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Policymakers to ensure State firms contribute fully
Policymakers and economists yesterday gathered to discuss a draft of the new regulations managing the establishment and operation of State-owned economic groups as well as how to supervise them to ensure they contribute fully to the entire economy.
The regulations, proposed by the Central Institute for Economic Management (CIEM), are designed to deal with certain economic groups/corporations that have expanded to sectors unrelated to their major businesses, sometimes putting the entire enterprise at risk.
According to the draft, a State-economic group is comprised of state corporations, or State owned parent-subsidiary companies.
Every State economic group has a major business sector, decided by the company with the largest controlling stock. If they plan to expand to other related sectors, they must meet some certain requirements.
Firstly, the related business must not affect the performance and development of the core business; and secondly, revenue from related businesses must be re-invested in the core business.
If the parent company (of an economic group) directly or indirectly via another company, in which the parent company hold the ruling stake, invests in sectors risky to core business performance, the parent company must get the Prime Minister's approval.
CIEM proposed a 21-sector list for major economic groups: telecommunication, information and technology, post communication, shipbuilding, textile and garment, electricity, oil and gas, coal and mineral, rubber, coffee and cacao, financial and insurance services, petrol and oil services, food, aviation, maritime transportation, cement, tobacco and cigars, paper and pulp, fertiliser and chemicals, and state capital investment.
Tran Tien Cuong, head of Enterprises Renewal and Development Research Board under CIEM said that these major sectors were determined based on the importance and contribution of these business to the economy.
"These sectors must be able to lure and to support the development of other businesses," said Cuong.
In terms of administration, groups are allowed to decide for themselves: the State has no general administration system for all enterprises belonging to the group.
In another development, if a parent-subsidiary corporation or state corporation plans to shift into the business model of an economic group, they must run one of the 21 major businesses, and have the potential ability for development.
The parents company [of a parent and subsidiary corporation or state corporation] must have at least VND7 trillion (US$425.53 million) of state owned equity, be equipped with a sufficient and experienced staff, and have a strong financial capability to run the major business and other related businesses.
Furthermore, the parent company must be wholly stated-owned and set up under the model of one member limited liability, over two member limited liability, joint stock or state company.
CIEM, economists and existing economic groups also discussed other issues including administration, monitoring, reporting and the responsibility of economic groups.
The proposal is to be submitted to the National Assembly Standing Committee next month.
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