Corporate governance of SoEs requires prudential reforms

Cuong was speaking at a conference to discuss the results of an investigation on corporate governance and supervision, as well as suggest policies on the issue.

The project was carried out to gauge current levels and attitudes of supervision, and implemented at over 400 SoEs and groups.

Cuong said SoEs had been trying to improve their corporate governance.

"However, there was no unified awareness of the nature and role of corporate governance in enterprises," he said, adding that several believed the work mainly related to internal management of finances, human resources, wages, production and commerce.

He also said strengthening the transparency and publicity of businesses as well as protecting relevant organisations and individuals had not been given adequate consideration.

"In addition, laws in this field have not clearly defined their targets, making supervision and evaluation ineffective," Cuong added.

He highlighted shortcomings in laws regulating corporate governance at SoEs which were transformed to other types of joint stock and limited companies.

Dr Nguyen Van Phuc from the Ha Noi National Economics University said the state was regarded as the management agency, rather than the owner.

Participants at the event also said SoEs had been given more preferential polices than others on corporate governance.

Deputy head of the Ministry of Planning and Investment's Enterprises Development Department Nguyen Trong Hieu said the investigation showed that supervision had its shortcomings.

Hieu said the reason was due to insufficient implementation of laws, adding that the work should be reformed with clear and detailed criteria.

The majority of participants said the state had not been active enough in the supervision of SoEs or related people including chairmen and directors.

Results of the investigation also showed that investment supervision on business subsidiaries, monopoly activities and shareholder protection had not been effective.

They argued that this was the reason for extensive investment in state-run groups.

Nguyen Tuan Anh from CIEM said the governance should have detailed criteria on how to evaluate enterprises.

Anh added that SoEs would retain their role in the economy but needed more effective evaluation methods.

He said that supervision should provide several technical criteria and suggested that the focus should be on strategies, targets, transparent effectiveness, officer supervision and their obedience to laws.

Attendants said awareness of the issue needed to be improved.

They also asked for transparency in investment and business activities as well as completing legal framework in this field.