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State enterprises unable, unwilling to restructure
State-owned enterprises are finding it difficult to provide restructuring plans as required by the Government because their auxiliary businesses are often more profitable than core operations and business officials may be loathe to reveal areas of mismanagement.
These were among comments made by SOE representatives at a recent workshop in Ha Noi.
The Government asked State-owned economic groups and corporations to submit their reorganising schemes by the end of the first quarter but only seven of them had complied, leaving 35 others overdue, Ministry of Finance's Corporate Finance Department deputy director Dang Quyet Tien reported.
Ministry officials said State-run economic groups had overstretched their investments to a variety of sectors in which they didn't have strategic advantages or in "sensitive areas" like banking, the stock market and real estate.
In a declining market, they had suffered losses and their core businesses were affected as a result.
The SOE restructuring process required firms to hive off their secondary businesses, but sometimes the secondary operations were more profitable than the core business, the workshop heard.
Deciding which areas to maintain or quit was a key question but firms were finding it difficult to answer.
Firms would have to carefully consider such matters as price fluctuations and return on capital/equity in every field.
Competition among multi-sector SOEs, together with complicated investments among parent companies and subsidiaries, were also confusing, Tien said.
Among the companies who presented plans, none were able to specify financial costs for restructuring, public debt and losses as well as methods to treat related problems, Tien said.
Perhaps firms were afraid to unveil unsatisfactory financial situations, he told Thoi bao Kinh te Sai Gon (Saigon Economic Times).
"They need to tell the truth and report the exact situation in order to find the [right] resolution."
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