Directive No. 04/2005/CT-TTg on Accelerating and Strengthening the Shareholding Reform of State-Owned Enterprises

DIRECTIVE

On Accelerating and Consolidating the Shareholding Reform of State-Owned Enterprises

Over the past ten years, the shareholding reform of state-owned enterprises has been implemented steadily according to the Party's guidelines and resolutions. The Government has concretized the Party's policies, issued a series of legal documents synchronously, and timely addressed issues arising from the restructuring and shareholding reform of state-owned enterprises, especially the handling of accumulated debts and surplus labor. Ministries, sectors, provincial and municipal people's committees under the central government, and state-owned enterprises have recognized that restructuring and shareholding reform of state-owned enterprises is a key task and have actively directed with specific programs and measures, achieving significant results. After the Central Resolution No. 3 of the Ninth Congress, the shareholding reform was further accelerated and basically achieved its set goals. Through the shareholding reform, state-owned enterprises have transformed into enterprises with multiple shareholders, creating motivation and dynamic management mechanisms; mobilizing additional social capital for production and business; enhancing efficiency, competitiveness, and integration capabilities. In practice, it has been confirmed that the shareholding reform has become a crucial solution for restructuring, improving management mechanisms, and enhancing the operational efficiency of state-owned enterprises.

However, the progress of the shareholding reform remains slow, many state-owned enterprises that the State does not need to hold continue to maintain 100% state capital, the proportion of shares sold outside the enterprise is still low. In some places, understanding of the shareholding reform of state-owned enterprises is still incomplete and inconsistent, obstacles during implementation have not been resolved promptly. Some regulations of state management agencies are still not appropriate, the time required for the shareholding reform of one enterprise is still long. When transitioning to joint-stock companies, insufficient attention has been paid to modernizing management and operation methods, the production and business efficiency of some joint-stock companies is not high. The number of enterprises listed on the stock market is still very small.

To accelerate and consolidate the shareholding reform of state-owned enterprises in accordance with the spirit of Central Resolution No. 3, Central Resolution No. 9 of the Ninth Congress, and Directive No. 45-CT/TW of the Political Bureau on accelerating the restructuring, renewal, development, and enhancement of the operational efficiency of state-owned enterprises, the Prime Minister instructs:

1. Ministries, ministerial-level agencies, agencies under the Government, provincial and municipal people's committees under the central government, and state-owned holding corporations need to implement the following tasks well:

a) Continue to deeply understand and promote the dissemination of the Ninth National Congress of the Party's Resolution, Central Resolution No. 3, particularly Central Resolution No. 9 and Directive No. 45-CT/TW of the Political Bureau to create higher consensus among levels, sectors, cadres, and party members regarding the economic and social development policy, requirements, opportunities, and challenges in international economic integration, viewpoints, objectives, tasks, and solutions to accelerate restructuring, renewal, development, and enhancement of the operational efficiency of state-owned enterprises; among which, shareholding reform is the most critical link, a fundamental and important solution for restructuring, improving management mechanisms, and enhancing the operational efficiency of state-owned enterprises, promoting economic growth, contributing positively to administrative reform and anti-corruption efforts; at the same time, enhancing awareness of compliance with the Party's resolutions, laws, and administrative discipline of the State; strictly implementing the provisions, programs, and plans of the Government on the shareholding reform of state-owned enterprises.

b) By April 2005, complete the submission of supplementary overall plans for restructuring and renewing state-owned enterprises in accordance with the spirit of Central Resolution No. 9 of the Ninth Congress and Decision No. 155/2004/QĐ-TTg dated August 24, 2004 of the Prime Minister promulgating criteria and classification lists of state-owned corporations and independent accounting subsidiaries of state-owned holding corporations.

When formulating plans for restructuring and renewing state-owned enterprises for 2005 and subsequent years, it is necessary to focus on developing the roadmap for the shareholding reform of state-owned holding corporations, except those involved in national security or defense or unable to undergo shareholding reform. Holding corporations that have completed the shareholding reform of the majority of their subsidiary enterprises should proceed with the full shareholding reform of the corporation. Holding corporations playing a significant role in the economy, while not yet fully undergoing shareholding reform, must proceed with the shareholding reform of almost all subsidiary enterprises and transition to the parent company-subcompany model so that the parent company truly controls state capital in the subcompanies. After stable operations, consider and firmly carry out the shareholding reform of the parent company.

c) The Ministry of Finance shall coordinate with relevant functional agencies to organize training, disseminate, and widely promote Decree No. 187/2004/NĐ-CP dated November 16, 2004 of the Government on converting state-owned companies into joint-stock companies and related guiding documents to management cadres at all levels, sectors, and workers in state-owned enterprises.

d) Firmly direct the shareholding reform of state-owned enterprises according to the overall plan approved by the Prime Minister.

Strictly implement Decree No. 187/2004/NĐ-CP dated November 16, 2004 on converting state-owned companies into joint-stock companies, ensuring market principles in the shareholding reform of state-owned enterprises: conducting enterprise value assessment through organizations with valuation functions; not conducting closed shareholding reform within the enterprise; publicly auctioning shares; ...

