VietNamNet Bridge – The ambiguous definition of State economic groups has led to many problems since big State-owned enterprises (SOEs) were turned into economic groups, economic experts said at a recent conference in Hanoi.

According to the 2005 Corporate Law, a State economic group is understood as a group of enterprises which does not have a legal entity, said Bui Van Dung, head of the Research Department for Enterprise Reform and Development under the Central Institute for Economic Management (CIEM).

The law also says that a State economic group is a group of large-scale enterprises, which has caused different interpretations in documents guiding the implementation of the law, Dung told the conference on real situations and solutions for the sustainable development of State economic groups in Vietnam.

Decree 39 states that State economic group is a group of many enterprises regardless of scale while Decree 102 defines it as a group of only large enterprises having independent legal entities, but accounting standard 25 says a State economic group includes a holding company and its subsidiaries.

“Therefore, the question about how many State economic groups are run in Vietnam cannot be answered. As the definition is ambiguous, it is difficult to build a supervision mechanism as well as evaluate their operations and protect the interests of related parties,” he said.

Tran Tien Cuong, an expert in SOEs, said Vietnam has been unable to come up with a clear and precise definition of State economic groups in the past ten years and this has affected the process of economic restructuring.

According to CIEM, State economic groups have developed fast and accounted for a major part in the group of large-scale enterprises. There are 15 State economic groups out of the 20 biggest enterprises in Vietnam.

These groups are involved in major sectors of the economy. They make up 99% of fertilizer production, 97% of coal exploitation, 94% of electricity and gas production, 91% of telecommunications and 88% of insurance.

Dung of CIEM said a group of more than four enterprises holding more than 75% market share is considered as a monopoly as described by the Competition Law.

The law has limitations because most of the State economic groups on the market comprise more than four firms each and are dominating the market segments in the fields they operate. This makes it difficult for agencies to find effective measures to control monopoly.

Dinh Quang Ty from the Central Theoretical Council said problems remain unsolved at State economic groups such as the cases of Vinashin and Vinalines. Most major problems of the country’s economy have been related to the groups in the past decade.

Ty said CIEM has to point out the impacts of key shortcomings of State economic groups on the country’s socio-economic development.

CIEM president Nguyen Dinh Cung said the way the Ministry of Industry and Trade protects Vietnam Electricity Group (EVN) shows that the ministry solves relevant issues in the role of the group’s owner rather than a State administering agency. This has resulted in unhealthy competition on the market and created favorable conditions for interest groups to thrive.

SGT