Binh Duong Water Environment Joint Stock Company (BIWASE) quickly achieves its expected results after equitization , though it is a bit later than other enterprises in same industry.

In accordance to the general policy of Government on arranging and restructuring State Owned Enterprises (SOEs), Binh Duong Water Environment Joint Stock Company privatizes a bit later than other enterprises (because that Binh Duong Provincial People's Committee issued a Decision on the equitization of Binh Duong Water Supply Sewerage and Environment Company Limited in Document No. 4295 / QD-UBND dated 24/12/2014). However, it quickly achieves good outcomes as planned.

In order to implement the above decision, BIWASE cooperates with Becamex IDC, the representative for state capital, assigned by Binh Duong People's Committee  to do enterprise valuation. It is the first and the most important step in privatization. The company has many service lines and many assets; therefore, the assessment of assets is extremely complicated and difficult (water supply, garbage collection and treatment, cemetery, water drainage, waste water treatment, etc.). Finally, drainage works are set aside, not included in the enterprise value; on the other words, the work did not equitize.

On 3/6/2016, the company finalized its value. The total actual capital value in 31/12/2014 was VND 4,170 billion. In particular, the total value of state capital was VND 1,892 billion. In order to attract investors and improve capital efficiency, the company's executive management board decided to record a chartered capital of VND 1,500 billion. Return of VND 392 billion to state, the first rate of capital withdrawal was 49%, the state still hold 51%. The quantity of shares registered to buy was 3.5 times of shares offered for sale. There were 283 investors registered to buy (269 individual investors, 9 local organizations and 5 foreign organizations). The average successful auction price was 14,227 VND / 1 stock. The total value collected to the State was over VND 846 billion.

The first IPO was very successful, the company's employees were extremely excited, especially the executive apparatus. On 22/9/2017, the company conducted the second state divestment by 10%, consequently, the state still hold 41%. The average selling price was VND 25,500 / 1 share. The total amount of money sold by the State was VND 382.5 billion. Currently, the state has a third policy on withdrawing of 16% and remains 25% of state capital at the company.

The company was listed on Ho Chi Minh City Stock Exchange (HOSE) as BWE. With efforts, determination and hard work in 2 years, the company creates a strong brand with high reputation in the market thanks to its stable growth in annual business performance, great responsibility and professionalism of management board.  Dividends paid to investors steadily increases annually: 7% in 2017 (the 1st year)  and 9% in 2018 (the next year).

On the stock exchange, the company is very interested to investors, average trade record is about 100,000 to 300,000 shares per day. We strongly believe the company will continue to grow in the future. The production of BIWASE also significantly increases. The average annual turnover increases by 24%, of which clean water production increased by 26.4% / year, garbage collection and treatment increased by 27% / year, wastewater collection and treatment increased by 51.11% / year. Over a period of 2 years and 1 quarter as a public company, the company has been mading great efforts to overcome many major changes and challenges.

One of the major challenges is that all support from the state budget is almost completely cut off, other support policies are no longer available such as: grant of land for construction of water and garbage treatment plant according to Decree 117/2007 /ND-CP dated 11/07/2007 of the Government on production, supply and consumption of clean water and Decree No. 124/2011 / ND-CP dated 28/12/2011 of the Government about the amendment and supplement of some articles of the Government's Decree No. 117/2007 /ND-CP 11/7/ 2007 on the production, supply and consumption of clean water. Borrow of idle capital from the Provincial People's Reserve Fund also decreases significantly and some other things are also refuted by leaders.

Perhaps, we was in a situation not to worry much as we always referred the state for any issues. We stand by our feet now; hence we must find a way to survive and develop. In order to please investors, expectation of employees, society and the executive board, the company makes continuous efforts to reduce the pace of customer service. Moreover, we always find solution to continue investment and growth to met the service quality and the increasing demand of clean water.

The investment was extended to suburban areas in the past 2 years. We invested VND 505 billion to clean water service to raise the plant's capacity to 450,000m3 / day, in which portion to rural area is VND 120.12 billion, contribution to development of countryside. Solid waste treatment complex, one of our affiliates,  invested another VND 290 billion to increase the capacity of waste treatment from around 900 - 1,000 tons / day to 1,700 tons / day (domestic waste) and 700 tons / day (industrial waste).

As we proves our efficiency and responsibility of management and executive board, the government will accompany and support. In other words, "we finally gain a prize". The support of customers and local authorities helps us to have faith and sustainable development direction.

