- Issues of management and use of money from selling shares of the enterprise.
- Does the regulation that the value of shares held by the State must be twice as large as the shares of the other largest shareholder hinder the attraction of additional external capital?
- The relationship between equitized enterprises and the State tends to escape management, creating confusion due to the lack of guiding documents.
- After equitization, the management of some joint stock companies still has the appearance of state-owned enterprises. [4; page 329]
* Further promote the progress of CPH in Ninh Binh province
Along with the whole country, the work of reforming and reorganizing state-owned enterprises in recent years has always been focused on by Ninh Binh province, but by the end of 2001, the number of state-owned enterprises equitized in the whole province was insignificant. This result was not commensurate with the requirements and reality of the locality. This delay, according to the explanation of the Ninh Binh Provincial Enterprise Innovation Board, was due to the fact that the awareness of the policy of reforming state-owned enterprises of some leaders of Departments, Boards, Branches, and state-owned enterprises had not changed positively, and there was still a mentality of doubt and avoidance. The implementation of the reform lacked determination and was initially confused. The majority of the officials in the Enterprise Innovation Board were part-time employees, so they had limited experience and professional capacity. The propaganda and dissemination of policies on reforming state-owned enterprises had not met the requirements, leading to employees in enterprises as well as people from all walks of life not actively responding to the policy through share trading activities. Besides, the enterprises themselves still have many limitations in financial capacity, management and operation, and many related issues such as surplus labor and outstanding debt have not been satisfactorily resolved.
Thanks to finding the right cause and the determination of leadership and direction of Party committees and authorities at all levels, the implementation of CPHDNNN in Ninh Binh in recent years has had significant changes. As of May 2003, Ninh
Binh has equitized 42% of state-owned enterprises.
Above are some initial but very valuable experiences, which have the effect of suggesting creative application to suit the current practice of equitization of state-owned enterprises in Thanh Hoa.
In short, SOEs not only play a core role but also an important economic force for the state to manage the socialist-oriented market economy. To fulfill the above role, SOEs must constantly innovate, with many forms of innovation, but equitization is the central step in the entire process of reforming and restructuring SOEs. Equitization of SOEs is an objective necessity, it not only overcomes the contradiction between productive forces and production relations due to previous mistakes in old thinking but also achieves the goal of mobilizing social capital to invest in expanding production and business, creating conditions for enterprises to have more capital to invest in changing technological equipment, contributing to improving labor productivity, efficiency and product quality, effectively overcoming weaknesses in management of previous SOEs. This is one of the decisive solutions for state-owned enterprises nationwide and in localities, including Thanh Hoa province, to improve their competitiveness and develop sustainably in the trend of globalization and international and regional economic integration.
Chapter 2
STATUS OF EQUITIZATION
STATE-OWNED ENTERPRISES OF THANH HOA IN PAST TIMES
2.1. STATUS OF IMPLEMENTATION OF EQUITIZATION OF STATE-OWNED ENTERPRISES IN THANH HOA PROVINCE
2.1.1. Overview of the situation of State-owned enterprises in Thanh Hoa province before equitization of State-owned enterprises
Like the previous state-owned enterprises in our country, Thanh Hoa's state-owned enterprises were also born in the context of a centrally planned, bureaucratic, subsidized economy, so the number of state-owned enterprises developed too quickly and too much in all sectors and fields from the province to the district. The general picture of state-owned enterprises in Thanh Hoa before the policy of restructuring state-owned enterprises showed:
On the number of state-owned enterprises, capital and labor scale
Through table 2.1, it can be seen that: Most of the enterprises managed by the province were established before 1970, with some enterprises established since the 60s of the 20th century. Of the 265 enterprises managed by districts and towns, 80% were established from 1983 to 1986 (the period of implementing the policy of building and strengthening the district level). With a small scale of capital and labor: Average 124 million VND/1 enterprise and 91 labors/1 enterprise
After 10 years (1989-1999) of restructuring SOEs according to Decision 315, Decree 388, and Directive 500 TTG of the Prime Minister, as of January 1, 1999, the remaining SOEs managed by the province were 128 and managed by the district were 8, a decrease of 320 enterprises compared to 1989. (See Table 2.2)
Table 2.1 . State-owned enterprises classified by level and sector in Thanh Hoa (as of December 31, 1989)
Unit : Million VND
Classify
Quantity Business | Total labor move (person) | Total capital | |
1. Total | 454 | 50,700 | 422,830 |
2. According to Provincial management level District | 189 | 26,400 | 389,932 |
265 | 24,300 | 32,898 | |
3. According to the management sector: Industry - Construction Agriculture - Forestry Materials, export Other industries | |||
151 | 19,200 | 238,508 | |
94 | 13,900 | 385,870 | |
137 | 12,000 | 125,740 | |
104 | 22,000 | 172,642 |
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Source : Department of State Capital and Asset Management at Enterprises, Thanh Hoa province
Table 2. 2: State-owned enterprises classified by industry in Thanh Hoa province (as of January 1, 1999)
State-owned enterprise | ||
Number of businesses | Number of employees (people) | |
Total | 136 | 27,300 |
Agriculture | 44 | 8,200 |
Industry | 18 | 5,200 |
Build | 19 | 4,100 |
Transportation | 13 | 2,400 |
Commerce | 12 | 2,650 |
Aquaculture | 10 | 1,050 |
Other material production | 7 | 1,200 |
Source: From the Board of Innovation and Development of State-owned Enterprises of Thanh Hoa province
Through the data in Table 2.2, it can be seen that the total number of State-owned enterprises in Thanh Hoa province by the end of 1999 was 136 units, mainly distributed in the agricultural, industrial and construction sectors. The labor scale is still small, averaging about 200 people/1 enterprise.
