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New effort urged to restructure State firms
Overhauling and restructuring of State-owned enterprises remains the focus of the country, although the process has been implemented for the past 20 years, says a senior economist.
Dr. Nguyen Dinh Cung, Deputy Director of the Central Research Institute for Economic Management said that although some industries had been dominated by SoEs, including telecommunications and air transport, the State sector failed to play its major role as expected.
"Its contribution to national reconstruction and development has not matched its position and resources with which it was entrusted."
The State sector enjoys one-third of total social investment, and almost all of the national resources and minerals, but its contribution to the country accounts for between 25 and 27 per cent of the Gross Domestic Product, according to the economist.
Although the number of SoEs has been cut to 1,500 from 12,000 over the past 20 years, efficiency is questionable.
"The growth rate of the State sector, in general, and SoEs' in particular, is always lower than other economic sectors, and even lower than the national average," said Cung.
Firstly, Cung said, the sector's failure was not because of its own form of State ownership, but because of "unsuitable" institutions, tools and ways to practise the rights to ownership.
Secondly, although the country has switched to a market economy, many State enterprises have not operated accordingly, with unaccountability being a major problem.
Lastly, Cung said, a the majority of SoEs have not actually integrated into the world economy, lacking a global business vision and mindset.
To solve the problem, Cung said, all principles and mechanisms of the market economy must be fully applied to State-owned enterprises, while a framework for corporate governance must be accomplished according to international standards and norms.
"We have to do away with any style of loan and credit appointed and ordered by the State," he said.
All SoEs' production costs must be calculated properly following the market price.
At the same time, he said, the Government should not issue any decision to delay or write off or pay debts for any business.
All priorities and privileges towards SoEs, especially their business rights and access to natural resources, land and market information, must be eliminated.
The market must be open to all sectors, even in industries and fields that still enjoy corporate monopoly, except for those identified by the Government, he said.
State enterprises must be clearly defined as a means to carry out the country's industrialisation and economic restructuring in order to improve its development and offer added value to the economy.
Besides the specific requirements on efficiency, the State should assign enterprises with specific targets including annual export turnover, scale and level of development in certain period of time, regional and international market share, and competitiveness, Cung said.
Poor governance
Better corporate governance can help State-owned enterprises and corprations to improve production and profitability, but this has not happened in most cases, a senior lawmaker has said.
Vu Viet Ngoan, Deputy Chairman of the National Assembly's Economic Committee, told the Vietnam Economic Times last week that one of the key tasks that needed to be completed soon was to set up regulations on enterprise governance and the State's supervision.
Acknowledging ineffective fund management by some State-owned corporations, he suggested that a comprehensive evaluation be undertaken in order to take corrective action.
"Our aim is to continue equitisation and reduce the capital controlled by State-owned enterprises," Ngoan said.
The National Assembly has passed six resolutions after screening State-owned corporations and general companies.
These have called for, inter alia, more effective regulations for the sector, the need to restructure SOEs to ensure they are involved only in certain key activities involving public services and national security, and the need for human resources development.
The National Assembly has also proposed regulations covering the use of capital by State-owned corporations. The relevant public investment law is currently under discussion.
Recently, the Government and the Asian Development Bank signed a US$630 million agreement to push forward the reform of State-owned enterprises that would improve their business management capacity and make them more effective. The project will be implemented over the next five years.
While SOEs have been criticised for being inefficient and ineffective, there are several State-owned corporations that have developed well and begun investing in foreign countries, improving their competitiveness in the international market.
Mobile phone service provider Viettel, which has launched operations in Cambodia, is one example, and PetroVietnam, the national oil and gas group, is another.
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