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In Haiphong, there
are over 30 SOEs that have used their LUR as a capital
contribution in JVs with a foreign partner. There are cases
where this capital contribution was valued up to hundreds of
millions of dollars, such as in the case of the Dinh Vu
Industrial Park joint venture. If the total amount of this JV
capital contribution is included in the valuation of the SOE
during equitization, the calculated value of the SOE would be
very high for potential investors. But if this amount is not
included, where should it be moved to, and who shall be
responsible for managing it?
We have heard that the State intends to establish a State
Finance Investment Company. In my opinion, the best solution is
to transfer this amount to such a company for management. But it
has not been established yet. As a result, none of the SOEs in
Haiphong that have capital contributions in foreign JVs have
been equitized yet.
Dr. Nguyen Huy Tuong, Vice Director of the Hai Phong Finance
Department
cum Chief of the Enterprise Finance Divison
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According to a
Directive from the Prime Minister, by the end of 2004, State
Finance Investment companies may be established in Ho Chi Minh
City and Hai Phong to manage the state's capital in equitized
SOEs. This institution will replace the current administrative
mechanism through line ministries and peoples' committees. These
institutions may also take over management of the state capital
contribution in all enterprises, including JVs established
between SOEs and foreign partners.
Mr. Tran Huu Tien, Deputy Director,
Enterprise Finance Department, Ministry of Finance
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Bao Minh has two
JVs. The one with the United Insurance Corporation (UIC) is
operating at a profit, and the other with CMG–an Australian life
insurance company–is operating at a loss. However, it is very
possible that one day in the future the loss making company
could be even more profitable than the currently profitable
company. We don't yet know how to value the capital contribution
in these two firms. Currently, we are proposing to value them at
initial book value, i.e. the original contributions invested by
the partners at the time of the JV's establishment.
Mr. Pham Xuan Phong, Deputy Managing Director,
Ho Chi Minh City Insurance Company (Bao Minh)
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