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Corporations not enthused about becoming members of EGs
Chairman of the National Assembly’s Economics Committee Ha Van Hien said in a recent interview with Thoi bao Kinh te Vietnam that many general corporations are not thrilled by the news that they will become members of economic groups (EGs).
“When I asked some corporations about their joining forces with other corporations to form economic groups, they said that this was the job of the ministries, not theirs’,” said Vu Van Khoa, Chairman of the Vietnamese Construction Contractors’ Association.
Hien said that it is true that general corporations are not interesting in joining economic groups.
TBKTVN: Is it true that while the general corporations which have been chosen as the nuclei of economic groups are very enthusiastic about becoming members of the groups, other general corporations are not?
Mr. Hien: It is exactly what is happening now. For example, we have found out that the same thing is occurring with construction corporations which will be merged to form up two economic groups as planned by the Ministry of Construction.
In Vietnam, we are forming up economic groups this way. We choose a strong general corporation which will serve as the nucleus in the economic group, and then we put some other general corporations together to form up economic groups. The nucleus general corporation will become the holding company in the group, while the others will be subsidiaries.
A general corporation once had many subsidiaries, but when they are merged to form economic groups, they will become the subsidiaries of the groups themselves. And the general corporations do not like this.
TBKTVN: Do you mean that they fear they will lose interests?
Mr. Hien: It is not clear about interests in business, but it is clear that there will be changes in management power.
I had working sessions with many general corporations and I have found that they do not want to join economic groups in such a scheme.
TBKTVN: Some experts said that the model of economic groups, in fact, is not much different from the model of general corporations. The leader of an economic group even said that the regulations of the group are nearly the same as the ones set up in 1996, when it operated as a general corporation.
Mr. Hien: In economic groups, there exist relations between parent companies and child companies. The names of all economic groups are the names of the parent companies. Parent companies make capital contributions in the offspring companies, while offspring companies make investment in grandchild companies…
The relation is the same in economic groups and general corporations.
However, it is undeniable that economic groups have bigger operation scale and stronger competitiveness. However, it is still necessary to discuss more about the groups’ scale and inner management.
TBKTVN: Some experts say that economic groups always take shape simply on administrative decisions, while government agencies do not care about the opinions of other general corporations.
Mr. Hien: I don’t think so. Previously, general corporations ran business with administrative orders. However, now the relations between holding companies and subsidiaries are decided by capital contributions.
TBKTVN: The economics committee has submitted to the National Assembly’s Standing Committee a report reviewing the operations of economic groups. Are there any special things that need special attention?
Mr. Hien: There are many different opinions about different issues, including about the scale of groups. We now have a group with 150 member companies. How should the inner management of such a group go? What should the relationships between holding companies and subsidiaries in economic groups be? Besides, other questions have also arisen about the legal position, the power of son and grandson companies.
Economic groups are still operating on a trial basis. We will review the operations and we will make suitable adjustments.
vietnamnet, vneconomy
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