State firms need fair assessment
Minister of Planning and Investment Bui Quang Vinh spoke with the Vietnam News Agency about the performance of State-owned enterprises and solutions to raise their effectiveness.
How do you assess the role of State-owned enterprises in the current national economic context?
This is a major issue, to be assessed carefully, objectively and fairly because State-owned enterprises with long-lasting traditions are key in national socio-economic development.
We are moving towards a socialist-oriented market economy including many sectors. However, the State sector or State-owned groups and enterprises still control major national resources including infrastructure and technique, making huge contributions in manufacturing and providing basic products or services that help regulate the national economy. Products and services such as telecommunications, power, fuel, cement, oil, coal, fertilisers and chemicals are all important input materials for industries. Thus, they add a large proportion to the national budget.
Out of 85 State-owned groups, 30 are reported to have excessive debt-to-equity ratios. Can it be assumed that these groups burden the national budget and economy?
Government passed a decision that regulates that debt-to-equity ratios of Sate-owned groups must not be more than 3 times. Finance Ministry statistics show that the current ratio is 1.36 times with total debt at VND1,008 trillion (US$48billion) and total equity at VND790 trillion ($37.6 billion). In many groups, the ratio is high because of required investment for production. For example, Electricity of Viet Nam (EVN) has incurred debts investing in construction and developing power platns to meet demand in national socio-economic growth. When these plants go into operation, EVN will profit and repay its debts. Therefore, we should not think State-owned groups burden national budget or the economy.
According to a Finance Ministry report, up to 2010, 20 per cent of State-owned groups claimed losses and broke even while the rest gained profits. Their contributions to the national budget increases yearly. The groups play a major role in helping the Government stabilise prices, ensure social welfare and join in fields the private sector has yet to discover. However, State-owned groups have yet to use resources as effectively as expected.
In the past, some groups were reported to commit violations. What measures are there to better monitor and improve the effectiveness of State-owned enterprises?
When a violation occurs at a State-owned group, Government management bodies and socio-political organisations are partly responsible. Moreover, I think the major fault belongs to leadership, which Government assigns to directly manage the group. For example, in the cases of Vinashin and Vinalines, individuals intentionally violated laws. While these need to be punished, we should not deny the contributions of millions of people working at these groups.
A key solution would be to set up stricter sanctions that force groups to publicise and report information on their operations and financial statuses such as those in the securities market. In addition, it is necessary to impose compulsory yearly auditing at State-owned groups.
Following the direction of the Prime Minister, the Ministry of Planning and Investment is co-operating with other relevant ministries and sectors to review and amend Decision 132/2005/ND-CP on the rights and obligations of equity in State-owned enterprises. The amended decision, expected to be submitted this month, will empower ministries to manage groups directly and more comprehensively. — VNS