On the efficiency of capital use in enterprises
Production and business efficiency in 10 years of restructuring and innovating state-owned enterprises is shown in the following table:
Table 2.3 : Production and business efficiency of state-owned enterprises in Thanh Hoa province
1995 | 1996 | 1997 | |
Return on state capital | 0.14 | 0.12 | 0.06 |
Return on capital employed | 0.09 | 0.07 | 0.03 |
Profit margin on sales | 0.05 | 0.03 | 0.02 |
Source: Enterprise financial report - Department of State capital and finance management at Thanh Hoa enterprises in 1998
Besides the SOEs that operate effectively, there are still many SOEs that operate at a loss and have outstanding debts that are difficult to recover. (See Table 2.4)
Table 2.4 : Number of loss-making businesses and bad debts (as of January 1, 1995)
Unit: Million VND
STT
Business name | Loss money | Bad debt | Loss of capital | |
1 | Tobacco company | 7,700 | ||
2 | Seafood | 5,900 | 3,000 | |
3 | Electromechanical Company | 800 | ||
4 | Phosphate Company | 3,700 | ||
5 | Irrigation Company 1 | 3,400 | 14,000 | |
6 | Chu River Irrigation Company | 1,700 | ||
7 | Electricity Company | 817 | ||
8 | Electrical company | 243 | ||
9 | Export refrigeration factory | 311 | ||
10 | Agricultural and food products company | 783 |
Source : Report on the financial situation of enterprises - Department of State Capital and Asset Management at Enterprises in Thanh Hoa in 1995.
There are many reasons, but research shows that first of all, the province's state-owned enterprises are small and medium-sized, with an average capital of only 3.3 billion VND. Of the 136 enterprises managed by the province, only 17 have capital of over 5 billion VND, 73 have capital from 1 billion to 5 billion VND; 46 have capital under 1 billion VND, and there is a state-owned enterprise with only 75 million VND (Quang Xuong Construction Materials Enterprise).
Due to limited capital and confusion in using capital, most state-owned enterprises in the province not only cannot supplement additional business capital but also gradually exhaust their initial capital. Especially when banks change their credit business methods, requiring loans to have a feasible production and business plan with collateral, many enterprises have not been able to access credit capital.
State-owned enterprises have been forced to borrow at much higher interest rates than bank interest rates. This situation has caused more and more state-owned enterprises in the province to suffer losses in production and business, leading to increasingly bad debts; many enterprises have been operating with 100% borrowed capital. Typical examples include: Phosphate Fertilizer Enterprise, Dien Bien Wood, Ceramic Enterprise, Industrial Construction and Installation, Marble Export, Silkworm Company, Coffee Processing Company, Construction Company No. 4, Porcelain Enterprise, Lam Son Electronics... In particular, the marble export company is unable to pay its debts.
After the restructuring according to the market mechanism, the province's state-owned enterprises had a new step of development but were still basically stuck in production and business. In 1997, the production and business enterprises were doing well with a profit of 11.1 billion VND, the rest mostly lost up to 13.5 billion VND, so the accumulated debt was up to 43 billion 265 million VND. Many enterprises suffered losses for a long time, workers lacked jobs and had to take voluntary leave and pay social insurance. In particular, the situation of blank checks in enterprises in the trade and service sectors became common. Many state-owned enterprises could not pay taxes, could not pay insurance for workers, and negativity in some enterprises arose, affecting the core role in the economy. The picture of state-owned enterprises in the province was quite gloomy, production and business still had no way out. That situation existed until October 2001 (before the Resolution of the 9th Party Central Committee on continuing to reorganize, innovate, develop and improve the efficiency of state-owned enterprises). Through the implementation of the above Resolution, by July 2002, the remaining state-owned enterprises managed by the province were 101 units, divided by business lines as follows:
Construction industry: 10 enterprises Industry industry: 7 enterprises Transportation industry: 12 enterprises Agriculture and Rural Development industry: 41 enterprises