đ) Based on Decision No. 155/2004/QĐ-TTg of the Prime Minister, review and continue selling state shares in joint-stock companies with state capital. Direct representatives of state capital to use shareholder rights to list companies meeting listing conditions on the stock exchange.

e) Direct, guide state-owned enterprises to resolve financial and labor issues before implementing shareholding reform according to current regulations, avoiding situations where these issues are only addressed at the time of shareholding reform, leading to delays or inability to reform due to lack of state capital. In cases where there is no state capital left, sell the enterprise through public auction according to current regulations or declare bankruptcy for the enterprise.

g) Continue to improve the Board for Enterprise Reform and Development, ensuring that there is a specialized department to effectively perform advisory, guidance, inspection, and urging functions for the shareholding reform of state-owned companies.

h) Monthly, ministries, sectors, localities, and state-owned holding corporations evaluate the results of restructuring and shareholding reform of state-owned enterprises, review the responsibilities of leadership, and propose measures to resolve difficulties. At year-end, when evaluating and assessing cadres and party members, the results of restructuring and shareholding reform of state-owned enterprises must be included.

2. Ministries and agencies shall complete mechanisms and policies for state-owned enterprises after shareholding reform; promptly issue and direct the implementation of guiding documents for the implementation of Decree No. 187/2004/NĐ-CP, and handle and address emerging issues effectively during the implementation process.

a) By April 2005, the Ministry of Natural Resources and Environment shall direct and guide procedures for transferring land lease contracts and issuing certificates of land use rights when state-owned companies are converted into joint-stock companies.

b) By April 2005, the State Bank of Vietnam shall direct and guide contents related to outstanding bank loans of state-owned companies undergoing shareholding reform; the succession of credit contracts and maintenance of credit mechanisms similar to those before shareholding reform; handling of the risk reserve fund when commercial banks undergo shareholding reform.

c) Ministry of Finance:

- By March 2005, issue Circular guiding the implementation of Decree No. 199/2004/NĐ-CP dated December 3, 2004, issued by the Government on the financial management system of state-owned companies and management of state capital invested in other enterprises, clearly stipulating the number of representatives and methods of exercising rights and obligations of state capital representatives in other enterprises.

- Organize for the State Capital Investment Corporation to commence operations according to the Prime Minister's Decision.

- Study and develop policies to encourage the development of professional organizations to provide consultancy services for shareholding reform, valuation of enterprises, and investment in shares; establish some stock auction centers in major cities and urban areas. Study and supplement the list of securities companies and auditing firms eligible to provide enterprise valuation services for shareholding reform.

- Study and propose to the Prime Minister measures for the shareholding reform of enterprises currently implementing large-scale investment projects and borrowing from various sources.

- Take the lead and coordinate with relevant agencies to select and decide to list approximately 200 enterprises on the stock market in 2005.

- Report on the operation of joint-stock companies where state-owned companies are shareholders; sell enterprises through public auction if they cannot be reformed.

- By the second quarter of 2005, submit to the Prime Minister for revision Decision No. 36/2003/QĐ-TTg dated March 11, 2003, on the issuance of regulations on foreign investors' capital contribution and share purchase in Vietnamese enterprises and Decision No. 146/2003/QĐ-TTg dated July 17, 2003, on the participation ratio of foreign parties in the Vietnamese stock market, allowing foreign investors unrestricted participation in share purchases and strategic shareholder status in enterprises not subject to maximum 30% foreign investment limits.

d) The Ministry of Home Affairs, by the second quarter of 2005, shall guide the implementation of the arrangement and utilization of leaders of state-owned enterprises undergoing shareholding reform who shall not be appointed as state capital representatives in joint-stock companies.

đ) The Ministry of Labor, Invalids and Social Affairs, by the second quarter of 2005, shall submit to the Prime Minister the allowance and bonus system for state capital representatives in other enterprises.

e) The Ministry of Planning and Investment:

- By April 2005, announce the specific list of industries and fields where foreign investors can participate up to a maximum of 30% of the registered capital according to the Law on Encouragement of Domestic Investment; for other industries and fields, there will be no restrictions.

- Study and propose increasing the proportion of foreign investors' capital contribution and share purchase in Vietnamese enterprises above 30% of the registered capital for certain industries and fields when drafting the Investment Law.

- Study amendments, supplements, and build support policies for enterprises through infrastructure construction; post-investment interest rate subsidies; research and technological innovation; training and capacity building for managers and workers in enterprises; access to and expansion of export markets; encouragement of best corporate governance practices; support in providing information and new policies... creating conditions for enterprise development and enhancing competitiveness after shareholding reform.

3. The Steering Committee for Enterprise Reform and Development shall be responsible for:

- Inspect, urge, guide, monitor, and periodically report to the Prime Minister on the situation of shareholding reform of state-owned companies by ministries, sectors, localities, and state-owned holding corporations; promptly identify difficulties, obstacles, and unreasonable aspects during the implementation process and propose solutions or recommendations to relevant authorities for resolution within their jurisdiction.

- Participate in opinions with the Central Organization Department regarding guidance on the activities of Party organizations in joint-stock companies.

- Monitoring and periodically reporting to the Prime Minister on the implementation of this Directive.

Ministers, heads of ministerial-level agencies, heads of agencies under the Government, Chairmen of People's Committees of provinces and centrally-administered cities, the Steering Committee for Enterprise Reform and Development, and Boards of Directors of state-owned holding corporations are responsible for implementing this Directive.