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Restructured firms threaten unfair competition

Update: July, 16/2012 - 10:55

HA NOI — Reorganising State-owned enterprises is key to restructuring the nation's economy, but officials need to decide what to do about loss-making enterprises and unfair competition between State-owned and non-State enterprises, says Deputy Minister of Finance Do Hoang Anh Tuan.

Speaking to the Vietnam News Agency on the sidelines of this month's Ministry of Finance meeting held to review the economy in the first half of 2012 and set goals for the rest of the year, Tuan also said that "addressing the findings of the Government Inspectorate and State Audit will be an important step in the process of restructuring State-owned enterprises.

"The Finance Ministry has also asked all relevant bodies to reach a consensus on current loss assessments to avoid misunderstandings," he said. "For instance, PetroVietnam was asked to explain the spending of VND18.2 trillion (US$873.6 million) which includes some losses, but it turns out that PetroVietnam invested VND15 trillion ($714 million) in several special projects abroad on the nod of the Government. It can not therefore be said that the entire VND18.2 trillion is a loss."

The group also pumped VND600 billion ($28.5 million) into loans in some cities and provinces experiencing economic difficulties, he noted. These funds represented receivables and could not be counted as a loss to the State budget. The State Auditor planned to deal with such cases by requiring local authorities in the future to arrange for their own financing.

The objective of restructuring was also to create equality and transparency, he said, making it necessary to identify points of inequity between State and non-State enterprises. Currently, the State equity in groups and corporations was VND653 trillion ($31 billion) and that State enterprises didn't suffer the pressures of capital costs faced by non-State enterprises required to borrow at high interest rates.

This created unfair competition and allowed State enterprises to operate inefficiently, said the official. "We should carefully study equality to create fair competition between the sectors," added Tuan. — VNS

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