A "super committee" will change distribution of power

	Party Central Committee closes its third plenum
	12th Party Central Committee convenes third meeting
	Proposing to establish the National Steering Committee on Single Window

Dr. Nguyen Dinh Cung, Head of the Central Institute for Economic Management.

Can you tell us the reasons to propose the establishment of a "super committee" to manage a huge amount of capital of large companies, corporations?

First, I confirm that this is a trend, a requirement of economic reform in Vietnam, consistent with the international markets, which makes Vietnam’s economy more competent and competitive. In fact, the State is performing many functions, but all of these functions should not be implemented by a certain agency.

A ministry which both builds policies and is the owner of the enterprises in the sector will cause a conflict of interest, because normally, the policies will put priorities on enterprises in that sector, which makes the market not operate, becoming very distorted, leading the unfair competition.

This causes distortions in the mobilization and allocation of resources, leading to poor resource utilization and the economy under potential development.

Second, a ministry with many functions will not perform specialized functions and conduct the State ownership ineffectively.

Third, because of lacking specialized functions, when the problem occurs, there are no ministries or departments which have responsibility for the results and efficiency of the State capital investment in general and the business performance of the SOEs in particular.

This is very clear in practice. Because of the above reasons, the establishment of a specialized agency to focus on implementing ownership rights in companies as a State capital investment in enterprises is necessary for promoting reforms of Vietnam's economy, which reduces the distortion of Vietnam’s market and improves the efficiency of using resource to invest the economy.

Without reforms, Vietnam’s economy will remain unchanged. Because the volume of state assets in the economy is huge, accounting for a dominant role, therefore the State is very powerful on the distribution of resources.

With such a huge capital, if we raise 1% of efficiency, we will enable economic growth to reach 7% or more. This target is entirely possible to achieve.

Will the proposal of establishing a "super committee" encounter opposition because the ministries are enjoying benefits from the management of resources? In addition, when businesses are put into a place, will it affect budget revenues, sir?

I think there are two sides. First, the establishment of this committee must be implemented, but it hasn’t received a consensus in our society, especially the ministries. Because, this reform not only changes the allocation of resources, but also changes the distribution of power.

The ministry is no longer the owners of the State capital and loses power and several relevant benefits.

I think it is understandable for them to protest in this case.

Second, when putting them to this committee, we hope that we will use State resources more efficiently, which not only increases the value of investment property of the State but also increases profit from assets.

Profit from assets shall be transferred to the budget, while the added value should be put into the investment. This is better for economic development in general and the budget in particular.

You said that the “super committee” should focus on investment. So how will this committee operate?

It is not easy to answer this question. We must assign its operational functions, and then find the answer to this question. There are 3 main problems. First, if we put SCIC into this committee, it will be financial investment committee.

The second problem is how to conduct the array of governance, management, monitoring and the implementation of the State ownership rights, distribution of property in the corporation effectively, consistent with the market mechanism and improving the efficiency of capital.

Third, restructuring portfolio of State investment assets and carrying out the State's investment in the strategic sectors which we have not done and the private sectors haven’t implemented yet.

After considering 3 main problems, we can look for patterns and the operational ways of this committee. We can learn experience from other countries with the models in the management of SOEs in Indonesia, etc. to design this committee to have appropriate legal framework as much as possible, in the context and the needs of Vietnam.

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Now there are many different opinions on this issue. We need the opinions of the expert on corporate governance, capital investment, managing design of the State apparatus, etc. to find out the most suitable alternatives to implement reforms successfully, opening up a new space for economic development.

Thank you!