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Legal foundation set for economic groups’ operations
A decree covering the establishment, organisation, operation and management of state-owned economic groups has been promulgated, ending the period of economic groups operating with no legal framework.
Deputy Chairman of the Government Office, Deputy Chairman of the Committee for State Owned Enterprise Renovation and Development Pham Viet Muon, in an interview given to Dau tu chung khoan, said that the decree aims to set a legal framework for economic groups’ operations to ensure that the economic groups implement the tasks assigned by the state, and ensure the state’s economic role in important fields.
The decree includes one chapter stipulating the conditions for the establishment of economic groups, identifying the branches and business fields in which economic groups can be set up, for example, oil and gas, power, coal and mineral, rubber, chemicals, telecommunications, real estate and construction.
Will the newly promulgated decree pave the way for the establishment of more economic groups or will it tighten the establishment of groups?
Economic groups must operate in the fields stipulated in the decree. Moreover, they will have to follow the procedures stipulated in the decree to be set up, i.e. they have to meet the stipulated requirements and go through verification and assessment.
For example, Viettel, a military telecommunications corporation, plans to establish an economic group. The Ministry of National Defence, which manages the corporation, needs to instruct Viettel to build up a plan on the group’s establishment to submit to the Prime Minister. It will be compulsory to collect opinions from relevant branches and ministries on the plan before it is considered by the Prime Minister.
Experts have recently talked about economic groups’ and general corporations’ investment in unfamiliar business fields, warning that this may cause high risks for the national economy. Does the decree have any provisions to prevent these risky investments?
Regarding investments in fields which are not the main business fields of economic groups, the new decree stipulates that economic groups are only allowed to invest in fields which have relations to their main business fields.
For example, oil and gas group must not jump into animal feed trading. State-owned companies have to use at least 70 percent of their total investment capital to invest in their main business fields.
Regarding investment in banks, insurers and securities companies, state-owned companies are allowed to invest in one enterprise only for every business field with the capital of no more than 20 percent of the chartered capital of the target companies. One economic group or general corporation is not allowed to make investment in two banks at the same time.
Vietnam to establish four more state-owned economic groups
There are now eight state-owned economic groups: the Vietnam Oil and Gas Group (PetroVietnam), Vietnam Shipbuilding Industry Group (Vinashin), Vietnam Post and Telecommunications Group (VNPT), Vietnam Coal and Mineral Industries (Vinacomin), Bao Viet, Vietnam Textile and Garment Group (Vinatex) and Vietnam Rubber Group.
Vietnam plans to establish four more economic groups, including one operating in the field of telecommunications; one in chemicals; one in the construction industry and heavy mechanics; and the last in real estate development. The telecommunications group will be established based on the restructuring of the operational military telecommunications service provider Viettel.
Vietnam will take stock of the operations of economic groups by early 2010 and set the orientation for the development of the groups for the next stage.
vietnamnet
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