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State-owned firms not pulling their weight: Lawmakers
Legislators have slammed the poor performance of several state-run companies despite benefiting from many preferential policies.
At the ongoing sixth session of the 12th National Assembly in Hanoi, deputies called for the government to tighten control over these firms, saying they were not pulling their proportionate weight in the national economy.
Representative Ma Dien Cu of central Quang Ngai Province said state-owned groups should have made huge profits as they were given many preferential treatments including monopoly rights to natural resources and easy access to credit.
Although state-run enterprises accounted for 60 percent of outstanding loans in the banking system and 70 percent of foreign debts, they only contributed 40 percent of the country’s gross domestic product, he said.
Nguyen Dang Vang from Binh Dinh Province said the capital invested in state-owned enterprises was proportionally much greater than the profits and jobs they could create in comparison to the private sector.
In a report released last week, the National Assembly Standing Committee said 45.05 percent of 91 state-owned groups in Vietnam had a low return on equity of less than 10 percent while 25 percent had a ratio of under 5 percent. Some even had minus returns.
As of the end of last year 47 state-owned groups invested a total VND21.16 trillion into non-core areas such as banking, insurance, real estate and stock, up from VND16.19 trillion the previous year.
However, most of the expansions were not profitable due to a sharp decline in the local stock market last year, the report said. The VN-Index, Vietnam’s primary stock index, slumped 66 percent in 2008.
Electricity of Vietnam, also known as EVN, for instance, poured VND214 billion into stocks but the investment didn’t bring any returns. The power monopoly last year rejected 13 power projects assigned by the government, saying it lacked funds. EVN still needs VND382.93 trillion to fulfill its plans to build new power generation facilities by the end of 2015.
According to the report, cumulative losses at 23 groups reached VND2.79 trillion ($156.5 million) at the end of last year. The Standing Committee also said many enterprises kept incurring losses for several years without taking any measures to improve their business.
Representative Nguyen Dinh Xuan from Tay Ninh Province said the development of state-owned groups in the past five years was too fast for the government to control, leading to losses for a long time.
“Many enterprises are dead already. They just don’t file for bankruptcy,” Xuan said, without giving further details.
If no measures were taken to end the losses, the state budget would be further depleted, he said. “It is necessary to make sure that the money lost by the groups doesn’t end up with their subsidiaries or partner companies.”
Do Manh Hung from Thai Nguyen said enterprises that cannot make full use of preferential treatment to run efficient businesses should be eliminated. The country needs strong groups that are able to compete in the global market, he said.
Nguyen Ngoc Dao of Hanoi said there should be a special law governing state-owned enterprises, stipulating clearly both their rights and obligations.
“Right now we don’t completely understand their activities. We can’t even ban them from investing in stock or property markets, simply because we don’t have a legal framework,” Dao said.
The government should also make clear the responsibilities of managers at state-owned firms and which role they should take, i.e., should they be politicians or businessmen, he added.
Tran Du Lich, deputy head of the Ho Chi Minh City delegation, said in an economy any enterprise can incur losses, not just state-owned companies.
“Financially speaking, almost no country in the world has state-run enterprises that are more profitable than other sectors, with the exception of Singapore.”
What is more important now is to figure out their weaknesses and steer them into core business activities, instead of counting how many enterprises were making losses, Lich said.
Under a new decree passed by the government early this month, state-owned enterprises are allowed to invest in all business lines allowed by the government, but they have to focus on their core business and related activities.
The decree, taking effect on December 20, also stipulates that general directors at state-owned groups hold their positions for five year terms, but they will be suspended if their companies incur losses for two consecutive years.
thanhnien, vietnamnews
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