The operation efficiency of State-owned enterprises (SOEs) during 2011-2016 had yet to match the resources they were holding, according to a report delivered to the National Assembly on May 28. 

The report, compiled by the NA specialised team to supervise the management and use of state capital and assets in enterprises and SOEs equitisation during 2011-2016, said as of December 31, 2016, the nation had 583 enterprises fully owned by the State.

Most enterprises posted profit and the profit increased year after year. They basically fulfilled their role as an important force of the economy, contributing to regulating and stabilising the macro-economy. 

Their combined revenues reached 1.5 quadrillion VND (66 billion USD) in 2016, and pre-tax profits were nearly 140 trillion VND (6.1 billion USD). Several enterprises reported high profits such as Viettel Group, Vietnam Rubber Group and Vietnam Sugarcane and Sugar Corporation. 

For enterprises partly owned by the State, 26.2 trillion VND (1.1 billion USD) of State stake was sold, earning over 36.5 trillion VND (1.6 billion USD) for the State coffer during 2011-2015.

However, the supervision team said despite high growth in total assets and capital, increases in revenues, pre-tax profits and contributions to the State budget were slow at an average of 3 percent a year. Meanwhile, total debts remained high, rising 26 percent against 2011.

A number of SOEs occurred losses, while corruption and wastefulness were seen in some giants such as the Vietnam National Oil and Gas Group, the Vietnam National Chemical Group, the Electricity of Vietnam, and the Vietnam National Coal and Mineral Industries Group.

In addition, the restructuring of badly-performing businesses and the withdrawal of State capital from ineffective investment projects remained slow. Notably, several violations in the implementation of policies and laws on the management and use of state capital and assets in enterprises left serious consequences, including the punishment of a number of involved officials.

In terms of SOE equitisation, the supervision team said that the work produced positive results. During 2011-2016, a total of 571 businesses were privatised. Social capital was mobilised to invest in these businesses, thus contributing to changing the administration mode, creating motivation for development and increasing the efficiency of production and business.

However, the supervision team noted that some agencies and units failed to meet requirements and progress of equitisation. The proportion of State stake in joint stock companies remained high. The number of shares sold at initial public offerings (IPO) was lower than the plan, which hindered the realization of the goal to attract capital from outside and renovate corporate governance. 

The equitisation process faced many difficulties related to land, while the implementation of policies and laws on SOE equitisation saw several violations related to businesses’ finance and the evaluation of business value.

The report of the supervision team also pointed to reasons for shortcomings in the management and use of State capital and assets in enterprises and SOE equitisation work.

It noted that along with the target of profits, SOEs had to implement political and social welfare tasks in the context of instability in domestic, regional and international economies, thus affecting their growth rate, revenues and profits. The policy and law framework on the management and use of State capital and assets in enterprises and SOE equitisation work still had many limitations.

In addition, agencies representing the State stake in enterprises have not performed well the supervision and inspection work.

To increase the efficiency of the implementation of laws and policies, the supervision team proposed the legislative body consider the revision of related laws to address shortcomings in current regulations.

The NA, NA Standing Committee, NA agencies, delegations of deputies and deputies should intensify supervision over the management and use of state capital and assets in enterprises and SOE equitisation.

Meanwhile, the Government should review the implementation of laws on the matter and proposed to the NA on revising or supplementing related laws. The Government should also complete regulations on selection, appointment and supervision of the management of enterprises and land after equitisation, while directing the strict punishment of violations related to the management and use of state capital and assets in enterprises and SOE equitisation.

The Government also need keep a close watch on the mobilisation and use of capital of businesses, and allow the bankruptcy of SOEs as regulated by law. 

The report stressed that the State budget should not be used to rescue businesses in loss.

The supervision team suggested ministries, sectors and localities to complete and approve land use plans. It also asked SOEs to continue renovating business administration , focus on main business activities, and build a roadmap on recovering State investment in other enterprises in a transparent manner and ensure the State’s interest.

NA deputies scrutinise State management in SOEs

Minister of Industry and Trade Tran Tuan Anh speaks at the session 

Lawmakers stressed the need to clearly define State management and corporate governance in businesses during the ongoing fifth session of the 14th-tenure National Assembly on May 28.

The discussion session focused on the implementation of policies and laws on State capital and asset management and use in State-owned enterprises (SOEs) and equitisation of SOEs in the 2011-2016 period. 

According to NA deputies, ministries are still slow in separating State owner representative function and State management function, while inspection, examination and supervision of SOEs remains ineffective, leading to violations in the management and use of State property. 

Some argued that ministries and sectors do not want to leave businesses that are considered their "backyards", stating that this is a manifestation of group interests or a cause that leads to interest groups. 

State management agencies at the same time perform the two functions so that conflicts of interest may arise between policy assurance and implementation and supervision, they said, adding that the method of monitoring and evaluation is mainly based on statistic reports of SOEs rather than those on the performance of owners' objectives.

Minister of Industry and Trade Tran Tuan Anh in his explanations on State management and ownership over SOEs in recent times pointed out that the process has divided into two phases.

Accordingly, in 2011-2012, the implementation of State ownership and management for SOEs was governed by the 2003 Law on SOEs, the 2005 Law on Enterprises and a number of subordinate documents. Therefore, the supervision of financial performance of SOEs, representatives of the State-owned capital of businesses was the responsibility of the Ministry of Finance.

The 2013-2016 period witnessed changes in the institution, he said, noting that the Law on Enterprises in 2014, the Law on State capital management and use for investing in production and business in SOEs and other documents stipulated the management of SOEs and the performance of ownership function in SOEs. 

He affirmed that in the past time, in recent times, SOEs, including enterprises of the industry and trade sector, have contributed to ensuring assigned objectives and political tasks.

Agreeing with the NA’s supervision report, he said there have remained shortcomings in the management of State capital and State capital ownership representatives in SOEs, including both objective and subjective factors.

He mentioned the fact that conflicts in the institutional system and legal documents have made SOEs’ operation more difficult, adding that the overlap between the State management function and corporate governance role has made SOEs less active and caused the responsibility dodge among business leaders. 

The overlapping management also causes deliberate wrongdoings and violations in implementing investment projects.

Among 12 loss-making and ineffective projects reported by the industry and trade sector  to the NA recently, many reflect the real situation of capital management and corporate governance, he noted, stressing that not only heads of these enterprises but also managers of relevant ministries and agencies must be responsible for those, including criminal liability.

Expressing his sympathy with solutions stated in the NA’s monitoring report, he said it is necessary to accelerate the completion of institution and legal framework for the State Capital Management Committee. 

In the coming time, the industry and trade sector will continue to closely coordinate with ministries and sectors to implement the State's directions, especially in improving the management mechanism and clearly defining the State management and corporate governance; bettering the legal framework to ensure sustainable economic development, and promoting integration so that State-owned and private businesses can take advantage of market opportunities, the minister affirmed.

VNA