SOEs told to speed reform

At last week’s meeting with top leaders of stateowned enterprises (SOEs) in Hanoi, Dung commanded that: “In 2013, SOEs have to accelerate their restructuring and review their all business and production soon. They have to reduce state capital in already-equitised enterprises and focus on their core businesses. All capital from their non-core sectors must be withdrawn.”

However, the premier noted that the capital withdrawal process must have roadmaps, and enterprises must not sell their assets hastily. “Enterprises with big long-lasting losses must be forced to be closed.”

Vietnam currently has nine state-run economic groups and 94 state-owned corporations. Dung said SOEs’ restructuring progress remained “too low” and there were many SOEs with “big long-lasting losses.” He said the image of SOEs, particularly groups and corporations, had been badly affected because many of them currently operating ineffectively.

“Groups and corporations have been investing rampantly and ineffectively. Experts and people are right when they criticise their ineffective operation and wastefulness,” Dung said.

The National Steering Committee for Enterprise Renovation and Development reported that state-run groups and corporations’ total debt within 2012 mounted to over VND1,335 trillion ($64.18 billion), equivalent to 47 per cent of Vietnam’s gross domestic product (GDP) last year.

Meanwhile, their total profit of was VND127.51 trillion ($6.13 billion) only, down 5 per cent on-year.

State-owned groups and corporations’ average debt to equity ratio last year stood at 1.82 and their total debt to total assets sat at 1.6. These figures were relatively high. In addition, total foreign debt of state parent companies totaled over $7.63 billion last year, up 11 per cent on-year.

“Some enterprises have big foreign debts like Electricity of Vietnam, Vietnam Airlines and Vietnam Expressway Corporation (VEC),” said the committee’s vice chairman Phan Viet Muon.

“In 2013, all SOEs’ operational results must be publicised openly and transparently to the public, so that the public can have correct understanding about SOEs,” Dung declared. “SOEs’ board chairpersons and SOEs’ managing ministries must be responsible for this.”  

Analysts claim that unhealthy monopolies have been established by some  major SOEs, such as Petrolimex occupying 60 per cent of the petrol market share, Electricity of Vietnam accounting for all power distribution, and mining group Vinacomin.

“These monopolies have distorted the local market, hurt Vietnam’s consumer benefits and restrain private enterprises’ competitiveness,” said Vo Tri Thanh, vice director of the Central Institute for Economic Management (CIEM). According to the CIEM, SOEs currently hold 70 per cent of total development investment capital and 50 per cent of total state investment capital and 70 per cent of official development assistance capital. However, SOEs created nearly 30 per cent of GDP and 39 per cent of total industrial production value.