VietNamNet Bridge – What should the State do – selling unprofitable state owned enterprises (SOEs) which cannot bring profits any more, or selling profitable SOEs which keep laying golden eggs?

Deputy Prime Minister Vu Van Ninh, when asked about the government’s viewpoint on dealing with SOEs, said the government wants to sell unprofitable SOEs instantly, while it is not necessary to sell the businesses which operate well and make profit immediately.

The question was posed to Ninh by the National Assembly’s Deputies who feel impatient about the slow process of withdrawing capital from state owned economic groups and general corporations.

National Assembly’s deputies, when discussing the solutions to the state budget deficit, said that the government has “forgot” a potential source of income – the sale of SOEs.

Tran Quang Chieu, a National Assembly’s Deputy from Nam Dinh province, has proposed to immediately sell the state’s shares in the enterprises where the state does not need to hold controlling stakes. The money to be raised from the sale should be used to build more schools and hospitals to ease the current overloading.

“If this can be done well, the state budget would have billions of dollars to spend on necessary items,” he said.

“Why does the State want to continue holding shares in so many enterprises?” he questioned.

The story of Vinamilk, the Vietnamese biggest dairy producer, has been cited as an example. He believes that the State does not need to hold the controlling stakes in a dairy enterprise, which has no relation with public services or national defense.

The sale of Vinamilk shares alone would be enough to bring billions of dollars to be invested in hospitals and schools.

The deputy went on to say that the current SOE management mechanism is unreasonable. “I think it would be better to put Vinamilk under the management of the Ministry of Finance. It’s no use of establishing the State Capital Investment Corporation (SCIC) to manage SOEs,” he said.

SCIC, in Vietnam, is known as a super-corporation which specializes in making investment in enterprises with the state’s money.

Vinamilk proves to be a topic of universal interest. “Vinamilk makes a profit of trillions of dong a year. However, the State has not used any dong of dividends to build schools and hospitals. How has the money been used?” questioned Tran Du Lich, a well-known economist, also a National Assembly’s Deputy.

It is clear that the viewpoints of National Assembly’s Deputies and the government on the issue are different.

While National Assembly’s Deputies urge to sell profitable enterprises, or the “valuable goods” so as to get much money, the government believes that no need to hurry to sell the valuable goods, and that the enterprises need to be sold for the best prices.

Deputy Minister of Finance Nguyen Thi Minh also thinks that no need to hurry to sell profitable enterprises just because of the current temporary difficulties. She said the government should follow a reasonable roadmap when selling SOEs so as to obtain the best benefits for the country. The enterprises with unsatisfactory business results would be put into equitization.

Dat Viet