Vietnam needs stock exchange<\/p>\n
By John Rogers<\/p>\n
HO CHI MINH CITY, Vietnam (Reuter): Vietnam needs its first
\nstock exchange to speed up privatization, says the chief
\nexecutive of one of the three state-owned companies successfully
\nsold off to shareholders so far.<\/p>\n
People were concerned they could not trade shares easily, said
\nNguyen Thi Mai Thanh, General Director of Refrigeration
\nElectrical Engineering Corporation (REE), which converted in
\nDecember 1993 to ownership by shareholders from ownership by the
\nlocal authority in Ho Chi Minh City.<\/p>\n
\"We need a market where we can sell and can buy,\" Thanh told
\nReuters in an interview this past week. She said she had told
\ngovernment and business leaders that selling shares was the best
\nway to raise capital -- \"very easy, no risk\".<\/p>\n
But officials say Vietnam's stock market, probably trading
\ninitially in government bonds and later in company shares, will
\nnot start operating before the end of this year or in 1996.<\/p>\n
\"Privatization is slow, the market is slow,\" Thanh said. \"The
\ngovernment is willing to proceed more quickly. But it's still too
\nslow.\"<\/p>\n
New rules were needed now that \"equitisation\", the process of
\nselling off state-owned companies to shareholders launched in
\n1992, had gone beyond the pilot stage, she said.<\/p>\n
At least four or five more companies in Ho Chi Minh City
\nwanted to proceed with equitisation, she said, following the
\nexample of REE, Hiep An Shoe Company and the General Forwarding
\nand Agency Company, Gemadept.<\/p>\n
Following closures and mergers, communist-ruled Vietnam now
\nhas about 6,000 state-owned firms, half the 1990 figure,<\/p>\n
But privatization has been slow for a host of reasons,
\nincluding debts and financial complications that make valuation
\ndifficult and fear on the part of managers and workers over loss
\nof security and benefits.<\/p>\n
Equitisation suffered a setback when one of the first
\ncompanies readied for sale, high-profile garment-maker Legamex,
\nhalted the process after its chief executive was sacked and
\narrested on mismanagement charges last year.<\/p>\n
REE is Ho Chi Minh City's main installer of air-conditioning
\nsystems, much in demand in Vietnam's construction boom.<\/p>\n
The firm was well-placed when it started equitisation in
\nSeptember 1993. It turned a tidy profit, had no financial
\ncomplications and was highly motivated to take advantage of
\nmarket-orientated reforms.<\/p>\n
\"In the state-owned stage, we always tried to make the company
\nmore efficient, but we thought it was not dynamic enough,\" said
\nThanh, 42, who has worked for REE since she returned from
\nengineering studies in East Germany in 1982.<\/p>\n
The shares in REE, valued at 16 billion dong ($1.5 million) in
\n1993, were sold within a month. Staff bought 50 percent and the
\npublic 20 percent, while the Ho Chi Minh City People's Committee
\nretained 30 percent.<\/p>\n
Turnover rose from 45 billion dong ($4 million) in 1993,
\nbefore equitisation, to 75 billion dong ($6.8 million) in 1994.<\/p>\n
It is projected to double this year, Thanh said.<\/p>\n
Profits rose from 7.5 billion dong ($681,000) in 1993 to 11
\nbillion dong ($1 million) in 1994, and are expected to rise to 15
\nbillion dong ($1.36 million) or more this year.<\/p>\n
The work force has grown to 470 from 300 in 1993, and salaries
\nhave risen almost 30 percent since equitisation. REE is
\ndiscussing a joint venture with the U.S. giant Carrier Corp.<\/p>\n
\"Things look very rosy for REE,\" said a foreign consultant.
\n\"It is very well-positioned in terms of market growth. If you
\nlook at all the construction going on, the demand for air-
\nconditioning will experience major growth.\"<\/p>\n
Thanh doubts estimates by foreign analysts that REE's value
\nhas tripled or quadrupled since equitisation, but says its worth
\ncould have increased 1.5 times.<\/p>\n
\"Maybe if we had a stock market, it would change very
\nquickly,\" she said. \"The shareholders would be happy. But maybe
\nif the value increased so much, it would be difficult to sell new
\nshares... We would become very expensive.\"<\/p>\n
Thanh says privatization has been good for the government as
\nwell as shareholders and workers.<\/p>\n
\"Since privatization, turnover and profits have increased, and
\nwe pay more taxes. It's good for the people, good for the
\ngovernment,\" she said.<\/p>",
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