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May 30, 2018 / 10:21

Vietnam to retain three state economic groups by 2020

The government plans to retain only three State-owned economic groups of PetroVietnam, Electricity of Vietnam and Viettel Military Telecommunications Group by 2020, according to a government’s report.

Under the report on policies, management and use of capital and assets of State-owned enterprises (SOEs) from 2011 to 2016 submitted to the National Assembly (NA) recently, the number of SOEs will reduce from more than 500 currently to some 150 by 2020. The remaining SOEs will be mainly lottery and public utility companies besides the three above groups.
 
PetroVietnam will be among three state-owned economic groups by 2020
PetroVietnam will be among three state-owned economic groups by 2020
The State currently holds 100 percent charter capital in seven economic groups, 57 corporations and 441 enterprises. The SOEs operate in only 11 sectors, down sharply against more than 60 sectors in 2001, mainly in key sectors that provide essential public products and services for the society as well as defense and security.
According to the NA’s supervisory board, most of these SOEs are making profits, and their profits are rising; there are those with high profit margin ratio such Viettel  (43.5 percent), Vietnam Rubber Group (30.4 percent), and the Vietnam Sugarcane  and Sugar Corporation (29.9 percent).
However, the efficiency of SOEs is low compared to private enterprises and FDI enterprises, the board said, pointing out a number of violations in the management and use of capital and property.
During the 2011-2016 period, the government has made many efforts to set up a legal basis for the management of assets and capital in SOEs and to strengthen the management to contribute to the development of enterprises, increasing capital and assets, preserving capital, raising business efficiency and remittance into the State budget. But the effect was not high. There were cases of wrongdoings that were detected tardily, causing serious economic consequences.
But on the flip side, the restructuring of enterprises with focus on SOEs have had few positive results.
According to the report, there were 571 SOEs that had been equitised in the last six years. Business indicators in most of these enterprises increased after the sale of State capital, total assets increased by 39 percent, the average income of workers increase by 33 percent.
However, the report indicates that the equitisation process is not going well everywhere. The ratio of State capital held in joint stock companies is still high. The number of shares offered to the public was low compared to the plan of equitisation of enterprises, there were many corporations where the ratio of selling out was very small (only about 1 -2 percent of charter capital).
According to the supervisory board, the main problem of SOEs in equitisation is wrongdoings in enterprise value determination.
When determining the value of an enterprise for equitisation, there are cases where the enterprise does not calculate or mistakenly calculate the value of the land use right, thus causing the land price to be determined to be lower than the market price. After the equitisation, the enterprise does not put the land into use but, instead, changes the purpose of land use and fails to fulfill its financial obligations to the State as prescribed, the report said.
On behalf of the NA’s supervisory board, Chairman of the NA’s Economics Committee Vu Hong Thanh suggested the NA strengthen the supervision and issue resolutions on raising the efficiency of the management and use of state capital and assets and the equitisation of State-owned enterprises.
The board also suggested the government strictly ban wrong enterprises value determination and strictly deal with wrongdoing regarding this matter.