the transport industry

To implement the equitization program of state-owned enterprises that the Government has determined for the period 2006-2010, the Ministry of Transport has proposed a roadmap for equitization of state-owned enterprises in the industry, specifically:

- Accelerate the equitization work to achieve the target of converting 169 SOEs identified in 2005, of which 87 SOEs are considered for equitization (this target was not achieved in 2005 and 2006).

- For 51 public service SOEs, continue to implement the conversion in 2 directions: Equitization or maintaining the legal entity to convert to SOEs assigned with public service tasks.

- For state-owned enterprises that are members of corporations established under Decision 90/TTg of the Prime Minister, continue to carry out the equitization plan. Specifically:

+ Vietnam Automobile Industry Corporation: has a project to convert its operations.

Moving to the parent company - subsidiary model, the Ministry of Transport is directing

directed according to the approved roadmap, including 2 affiliated enterprises,


Subject to equitization are: Transport Development Investment and Trade Brokerage Company and Construction Transport Mechanical Company.

+ Northern Inland Waterway Corporation: 7 enterprises were selected by the Ministry for equitization, including Waterway Transport Company 2; Waterway Transport Company 3; Waterway Transport Company 4; Waterway Transport and Mechanical Company; Waterway Construction and Technical Materials Company; Ha Bac Port and Nam Dinh River and Sea Company.

+ The Transport Engineering Consulting Corporation has 10 enterprises, of which 6 enterprises chose to equitize: Construction Geology Consulting Company; Waterway Construction Design Consulting Company; Traffic Engineering Consulting Company 2; Traffic Engineering Consulting Company 4; Traffic Engineering Consulting Company 5; Traffic Engineering Consulting Company 7.

+ Thang Long Construction Corporation has 10 enterprises, of which 7 enterprises were selected to carry out equitization: Thang Long Construction Company No. 6; Thang Long Mechanical and Construction Company; Thang Long Bridge Company No. 5; Thang Long Transport and Construction Company; Thang Long Mechanical and Construction Company No. 10; Thang Long Bridge Company No. 7; Thang Long Construction Company No. 9.

+ Traffic Construction Corporation 1 has 15 enterprises, of which 12 enterprises were selected to be equitized: Hydraulic Construction Company; Traffic Construction Consulting Company 1; Bridge and Road Company 10; Traffic Construction Company 116; Traffic Construction Company 124; Traffic Construction Company 128; Traffic Construction Mechanical Company 121; Road Company 126; Construction Company 136; Traffic Construction and Materials Production Company 1; Construction and Materials Production Company 117; Construction, Industrial Production and Import-Export Company 125.

+ Traffic Construction Corporation 4 has 6 enterprises, of which 3 enterprises were selected to be equitized: Construction Company


Traffic Construction Company 479; Traffic Construction Company 208; Traffic Construction Company 475.

+ Traffic Construction Corporation 5 has 7 enterprises, of which 6 enterprises were selected to be equitized: Traffic Construction Company 503; Traffic Construction Company 501; Traffic Construction Company 586; Traffic Construction Company 506; Traffic Construction Company 507; Traffic Construction and Import-Export Company 502.

+ Traffic Construction Corporation 6 has 7 enterprises, of which 5 enterprises were selected to be equitized: Traffic Construction Consulting Company 625; Stone Exploitation and Traffic Construction Company 621; Traffic Construction Company 68; Traffic Construction Company 675; Traffic Construction Company 60.

+ Traffic Construction Corporation 8 has 8 enterprises, of which 5 enterprises were selected to be equitized: Traffic Construction Company 874; Traffic Construction Company 820; Traffic Construction Company 892; Traffic Construction Company 875 and Construction Materials and Construction Company.

+ The Waterway Construction Corporation has 11 member enterprises, of which 8 enterprises were selected to be equitized: Waterway Dredging and Construction Company 1; Waterway Dredging Company 2; Traffic Construction Consulting Company 1; Mechanical Construction Company; Labor Supply Company; Southern Waterway Construction Company; Waterway Construction Company 2 and Construction Company 5.

+ Construction and Trading Corporation: The Ministry of Transport submitted to the Prime Minister a plan to equitize all 8 enterprises of the Corporation.

In addition, a number of enterprises under the Corporation established under Decision 91/TTg are also included in the equitization list.


3.2. Main solutions to solve socio-economic problems during and after equitization of enterprises in the transport sector

When studying the problems arising in businesses during and after

Equitization, the thesis points out the causes both before and during the equitization process. The equitization process of state-owned enterprises in general and in the transport sector in particular is still continuing and is in the implementation stage for large-scale units with economic potential.

