Tue, Jun 29, 2004 - Page 11 News List

China Shipbuilding the next to privatize: official

ON TIME A top economic affairs ministry official said the corporation's privatization had attracted considerable interest from investors keen to cash in on its turnaround


China Shipbuilding Corp (中船) may be the second state-run enterprise after Taiwan Salt Co (Taisalt, 台鹽) to complete privatization by the end of the year, a government official said yesterday.

China Shipbuilding is now looking for a financial consultant to manage its share sales, said Wu Fong-sheng (吳豐盛), executive director of the Commission of National Corporations, at a press conference yesterday.

Wu said he expected the national shipbuilder to complete privatizing on time.

"I heard that many investors have expressed fierce interest in investing in China Shipbuilding, and the company is also in close touch with potential investors," he said.

China Shipbuilding has been losing money, having reported an accumulated red-ink figure of NT$11.078 billion in 2002, a figure that almost rose to the level of the total dollar value of its assets -- NT$11.1 billion.

But it started to turn around in 2002 after implementing a revitalization plan at the end of 2001. China Shipbuilding downsized 47 percent of its employees and slashed salaries by 35 percent.

In the first quarter of the year, China Shipbuilding posted a pre-tax profit of NT$211 million, an increase of NT$114 million on the goal figure set by the government. It is expecting a brighter performance this year, since it has secured orders of NT$50.9 billion as of the end of March, a situation that will keep the company busy through 2007, Wu said.

However, the government is experiencing a headache over the senior management of China Shipbuilding, with chairman Hsu Chiang (徐強) no longer in the top post by the end of this month. Before the Cabinet finds a successor, the position will be filled by Fan Kuang-nan (范光男), president of China Shipbuilding, Wu said.

Other state-run companies under the Ministry of Economic Affairs, including Taipower (台電), Tang Eng Iron Works Corp (唐榮), Taiwan Sugar Corp (Taisugar, 台糖), Chinese Petroleum Corp (中油), Taiwan Water Supply Corp (台灣自來水) and Aerospace Industrial Development Corp (漢翔航空) will struggle to follow the privatization timetable because of labor disputes and an absence of supporting measures, Wu said.

Taipower, for example, was required to negotiate with the company's union before the legislature examined its privatization plan -- even though the company has budgeted 21 percent of its expenses for managing stock sales this year. Furthermore, the draft power industry law, which allows private power plants to sell and distribute electricity, is still up in the air, Wu said, adding that this was blocking Taipower from proceeding with privatization.

Tang Eng was set to be privatized by August, but it is also being dogged by disputes with its workforce, Wu said. After reforming its operations, as well as enjoying a surge in demand for steel products, Tang Eng saw profits jump to NT$1.5 billion last year, with a pre-tax profit of NT$1.27 billion for the first quarter of the year. The company may apply to list its shares on the Gretai Securities Market (櫃檯買賣中心) soon, Wu added.

Another high-profile personnel adjustment of note involves the chairmanship of Taisugar. Chairman Kong Jaw-sheng (龔照勝) was appointed to take the helm of the financial supervisory board, which is scheduled to be established next month.

Wu said the new chairman will be announced today before the company holds its shareholder meeting tomorrow.

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