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SOEs have to restructure or perish: expert
Too many investments in non-forte business fields and bulky management systems are the two most ‘serious diseases’ of state-owned enterprises. Associate Prof Phan Dang Tuat, Head of the Industrial Strategies and Policies Institute under the Ministry of Industry and Trade, talks about the ‘diseases’.
Many state-owned enterprises have great financial strength, but do not have high operation efficiency. What are the main reasons behind the ineffective operation?
First of all, I would like to mention the evolution of state-owned economic groups. State-owned enterprises have been gathered and then put under an economic group. The management mechanism of the groups does not fit the new development level of society.
I know of some economic groups in which parent companies do not have authority over their subsidiaries.
The problems you have mentioned, I think, can be seen in economic groups which have been newly established. What about the state-owned enterprises which are general corporations?
I know a state-owned enterprise which has one general director, one chairman of the management board, and nine deputy directors. The existence of such a bulky leadership certainly leads to management problems. I think state-owned enterprises have to restructure themselves, or they will be eliminated.
What do you mean by ‘restructuring’?
There are three main issues. First, restructuring business fields. Enterprises need to define their main business fields and the business fields they can follow in their business diversification strategies.
In principle, enterprises can expand their business by jumping into other fields which have close relations with their main fields. For example, a shipbuilding company can make investment in steel production or machine installation. They can also jump into the real estate or finance sectors.
There is no fixed advice about how to diversity business. The only principle is that enterprises should make suitable investments after considering their own strength and moments of investment.
Second, restructuring corporate finances. Enterprises nowadays only know how to calculate profit and loss, while they do not know that it is necessary to look into the future.
Third, restructuring corporate governance. Foreign economic groups do not have as many deputy general directors as Vietnam’s. They only have directors, who report directly to general directors.
Enterprises are aware of the importance of restructuring, but they have not started the restructuring yet. Why?
Because the restructuring will touch the interests of many people. Someone may be pulled from the post he is holding. Another problem is that we seriously lack staffs that really have qualifications and eagerness for renovation.
However, I have to repeat that restructuring is indispensable; it is something that state-owned enterprises must do if they don’t want to lag behind in global competition.
VNN
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