Therefore, in addition to direct solutions to handle socio-economic issues arising after equitization of SOEs, it is necessary to propose solutions for the entire equitization process, even general solutions to minimize the negative impacts of the equitization process on the operations of enterprises after equitization. The solutions proposed by the thesis include the following 4 specific groups:

3.2.1. Group of solutions to create necessary premises for equitization of state-owned enterprises

3.2.1.1. Innovating management mechanisms, reorganizing state-owned enterprises in a direction suitable to business lines and management areas

Currently, the system of state-owned enterprises in general, and state-owned enterprises in the transport sector in particular, is still managed by many agencies. This situation leads to inadequacies in the business operations of enterprises, including equitized state-owned enterprises. Therefore, innovating the management mechanism and restructuring state-owned enterprises in general, and pre- and post-equitization state-owned enterprises in particular, is one of the solutions to improve the operational efficiency of enterprises, including joint stock companies.

According to the assessment of the Ministry of Finance, in the recent past, the speed of equitization of SOEs has not yet met the requirements and goals set. Besides some ministries, branches and localities actively implementing and completing the plan, there are still ministries, branches and localities that have not completed the approved equitization plan, for example, Vietnam Shipbuilding Industry Corporation, the equitization plan


21 enterprises were equitized, but in both 2004 and 2005, none of them were equitized. Furthermore, the equitization of enterprises by sector and location was also uneven. By the end of 2005, 66% of SOEs were equitized in the industry, transportation, and construction sectors; 27.6% in the trade and service sectors; 6.4% in the agriculture, forestry, and fishery sectors; 61.7% of state-owned enterprises managed by provinces and centrally run cities were equitized; and 9.3% of corporations 91 were equitized.

In the coming time, the Government will continue to promote the equitization of independent companies, with priority given to attracting investors to buy shares. For enterprises with financial difficulties, they need to be restructured before equitization. Small-scale enterprises operating in the same industry will be considered for merger and consolidation, regardless of whether they are enterprises managed by the Central or local governments. Enterprises providing public services for national defense and security that have not yet been equitized will be

converted into a single member limited liability company.

In fact, in previous years, the plan was mainly to reorganize small-scale enterprises. In the coming time, the Government and ministries and branches will strongly implement the equitization of large companies and must consider this a breakthrough in enterprise development. Ministries, branches and localities continue to direct more resolutely the equitization and innovation of state-owned enterprises, linking the responsibility of local and enterprise leaders with the results of equitization in localities and units.

Specifically, the transport industry needs to proceed in the following direction:

- For current enterprises that have not been equitized, they need to be rearranged according to the business lines, management areas and development orientation of the industry. For example, in the province, there should only be 1-2 enterprises with the same business lines. For transportation

The railway should merge regional companies into one company, not be divided into three regions as it is now, to ensure smooth traffic from North to South.


- Separate highway management companies, road management companies, and road management companies.

River routes, railway infrastructure management, seaport infrastructure... into public utility companies under the Road Administration, River Administration, Railway Administration, Maritime Administration to collect fees and lease operations to business companies. For example:

For seaports, the Department will invest in infrastructure and allow port companies to invest in loading and unloading equipment for exploitation. Business companies will be put on the equitization list, while public utility companies will lease assets and collect fees to recover investment capital from the budget.

- The state should hold more than 50% of capital in enterprises in the fields of maritime transport, railway transport, large shipyards, automobile and large equipment manufacturing plants. In the field of road and river transport, small and medium-sized construction companies, the state should not hold a capital ratio of more than 50%. As for large corporations and groups that play a special role in the economy and the role of developing the socialist-oriented economy, state capital should not be used to issue securities, reducing the state capital ratio, and losing the real role of the state economy.

3.2.1.2. Building and developing the infrastructure system of the economy

This is a common requirement of the country's economic development before the integration process and the country entering a new stage of industrialization and modernization.

modernization. For state-owned enterprises, building infrastructure, especially building investment strategies for advanced equipment and material conditions for business operations, is to increase the capacity and potential for production and business.

That, on the one hand, will enable SOEs to perform well in improving efficiency in business operations. On the other hand, it will create attractiveness for enterprises to investors as future shareholders of SOEs during the equitization process. It is a huge difficulty for our country when

Investment in building infrastructure and facilities of the economy is capital. Because, the investment demand is very large, but the ability to recover direct investment capital for reinvestment

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