Special oversight needed for SOEs that suffer unreasonable losses
Board member of the National Assembly's Economic Committee Nguyen Duc Kien spoke to Nong thon Ngay nay (Countryside Today) newspaper about financial oversight at State-owned enterprises (SOEs).
Are the new rules connected to recent scandals related to misuse of public investment at the State-owned Viet Nam National Shipping Line (Vinalines) and Viet Nam Shipbuilding Industry Group (Vinashin)?
No. This is a normal activity carried out by the State management agency. The regulations are released because there is a need for regulations on oversight. Special oversight is also conducted for special cases.
The regulations cover four areas to put SOEs under special oversight that will focus on sudden losses that exceed 30 per cent of owners' equity or accumulated losses exceed 50 per cent of equity. Do you think it is already too late for oversight in these cases?
This type of oversight is not the usual type of work related to oversight. It means enterprises will be overseen in special circumstances.
The common principle of special oversight is to ensure the flow of funds while also ensuring against unreasonable expenses in enterprises' business activities. In many cases, when funds stop flowing, an enterprise can go bankrupt. So special oversight must support enterprises so that they will not suffer from a stop in the flow of funds.
A National Assembly deputy has claimed that the assembly is still approving thousands of billions of dong for SOEs despite the fact that such large investments have not gained the expected results. Should this case also be in the financial oversight category?
I don't see that is related. Regarding funding for SOEs, we need to see how much of the State budget is being spent on SOEs and where this figure stands in relation to total investment for basic infrastructure and other issues.
As for annual capital distribution, it is actually regulated by laws already.
In your opinions, what are the similarities and differences in the recent Vinalines case with other cases related to SOEs?
We should put the situation in a certain context. According to investigative reports, during the 2007-2008 period Vinalines still made some earnings. It suffered losses in the 2009-10 period. We need to evaluate the case in the whole context of the world economy with figures about how many enterprises went bankrupt during this time. We have to look at the Vinalines case objectively.
Do you think that most SOEs have the same problem, and that is ineffective use of capital?
No, I don't think so and I see the question containing prejudice towards SOEs. We should not have prejudice towards SOEs. — VNS