Central SOEs exit needs time

08:44, February 24, 2011      

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More State-owned enterprises (SOEs) are slated to exit the real estate sector and focus more on their core businesses, said an official with the State-owned Assets Supervision and Administration Commission (SASAC) at a press conference Tuesday.

In 2010, 14 State-owned enterprises (SOEs), whose core businesses aren't property, fully exited real estate business, and more than 20 more SOEs are expected to fully withdraw this year, said Shao Ning, deputy director of SASAC.

But Shao said that some companies needed to finish ongoing projects before they can exit their real estate businesses and focus on their core operations.

"For example, for some companies, construction of employee dormitories is done by the company. In this case, they will need more time to fully exit the sector," said Shao.

But some experts hold a different opinion.

"Ongoing projects should not be an excuse to slow withdrawal from the real estate sector. It is not difficult task for them to hand these projects to a third party," said Chen Guoqiang, director of the Real Estate Institute of Peking University.

Chen asserted that with only 34 SOEs scheduled to get out of the property business in two years, progress is coming very slowly, and Chen also noted that the difficult task of balancing the interests of different parties might be the reason behind the lag.

In March, the government banned 78 central government-owned SOEs from investing in property, as property isn't their core business. And late last year, the banking regulator also banned new property loans to the 78 companies to control risks in property credit and curb asset bubbles.

In April, the 78 companies handed in withdraw plans to the SASAC, but execution of the plan was not disclosed later.

Chen commented that details on execution of the plan should be more transparent.

And shortly after the 78 companies are required to withdraw from the real estate sector, the government started to curb the overheated industry.

Many wonder whether the government was protecting State-owned assets from possible turbulence in the real estate sector.

Chen said that is not true.

"The real estate sector in general is still a very profitable business, since the government mainly aims to curb soaring home prices, not commercial real estate," said Chen.

He pointed out that getting SOEs to focus on their core businesses – and not property speculation – is the main purpose in banning them from investing in the real estate sector.

Source: Global Times
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