The pressure is increasing for an estimated 1,500 remaining SOEs as the Law on State-owned enterprises will expire on July 1 next year. Many of these firms are major national players with leading roles in key industries. But the process has proven slow-going for a number of companies. A survey of 934 enterprises found that it took an average 437 days to complete equitisation.

There were several reasons for the slow pace of transformation, said Nguyen Dinh Tai from the Central Institute for Economic Management: constantly shifting criteria; reduced demand for securities of equitised firms in the wake of the global economic crisis; the scale and complexity of the organizational structures of SOEs’; their unhealthy financial statuses; and a lack of guidance from ministries and provincial People’s Committees on issues relating to the management of land-use rights and financial assets.

Equitisation has helped SOEs increase earnings, profits, and employee wages, say economic experts, but many others have seen little change in organization, management or capacity, which has resulted in low business efficiency.

Le Thi Hoa, a member of Vietcombank’s board of directors, said that there was currently no legal framework for equitised enterprises in which the state continued to hold the lion’s share of equity, create difficulties for the enterprises themselves as well as administrative agencies.

Nguyen Kim Toan, head of the Government Office’s Business Transformation Agency, said that, in the long term, the state should only hold majority interests in enterprises involved in national defence and security, or in those fields subject to a state monopoly.

“Accelerating the process of equitisation and ensuring quality will require additional state regulations,” said Hoa.

“Official guidance is also needed on appraising land-use rights and the value of intangible assets such as brand names and choosing strategic partners”

In addition, the state needs to complete supervisory structures for evaluating the operational effectiveness of equitised enterprises, rather than directly interfering in business operations as if they were still SOEs.

Conditions also need to be improved to facilitate access to information on these formerly SOEs, Hoa said.