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State-owned companies' financial management to be tightened
The Ministry of Finance has submitted to the Government a draft of the amended and supplemented Decree on regulations relating to financial management in State-owned companies and management of State capital invested in other enterprises as the Ministry is of the view that currently there is a situation where State-owned companies invest a considerable amount of capital to outside projects, including those that do not belong to their major trading fields.
According to reports by 70 groups and corporations, 28 of them have invested in securities, established securities companies, invested in fund management companies, commercial banks and insurance companies with a total investment capital of over VND 23 trillion, accounting for 8.7% of the owners' total capital and 20% of the total investment outside their own groups and corporations.
The investment in such fields as banking, insurance and securities trading which are considered to be sensitive fields could bring about high risks for State-owned companies as they do not have trading experience in these fields.
The draft regulates that State-owned companies must use at least 70% of their total investment capital to enterprises that are operating in their main fields.
Under the draft, total investment to outside projects by a State-owned company will not be allowed to exceed the company's chartered capital and investment by a State-owned company in commercial banks, insurance companies and securities companies will not be allowed to exceed 20% of the chartered capital of these institutions.
In addition, the draft decree also regulates that State-owned companies are not allowed to contribute capital or buy stake at venture investment funds, securities investment funds or securities investment companies.
State-owned companies that currently have their financial investment in other enterprises that exceeds the above-said regulations or already invest in venture investment funds, securities investment funds or securities investment companies must adjust their investment on the principle of capital preservation within two years since the decree becomes effective.
The supplement of trading professions of State-owned companies or their investment in member enterprises operating in such fields outside their main functional trading fields can only be implemented after being approved by the organisation that represents the State's stake ownership in these companies.
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