Conference calls for SOEs to restructure
Conference calls for SOEs to restructure
A neutral agency should be established to support the operation of State-owned enterprises (SOEs) in order to improve their efficiency and speed up the process of SOE restructuring, experts said yesterday.
Currently in Viet Nam, SOEs are owned and managed by one agency; with more than 1,300 wholly State-invested enterprises run by different State administrative agencies from Governmental to ministerial and local levels.
This model of ownership exacerbates many of the problems facing SOEs in Viet Nam and hinders reform, according to economists speaking at a conference on the issue held yesterday by the Central Institute for Economic Management (CIEM) in collaboration with the Beyond WTO Programme.
CIEM director Le Xuan Ba said, "for one agency to implement these two functions [ownership and management] is like a person being the judge in his own case, which is a practice mainly responsible for many SOEs' poor corporate governance."
Ba argued that this practice was also the major cause of the waste and losses of State capital and had also created a so-called "group interest" mentality in the country.
"SOE owners do not now have the capacity to undertake the role of an investor. Therefore, it is necessary to transfer the ownership function from State agencies to a neutral one," he stressed.
Tran Dinh Thien, director of the Viet Nam Economics Institute under the Viet Nam Academy of Social Sciences agreed with the necessity to separate these two functions, saying that Viet Nam's process of restructuring SOEs had taken a lot of time, money and effort, but had stalled in its progress due to the existing ownership model.
However, Thien warned that the creation of one new neutral agency may not work due to the number of SOEs in the country now, which he believed was too large for one agency to manage alone.
Bui Van Dung, head of the CIEM's Department of Enterprise Reform and Development, suggested that in the near future the independent agency should only be involved in the running of sole member limited liabilities companies and the State capital in parent companies of economic groups and corporations.
Pham Chi Lan, a well-known independent economist, said that the reform should be first conducted in State enterprises currently managed by central-level agencies because the capital that the enterprises were holding was accounting for more than 91 per cent of total capital of SOEs.
She said that the neutral agency must play the role of an investor, which means it must use the State capital efficiently and develop the State assets in the enterprises and ensure their operation is in line with the market mechanism and international rules.
"To successfully reform the ownership model, the prerequisite is to gradually reduce the number of SOEs and the Government should promulgate a law on SOEs which will form a legal framework to supervise the sector,"she said.
Le Thi Hoa, member of the Management Board of the Joint Stock Commercial Bank for Foreign Trade of Viet Nam (Vietcombank), said that there should be criteria for enterprises that require State management and the proportion of SOE contribution to GDP should be limited at under 10 per cent.
Otherwise, even the smallest fluctuation of a SOE may have a large effect on the whole economy, she said.
Hoa added that in order to address group interests, the Government needed to release legal documents to create an adequate and clear legal mechanism for State capital ownership and management, and acting as a basis for future inspections of SOEs.
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