Heilongjiang SOEs open to investors
By Xiao Yin (China Daily)
Updated: 2004-06-29 10:17

Restructuring State-owned enterprises (SOEs) tops the agenda of the Heilongjiang government, according to a senior official.

Hu Xiangding, assistant governor and director of Heilongjiang's State Asset Commission, said the province will push for SOEs' ownership reform to rev up its industrial sector.

Heilongjiang has the largest proportion of SOEs which created about 80 per cent of the province's industrial added value last year.

Hu said a SOE reform drive is now undergoing across the board in Heilongjiang and large and medium-sized SOEs are bearing the brunt.

This year, a majority of these SOEs will complete their restructuring by taking on strategic investors.

Hu said this means Heilongjiang's SOEs will be open to private and foreign funds.

These enterprises' equity transfers will be done through international bidding, auction or agreement.

The new round of SOE reforms has presented a rare business opportunity for strategic investors, Hu said.

In the first place, the State has rendered strong support to alleviate the heavy burden of these businesses.

This year and next year, the province will unload SOEs by dismissing 1.6 million employees with a decent severance package.

As for debts due to the State banks, Hu said Heilongjiang has agreed to write off 36 billion yuan (US$4.4 billion) worth of non-performing loans unpaid by the SOEs.

In addition, SOEs will be discharged with their former social functions and obligations.

Hu said more State bonds or special funds will be channeled into the restructuring.

To attract more investors, the Heilongjiang government has worked out a number of regulations encouraging various investors to get involved in the reform.

It has also designated the year as a Business Promotion Year and has been active behind the creation of a favourable investment environment.

Hu said after the restructuring, the government will follow up to ensure investors' legal rights.

This year, 75 large and medium-sized SOEs will be under the restructuring. They cover coal, equipment making, petrochemical, construction materials, textiles and medical industries.

These SOEs are mostly the province's leading enterprises with well-founded industrial bases, brands, markets and labour forces and thus a great potential.

Among them, the four coal producers have combined net assets of nearly 10 billion yuan (US$1.2 billion). Last year, they registered an output of 51 million tons and a total turnover of 7 billion yuan (US$846 million).

Heilongjiang's equipment making leads the country, boasting the well-known Harbin Power Stations Group and the Hafei Aviation Industry Group.

In coal machinery, the province's coal mining machines account for a third and tunnellers virtually half of the national market.

Heilongjiang's papermaking is also a national leader. The Jiamusi Papermaking Plant is the largest in Asia and the cigarette paper in its Mudanjiang City is the best in the country.

As for the medical industry, the Harbin Pharmaceutical Co is one of China's leading pharmacies and a pillar of the province's development of northern medicines.

In addition, Hu said Heilongjiang has abundant electricity and land resources, a large group of skilled workers and professionals and a low labour cost.

With these favourable conditions, Hu said investors are expected to harvest large and quick returns in the province.



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