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Auctions must be open to investors

Further equitisation of State-owned enterprises is regarded as a golden opportunity for financial investors to do business in Viet Nam. However, the equitisation process seems closed to investors, with share auctions taking place silently.

Viet Nam News spoke to Nguyen Hoang Hai, general secretary of the Viet Nam Association of Financial Investors (VAFI), an organisation representing the investment sector, about this problem.

In your opinion, what prevents financial investors from getting involved in the equitisation process?

Their biggest difficulty is that they do not have a thorough understanding or information about the equitisation plans of ministries, industries and localities.

Comprehensive information on the equitisation process is often available to governing bodies but is not publicised widely and officially. So, investors are passive in approaching equitisation, even though they are the ones who deserve the most focus in the investment promotion process.

Information about most share auctions is made public one or two weeks before they are set to take place. The proclamation sheets often have inadequate or untimely information and don’t provide readers with a sufficient overview of the firm that is to be equitised.

Can you be clearer about what you mean by adequate and timely information?

The information should include financial reports covering the past three years, detailed files on the firm’s valuation, and the equitisation plan ratified by governing agencies.

In addition, investors also need timely information about the firm’s equitisation process, including information on the firm’s valuation, what intermediary financial institution has been selected to perform the evaluation, and details about when the auction will take place.

This information should be available to the public and should not be delayed until all equitisation-related tasks have been completed.

Who is in charge of providing this information?

In accordance with the Law on State-owned Enterprises, ministries, branches and localities are in charge of managing the State’s capital. They are also authorised to carry out equitisation in such a way as to make it efficient and to avoid losses of State capital.

To attain these targets, information must be proclaimed widely, and these are the people who are in charge of this job.

We hope that State bodies will make use of VAFI as a tool to promote investment and develop the capital market.

How can you assure that VAFI will not monopolise information provision?

All we want to do is reorganise the provision of equitisation-related information in such a way as to make it more effective. The more organisations are involved in information publishing, the better investment promotion will be carried out.

Information publication can bring about four benefits. First, we will be able to erase the closed-off nature of equitisation. Second, we will lure more investors. Third, it will help develop the financial market. Finally, it will reduce losses of State assets.

Is information provision complicated?

It’s absolutely simple. All governing agencies need to do is send us copies of available documents on the equitisation process and we will distribute them to the public. As far as I know, enterprises under the Ministry of Industry (MoI) have their assets assessed by intermediate financial institutions. So, the MoI need only require these institutions to provide the VAFI with firms’ asset evaluation files. Although these jobs are simple, they bring practical benefits to the State and people – so why aren’t they being done?

The VAFI has sent official correspondence to the ministries of industry, transport, trade and construction, along with the HCM City People’s Committee, for permission to be an intermediary organisation in charge of providing information on equitisation. However, until now, we have received no feedback from them. We have also sent official correspondence to the National Assembly’s deputies and heads of ministries, industries and localities with the same proposal. We are waiting for a reply.

Vietnam Economic Review - (20/01/2005)

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