Legal eagles to shape asset investments

In a market economy, businesses from assorted economic sectors incur equal treatment under law. What changes would be needed to the Enterprise Law to make it compatible to actual development requirements?

The management mechanism applicable to limited liability companies, private, joint stock or foreign-invested businesses must not be equally applied to state-owned enterprises or the collective economy since the latter carries distinctive feathers different from others.

Hence, parallel to the Enterprise Law, we have the Law on Cooperatives. We also need to develop a specific legal framework catered to state economic sector.

Problems arose from July 1, 2006, when the Law on State Enterprises became invalid, particularly from July 1, 2010 until present when state-owned enterprises shifted into state-invested limited liability companies operating under the Enterprise Law.

Consequently, the state failed to put under control investment, financial activities as well as business efficiency of these state businesses, leading to out-of-control non-core investments which cast a big dent to state budget. Cases involving Vinashin or Vinalines are the best examples.

Must we compile another Law on State Enterprises?

In my view, we should not build another Law on State Enterprises to cover diverse operations of state economic sector, from organizational structure, appointment of members of Management Board or Member Council, to mechanisms relevant to state asset and capital management and the like.

Some suggest the contents overseeing investment and capital usage of state economic sector need to stay in specific chapters in the Enterprise Law.

The Ministry of Finance (MoF) has engaged in compiling a law aiming at effective management and usage of state capital investment in businesses. Is  this the right course ahead?

I would like to underscore that one of Ministry of Justice’s core functions is to assist the government with developing a well-conceived legislation programme for submission to the National Assembly.

In 2013, the government must present numerous draft laws to the NA for consideration, including the law on management and usage of state investment at enterprises which has grabbed particular attention from NA deputies and voters.

This is an extremely complex issue, still beyond the scope of the draft law on management and usage of state investment at enterprises, which is being developed by the MoF.

Can you elaborate on this?

The law on management and usage of state investment at enterprises would need to cover the whole process, from making investment decision, to related investment conditions and associated procedures, then the liability of people who make the decisions. It does not simply cover management and usage of state capital invested in particular businesses.

Does the proposed Law on Public Investment cover the whole state capital investment process?

The proposed Law on Public Investment just regulates state capital investments into projects not for business purposes, but mainly serving socioeconomic development.  Meanwhile, state capital invested in enterprises is for business purposes, then economic efficiency is a top priority. Hence, it should not be regulated in the Law on Public Investment.  

State capital may cover state budget allocations, investment development funds at businesses, land use rights value and the right to tap natural resources. The state needs to control assets and capital at business partially owned by the state but not only those entirely owned by the state.