Dr Vu Thanh Tu Anh, an economist from the Fulbright Economics Teaching Programme in Viet Nam, spoke to Sai Gon Economic Times about restructuring State-owned enterprises, one of the three core elements of economic reform.
Workers wrap papers at the Vietnam Paper Corporation. Restructuring State-owned enterprises is one of three core elements to reform the country's economy. — VNA/VNS Photo Hoang Hung
In two years, what has the project on restructuring SOEs achieved and what still needs to be done?
In recent years, the Government has reiterated many times the importance of restructuring SOEs. Now the Government is finally taking action. The most important element is that the project has improved competitiveness by creating an equitable legal structure and transparent and accountable financial reporting. It also focuses SOEs on their core lines of business.
Although the project is three-quarters of the way through its time, many of its objectives have not yet been achieved. In Decision No 929 to launch the project, there was a lack of consistency between paragraphs and some contradictions with reality. Many elements of the decision were not clear, and there was even some negligence during the drafting of the decision, including spelling and grammatical errors.
What's the current status of the restructuring process?
Competitiveness is a pre-requisite for all enterprises to operate effectively. This is also reflected in the 2005 Law on Enterprises. Another factor that is of great importance is the policy environment and fair treatment between enterprises, whether State-owned or private. In my opinion, this is the weakest point in the chain.
The project also has not reflected the principle that all businesses are responsible for their own operations – both State-owned and private. In reality, during the restructuring process, the Government has been supporting a number of SOEs in restructuring their enormous debts by using taxpayer money and other funds from other enterprises.
Though the decision establishing the project confirmed that international governance practices would be applied, there has not been any demand to change the overlap that exists between the State and management of State-owned enterprises. This has been the root cause of the confusions among objectives, functions and missions of SOEs and has undercut standards of operations.
What contradictions are there with other policies?
The first contradiction is that the Government has given SOEs a lot of economic power, even a monopoly position in the domestic market. However, Decision No 929 did not deal with this issue. As a result, many SOEs have monopolies that have had a negative impact on the functioning of the market system in our country.
Under the decision, SOEs that operate at a loss for several consecutive years have to be merged with another company or have their debts restructured so as they can be reorganised as a joint stock company or limited company or declare bankruptcy. Meanwhile, in my opinion, profitable SOEs, such as garment makers, would operate more effectively if fully privatised. — VNS