SOEs need to stick to what they do best

According to Minister of Finance (MoF) Vuong Dinh Hue, non-core investments have weakened enterprises’ powers, especially those that have invested in the risky sectors such as securities, insurance, real estate and banking, although most have maintained an acceptable rate of 30 per cent lower than their charter capital.

A MoF source said state-owned enterprises’ investments in those risky sectors had been surging from VND6.114 trillion ($293.94 million) in 2006, to VND14.441 trillion ($694.28 million) in 2007 and to VND19.840 trillion ($953.85 million) in 2008.

Thanks to Decree 09/2009/ND-CP that restricted non-core investments, the figure declined to VND14.991 trillion ($720.72 million) in 2009. However, this figure soared up to VND21.814 trillion ($1.1 billion) in 2010.

The abnormal hike in state-owned enterprises’ non-core investments in 2010 resulted in increasing their charter capital by payment dividends by shares, reward shares and giving existing shareholders the right to purchase additional shares, Hue explained. And thus, it made those state-owned non-core investments increase, but not exceeding the 30 per cent rate.  

State-owned corporations and groups have been requested to withdraw from their non-core investments by 2015.

Deputy head of the National Assembly’s Economic Committee Nguyen Duc Kien said each state-owned enterprise must withdrew based on ensuring transparency and state-capital and assets.

In terms of securities, the decision to withdraw from non-core investments is not easy at all due to profits-investments ratio of non-core activities is higher compared with state-owned corporations and groups’ core business.

For example, Vinalines’s profits-investments ratio of its financial activities was 8.63 per cent, while shipping building made no profits. Vinacomin and Vietnam Cement Industry Corporation also made profits in their financial investments.

“State-owned enterprises should take the initiative to withdraw depending on financial markets in order to ensure investment capital,” Kien said.