1. BIWASE's achievements after equitization thanks to the following factors: 

1. Good resources

• Human resource: based on good knowledge and highly automated technology in BIWASE: a staff  produces over 800m3 / day ~ 250,000m3 / year, 416 customers / 1 employee à 1 employee makes over VND 2.5 billion of revenue;
• High automation and labor productivity (skillful)  which contributes to business performance.
• Debt to Assets ratio is low.
• Good ROA and ROE ratio; (ROA: Profit / Asset; ROS: Profit / Revenue; ROE: Profit / Equity; ROI: Profit / Investment capital)
• In particular, the charter capital compared to the assets, production capacity / production capability is assessed to be small (return to the state after equitization > VND 450 billion);

2. Potential market;

• Strategic shareholders are competent and they sticked and accompanied with the company vision.
• After equitization, BIWASE gains a good reputation on the stock market (HOSE). The executive board smoothly coordinated thanks to effective management skills.
• Publicity, transparency, good report and timely;
• Business performance are high and stable;
• Effective use of capital:
• Low cost of capital (loan interest);
• Effective investment (rapid construction, low investment fund).
• With the above results, the ancients said thanks to heaven and earth! Is this possible? In my opinion, yes, for the following reasons:
• Binh Duong decisively reduces state capital, promotes self-control of businesses, and untied businesses also increased competitiveness;
• Good planning and implementation;
• Good mechanism;
• Potential market (50% of production + services, 50% of household consumption);
• Promote intelligence and capacity of employees.

2. Lessons learned from initial success:

• People (executive management board): the executive board is extremely important; no device can replace.

• Executive management board/ human: must be a solidarity, build mutual trust, mutual respect, know how to work and operate, especially the leader must create trust with those people around and investors.
• Must be knowledgeable: technical, financial management, planning;
• Water supply and drainage are a science and technology, therefore a member of the executive board should be knowledgeable and technically skilled, if not it will result in technical failure and low efficiency in business.
• The management / executive team must have quality.
•  Management skills: management must be effective.
• Professional and diligent at work.
•  Resource:
• Capital and assets must be strong
• Must have financial management skills, reasonable use of capital and savings. Finance is strong so business is strong.
• Capital: scale of production and turnover is parallel with investment capital (assets). Capital (assets) is too big but production capacity and revenue are not equivalent, how can it be effective?
•  Quantity of employees: must be reasonable (charter capital, number of employees)
• Quantity of employees must be reasonable;
• Employees must be trained, knowledgeable, highly skilled, have a sense of organization and discipline. Labor productivity must be high. Work must be effective to be able to talk about good income. In some branches, it is compared that their colleague have higher income while their work force is not really effective.
• People (workers): the most valuable asset of an enterprise is its resources. As we make the best use of this resource, we will increase the strength of the business by many times.
• Good service creates high prestige in the locality;
• Capability to reach out to difficult places in rural areas when the government requests;
• Trust in customers:
•  Services
• Quality of service and quality of clean water
• Support of authorities at all levels and customers.
• Finance must be transparent and clear
• In addition to the task of supplying water for daily consumption, urban and industrial use, in order to do business effectively, the company should:

Find ways to reduce production cost with best product quality;

Have best labor productivity;

Have Low loss as possible;

Have optimal customer service;

3. Recommendations:

- Whether a state-owned enterprise or state owned joint stock company where state portion capital does not dominant, clean water is still necessary to everyone and urban infrastructure for economic and social development. The state does not want expensive tariff, so the preferential mechanisms should continue to be applied to contribute to the clean water tariff as at the following Decrees:

• Decree 117/2007 / ND-CP dated 11/07/2007 of the Government on the production, supply and consumption of clean water;
• Decree 124/2011 / ND-CP dated 28/12/2011 of the Government on amendment and supplement a number of articles of the Government's Decree No. 117/2007 / ND-CP of July 11, 2007, on production, supply and consumption of clean water;
• Decree No. 45/2014 / ND-CP dated 15/5/2014 of the Government Regulations on collection of land use fees;
• Decree No. 69/2008 / ND-CP dated 20/5/2008 of the Government on policies to encourage socialization of capital for activities in the fields of education, vocational training, health, culture, sports, and environment;
• Decree No. 59/2014 / ND-CP dated 16/6/2014 of the Government on amendment and supplement of some articles of the Government's Decree No. 69/2008 / ND-CP of 30/5/2008 on policies encourage socialization of capital for activities in the fields of education, vocational training, health, culture, sports and environment;
• Decree No. 19/2015 / ND-CP dated 14/2/015 of the Government on details of implementation of a number of articles of the Law on Environmental Protection;

- The State no longer provides capital as before, it should have a more preferential and long-term loan fund from the collected capital of the equitization, such as urban infrastructure investment fund;

- A clean water supply utility is just like many other businesses, especially with large investment capital, low profit, capital recovery period takes around 20 years, if possible it will take 15 years with hard work and good performance;

- In the trend of globalization, fierce competition in the market mechanism, we need to change; management thinking should be the best and most effective in buy and sale services (no grant). Though, the production is difficult we may convince the higher management level step by step;

- With reasonable tariff  approved in the spirit of the Joint Circular No. 75/2012 / TTLT-BTC-BXD-BNN dated 19/5/2009 of the Ministry of Finance, Ministry of Construction and Ministry of Agriculture & Rural Development on guiding principles and methods for determining clean water consumption prices in urban centers, industrial parks and rural areas, it is already a market mechanism and the ability to supply water is abundant, therefore the tariff  is fixed;

- Should be entitled to preferential in the field of socialization / land (granted) for treatment plant construction, etc;

- Enterprise is subject to too many kind of taxes and fees on raw water resources and many procedures.

Mr. Nguyễn Văn Thiền

Chairman

Binh Duong Water Environment Joint Stock Company