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SOEs need PM approval for involvement in other business
State-owned economic groups will be required to concentrate on their tasks rather than invest in areas beyond their core line of business, according to the Ministry of Planning and Investment’s draft decree on supervision of state-owned enterprises (SOE).
Tran Tien Cuong, director of the SOE Research, Renewal and Development Division of the Central Institute for Economic Management (CIEM), said the draft decree will help economic groups and corporations to clearly define their core lines of business and reduce rampant investment in other areas as they did over the recent time.
Under the draft decree, only the prime minister or officials authorised by the PM are capable of making decision on permitting or not permitting economic groups and corporations to get involved in the fields of business that are considered risky or can impact on their core business.
Reports on business expansion that the SOE Renewal Steering Committee, the Ministry of Finance and the Ministry of Planning and Investment have submitted to the Prime Minister showed that state-owned economic groups and corporations have already invested nearly 7.4 trillion VND in banking, insurance, real estate and securities.
The reports said even though the figure remains a safe index, the above-metioned fields of business are risky, particularly for those who are not professional experts.
According to the report, state-owned economic groups and corporations that invest in or contribute capital to new enterprises which operate in areas other than their core line of business have seen inefficient business results due to competition. Many newly-established enterprises were subject to merger in just less than one year.
The SOE Renewal Steering Committee had thus proposed that these businesses temporarily halt their investment in financial, banking, securities and real estate areas during this year.
In the following years, further investment in these areas must receive the Prime Minister’s greenlight.
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