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State economic groups need ‘vitality'

Update: February, 13/2015 - 08:49
Workers assemble parts at Auto Co.Ltd. May 1. Experts say that State economic groups must develop brands that meet international standards in order to boost development. — VNA/VNS Photo Duong Ngoc
HA NOI (VNS) — Vietnamese economic groups must develop brands at regional levels and act as a growth driver for the economy, said experts from the Central Institute for Economic Management (CIEM).

They added that restructuring of State-owned enterprises should focus on key economic sectors.

Bui Van Dung, head of the Enterprises' Reform and Development Department, said at a press conference early this week that the development of economic groups must possess a new "vitality".

Dung stressed that market dominance of economic groups must be placed under better control.

The department brought up three scenarios for the development of Vietnamese economic groups, in terms of two growth indicators: average revenue growth rate and average labour growth rate.

In all the three scenarios, the growth rate for average revenue is projected to reach its peak during the 2018 to 2019 period.

Average revenue is forecast to jump 15.79 per cent, 14.23 per cent and 12.68 per cent during 2014 to 2020 period, for the best, medium and worst development scenarios, respectively.

Regarding labour growth, labour cuts will occur during the 2014 to 2016 period, but gradually improve after that.

Dung said the medium scenario would have the greatest feasibility and will apply to both State-owned and private economic groups, given the economy's competitiveness and existing instabilities.

However, there will be differences in the State and private sectors, Dung said, pointing out that the operation of SOEs have remained dominant due to the modest number of private economic groups.

Data showed that total charter capital for the biggest private economic groups is only equivalent to 15.5 per cent of the eight biggest State-owned economic groups.

State-owned economic groups have been revealed to hold dominant shares in many sectors, such as fertiliser production, coal exploitation, electricity generation and insurance.

However, experts said the private sector has better operational efficiency and financial safety.

The return on equity (ROE) for the 20 biggest private economic groups was 8.45 per cent in 2012 and 12.72 per cent in 2013, in comparison with 5.28 and 7.3 per cent for State-owned firms, respectively.

According to Nguyen Dinh Cung, there is little opportunity for State-owned economic groups to develop further if they remain closed to outside capital sources.

Cung added that State-owned economic groups should attract outside stakeholders to lower risks and costs.

Experts added that economic groups and the domestic market, must develop brands of an international standard to boost development — VNS

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