Thursday, December 8 2016

VietNamNews

Oversight key to SOE reform

Update: November, 30/2016 - 10:08
Strengthening financial supervision of State-owned enterprises (SOEs) is key to improving their performance and enhancing the efficiency of State investments, experts said yesterday. — Photo bnews.vn

HÀ NỘI — Strengthening financial supervision of State-owned enterprises (SOEs) is key to improving their performance and enhancing the efficiency of State investments, experts said yesterday.

They told an international conference that this was particularly true in the context of the Government stepping up the SOE restructuring process.

The conference, organised in Hà Nội by the finance ministries of Việt Nam and China, discussed the problems and difficulties faced by financial supervisory agencies and shared international experiences on improving supervision mechanisms.

Vietnamese Deputy Minister of Finance, Nguyễn Hữu Chí, said that the financial supervision in SOEs in Việt Nam is a complicated, difficult process because of the large number of SOEs with investments spread over various industries and different bodies representing State ownership in the enterprises.

As of early 2016, the Government has capital in more than 1,000 enterprises with total assets of VNĐ3.1 quadrillion (US$136.6 billion). Of these, the State holds 100 per cent of capital in 781 enterprises.

Chí said the complications as well as inefficient operations were among the main factors behind the wastage and loss of State-owned assets and investments.

In 2014, pretax return on equity of State economic corporations and groups was 16 per cent, and that of enterprises under the ministry and provincial-level People’s Committees was 10 per cent.

Supervision of State capital in SOEs has improved in recent years with the Government issuing and updating a number of policies to improve the supervisory mechanisms in a bid to limit risks of State capital losses, the conference heard.

For State corporations and groups, the rights and responsibilities of the representatives of State ownership have been more clearly laid out.

Management and supervision are carried out in tandem with performance evaluation of firms through various actions including the audit of financial statements, evaluation and classification of enterprises, regular inspections and monitoring of corporate finance.

The Ministry of Finance, in co-ordination with other ministries and provincial authorities, has conducted annual reviews and assessments of financial status and performance of SOEs and reported to the Government.

The Ministry will also use its assessments to give risk alerts and recommendations.

Besides, the ministry has pointed out inadequacies and shortcomings in the current supervisory regime, including loose enforcement of regulations, overlap and dispersion in State management levels and lack of transparency in disclosures by firms, Chí said.

Wen Zongyu, deputy director of the Research Institute for Fiscal Science of China’s Ministry of Finance, said SOEs had been playing a key role in the country’s economic reforms and they were expanding.

He said Chinese SOEs were subject to public asset management, and had a tight relationship in the reform process, and the improvement of management mechanisms for State assets should be monitored in parallel with the SOE restructuring process.

The management system needs to focus on effective financial supervision, as well as timely issuance and enforcement of policies to promote innovation within the enterprises, according to Wen. – VNS

 

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