Major restructuring of SOEs was commenced in the 1990s and especially urgent when the export markets in the Soviet Union and Eastern Europe were collapsed. In fact, the timing of enterprise reform under Doi Moi varied between enterprises. In the 1990s emphases were placed initially on loss making enterprises and there was a range of closures, consolidations, and some equitizations. Equitization is a part of the SOE reform program. However, equitized firms have to face some disadvantages they did not have to face when they were state-owned. For example, one of the major disadvantage for an equitized company is its lost of access to loan finance at the normal preferable rate of 3-5% for state companies, and it is having to borrow from a commercial bank at 0.57% monthly (Thoburn et al, 2002).
The state sector has achieved significant successes in export performance. An important factor in the state sector's export successes has been the focus of the restructuring in the 1990s in encouraging textile SOEs to move forwards into production of garments. The production of garments using firm's own fabrics had been pioneered in 1987 and rapidly become common. Textile companies appear to have found international buyers for their garments than their textiles. Yet, it should be also noted that the success of major textile SOEs in producing garments that can be exportable has been helped by their privileged access to investment funds, and by the resulting opportunity to replace obsolete equipment (Thoburn et al., 2002).
In terms of employment, in the 1990s Vietnam experienced large falls in state textile employment. The large contraction in the overall textile workforce is down by a third during the 1990s (GSO, 2001). Much of the reduction in workforce had been organized through early retirements. Sometimes, workers were induced to retire by the enterprise offering jobs to their children. Interestingly, SOEs that had retrenched workers had production increased while the workforce had been reduced (Thoburn et al, 2002).
In the textile sector, VINATEX is the national textile and garment corporation formed in 1995, covering 42 companies and a fashion design institute. All centrally SOEs come under Vinatex. Vinatex claims to have 95.7% of Vietnam's capacity in spinning, 45% in weaving, 28.8% in knitting, and 14.7% in sewing.
Vinatex takes up 30.6% of total output of Vietnam's textiles and garments and 28% of export turnover (Bui, 2001). It is notable that while acceleration of equitization process is called for with regard to garment enterprises, state ownership is to hold key function in this area. This implies that there may not much change in ownership structure (i.e. transformation of ownership) for textile sector. Instead, other measures of reform such as assignment, contracting out or restructuring textiles SOEs should be expected to implement in the years ahead.
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