Capital withdrawal process slows because managers fear for their seats
Capital withdrawal process slows because managers fear for their seats
To date, 66 economic groups and general corporations have built up the enterprise restructuring plans to be submitted to the governing ministries and the Prime Minister. Of these, 44 plans have been approved.
One year ago, the Prime Minister decided that all the state owned conglomerates have to withdraw the capital they contributed to other enterprises in order to gather their strength in their core business fields. It is too risky to make investments in many business fields, including the ones in which they don’t have experiences.
Most of the state owned economic groups have been found as injecting money in non-core business fields, including insurance, banking sectors and in real estate projects, which once brought fat profits in the hot development period.
State owned economic groups and general corporations all have voiced the same complaint that it’s difficult to withdraw the contributed capital from other enterprises.
One of the reasons behind the slowdown is that the enterprises’ managers fear they would lose their seats once their enterprises cannot make profits as expected.
Under the current regulations, once a business operates ineffectively for two consecutive years, the manager of the enterprise must explain to the governing body and competent agencies, while he is likely to be dismissed from the post.
According to Dang Quyet Tien, Deputy Head of the Enterprise Finance Agency, an arm of the Ministry of Finance, the ministry has released necessary documents, showing the steps to be taken during the capital withdrawal capital process.
One of the most important requirements is that enterprises have to make provisions against risks. Meanwhile, enterprises don’t want to make provisions against risks, because this would lead to the enterprises’ profit decreases. If so, the managers would be inquired by the businesses’ owners and the management ministries about the unsatisfactory business results.
Tien also said the current regulations that the managers of unprofitable enterprises would have to leave their posts after two years of taking loss have put a hard pressure on business managers.
While enterprises in chorus complain about the difficulties in the capital withdrawal process, competent agencies have not reported about the difficulties.
The Ministry of Finance earlier this year requested enterprises to report their cases and difficulties. However, to date, the ministry has received the reports from two or three economic groups and general corporations.
Tien has revealed that the problems of the Electricity of Vietnam (EVN) in selling its stakes in the insurance company have found the solution after the Ministry of Finance submitted to the Prime Minister the suggestion solution.
“EVN has affirmed that with the solution, they would be able to sell shares,” Tien said.
Most of the enterprises fear that the shares would be unsalable in the market or they would have to sell shares cheaply, thus bringing loss to the state. Therefore, they have asked for the permission to sell shares as instructed.
However, the Enterprise Finance Agency does not agree with the proposal, which is believed to cause frauds and losses.
The Ministry of Finance has vowed to take actions to accelerate the capital withdrawal capital. Tien said the leaders of SOEs who deliberately delay the capital withdrawal may be dismissed from their posts.
vietnamnet
