A CONFLICT of interests has slowed down the process of restructuring state enterprises in Guangzhou, hampering their reform, according to a government official. While the Guangzhou government plans to re-structure two thirds of the city's estimated 900 state enterprises by next year, a mere 70 of them have been transformed into shareholding companies. Enterprises are required to be restructured into either limited liability firms or shareholding companies in accordance with the Company Law, to facilitate the reforms. About 40 per cent of the state enterprises in Guangzhou are in the red according to Li Danrong, an official in the Guangzhou Economic Reform Council. Mr Li said that the government planned to have the Guangzhou's state enterprises restructured by 1998, but it was a difficult goal. 'The enterprises will cease to be state-owned entities after restructuring, and therefore, will lose some of the benefits, such as low taxes and the availability of government loans, which makes them unwilling to transform themselves.' One of the reasons for the lethargy towards change is the city's incomplete asset assessment system, which suffers from a paucity of assessment companies and poor quality services. 'It takes time to assess assets and property rights of the enterprises before restructuring,' said Mr Li. 'Besides, the use of varying methods of assessment has complicated the process.' The assessment process is the basis on which the State Assets Bureau determines the profit growth and performance of a company. In addition, many of the enterprises remain uninviting to shareholders because they are steeped in debt. Moreover, several enterprises owe banks so much money that they cannot transfer their financial claims into shares that banks can hold. The central government earmarked 100 firms for restructuring, including one in Guangzhou and five in Guangdong province. Mr Li said that since some enterprises in the city were in serious financial difficulty, the government had allocated between 200 million yuan (about HK$183.27 million) and 300 million yuan to help them restructure. He said that the money would be paid out as unemployment relief and subsidies for workers. He said the settlement of unemployed workers after enterprise restructuring headed the government's agenda this year.
