Enhance accountability for SOEs: PM

Dung Quat Bio Ethanol Plant, one of the 12 loss-making projects under the management of the Ministry of Industry and Trade, resumed operation in October, 2018.- VNA/VNS Photo Phuoc Ngoc

Under Directive 01/CT-TTg dated Saturday, Phuc asked ministries, ministerial-level agencies, local authorities and SOEs to complete the approval or submission the restructuring plans for approval before January 15, in which, the restructuring roadmap and accountability must be clarified.

The directive said that the operation of restructured SOEs improved considerably and contributed to stabilising the macroeconomy, citing that 147 were privatised in the period from 2016 to November 2018 and nearly VND155 trillion (US$6.74 billion) in State capital collected from divestments out of none-core businesses in the period.

However, the directive pointed out that the results of privatisation and divestment of SOEs were still below targets and the operation efficiency of SOEs was modest compared to the resources in their hands.

According to the directive, privatisation and capital divestment faced difficulties in evaluating corporate value. Especially, the lack of accountability, loose discipline, group interest and outdated thinking were hindering the progress of innovation.

Phuc stressed that the accountability of individuals and organisations for the stagnation of restructuring and capital divestment at SOEs and the listing of privatised SOEs on stock exchanges must be enhanced, adding that strong punishments would be raised to prevent and handle violations.

Ministries and ministerial-level agencies must speed up and complete the legal framework for restructuring and improving the operation efficiency of SOEs in the first quarter of this year.

Focus must be placed on renovating corporate governance and improving the operation efficiency and competitiveness of SOEs after privatisation, Phuc asked.

SOEs must be a pioneer in renovation and applying technologies and new business models such as sharing economy, e-commerce and electronic payments to operate more efficiently and meet the requirements of the digital era and Industry 4.0.

The directive also asked ministries and ministerial-level agencies to enhance supervision to prevent losses to the State capital during the restructuring of SOEs, at the same time, be determined to handle loss-making projects following market mechanisms.

The accountability of individuals and organisations which caused losses to the State capital must be clarified and violations must be handled strictly, it said.

Criteria proposed

The Ministry of Industry and Trade has proposed five criteria for a project to be taken out of the list of loss-making projects.

The criteria were: thoroughly completing the resolving of disputes with contractors, operation backing to stability with profit reported for at least one year as well as promising profitable business plans for following years, no overdue debts at credit institutions, fully paying taxes and fees to the State budget and completing all tasks mentioned in the project of handling the Ministry and Trade’s 12 loss-making projects.

After two years of implementing the project, the ministry said several positive results were reported.

Two out of six loss-making plants started to earn profits, including DAP No 1 fertiliser plant which reported a profit of VND160.5 billion in October 2018 along and Viet – Trung steel plant with a profit of VND469 billion. Two others, including Ha Bac fertiliser and DAP No 2 fertiliser, reported drops in losses compared to 2017.

In three projects which halted operation, two resumed operation, namely Dinh Vu Polyester Fiber Plant and Dung Quat Bio Ethanol Plant.

The other three projects, construction of which remained half way, were still in difficulty, according to the ministry’s report.

The outstanding loans at these 12 loss-making projects totalled nearly VND21 trillion as of the end of June 2018, a drop by VND124 billion compared to January 31, 2018.