Nguyen Thanh Nam, a former member of the former Government Research Panel, talked about the issue during an interview granted to VOV. Following is the full text of the interview.

VOV: SOE equitisation means employees have the right to purchase preferential stocks, become stakeholders and have their say in their enterprises’ important decisions. But the catch is that many stakeholders are selling their shares for immediate interests and in the end they become employees again. What is your opinion?

Mr Nam: There are several things we should make clear here. First, we look at employees’ incomes: they make a living from their monthly salary, not dividends. As life is full of twists and turns, they are unable to wait till the end of the year to receive dividends paid by enterprises. It is easy to understand why they sell their stocks at higher prices to get a certain amount of money for their own use. I would do the same if I were them. But the crux of the matter is that we should understand their lives to devise correct policies. To improve their living conditions, I think we should restructure enterprises to make them operate efficiently and as a result employees will get higher salaries.

Second, it is imperative to reconsider selling preferential stocks to employees. Employees sell their stocks if they think they get higher interests. But this will create a good chance for several persons to cash in on employees’ hard lives to gather their stocks secretly and out of enterprises’ control. I think part of extra earnings from selling enterprises due to the difference in price should be distributed to those who have made contributions to the development of enterprises. Only by doing so can we prevent the current negative phenomena.

Third, many people are concerned about the role of employees in the market economy. The fact is that not only employees but also the director have to work to earn salaries. As a scientist, I must work to make a living. Therefore, there is no point in worrying about their status. We’d better devise mechanisms for encouraging employees to develop their ability and lead stable life.

VOV: What do you think when most SOEs hold dominant stocks at present?

Mr Nam: It is high time to equitise these SOEs. Without equitisation, these SOEs will not be able to operate efficiently. But the State still has close-knit ties with these enterprises. Several persons believe that the State will have nothing, or even lose socialism if all SOEs are equitised. It is incorrect. The fact is that there are some lines of business that the State must take control of or invest in and the remainder will be equitised. I think SOE equitisation is a must from which the State will earn more benefits, employees will get higher incomes and society will further develop thanks to efficient business systems.  

VOV: Currently, many SOEs want to be equitised as they hope to benefit from the valuation of State property at low prices, or the settlement of their big debts. This means equitisation is just formality and proves inefficient. What do you think about this?

Mr Nam: These comments are correct if they were made some years ago. Now the capital of equitised SOEs comes not only from the State but also from private stakeholders and employees. Stakeholders require these enterprises to select competent directors and renew their operation. However, we cannot avoid possible risks arising from the low valuation of enterprises. I think the State has realised these risks and are seeking measures to minimise them.

VOV: How to avoid State losses in this equitisation process concerns many people. What are solutions for dealing with this issue?

Mr Nam: The problem of lost property stems from the incorrect valuation of enterprises. To stop this happening, it is imperative to establish a competitive market, abolish unnecessary preferences and the “give” and “take” mechanism, and use preferences in a more appropriate way to avoid cornering the market. This means market measures will be applied. I think equitisation has been on the right track and will certainly bring about good results. It is State management agencies and enterprise directors that will have to minimise risks and the negative phenomena. If they succeed in solving these problems, equitisation will pay off.