Removing problems in management and use of revenues from equitisation and divestment of SOEs

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Minister Dinh Tien Dung spoke at the session on September 9th.

According to the report, from January 1, 2018, the management and use of revenue from equitisation and divestment have been implemented through the fund for support of arrangement and development of enterprises.The Committee on Economic Affairs Vu Hong Thanh said that following the direction of the National Assembly (NA) Standing Committee on the establishment of the delegation of the NA Standing Committee to define the necessity of promulgation of a Resolution on management and use of revenue from equitisation and divestment of (SOEs), the delegation worked with ministries, sectors and localities on the above issues.

The fund's balance until January 1, 2013 was VND 16,215 billion. from 2013 to 2018, the total revenue was VND 257,497 billion (of which VND 186,534 billion was from from equitisation and transfer of State capital). Total expenditure was VND 221,643 billion (of which VND 155,000 billion was paid to the State budget according to the National Assembly's Resolution No. 26/2016 / QH13, the remaining amount of VND 66,643 billion was paid to support redundant labour and supplement for charter capital of State enterprises and paid to additional capital to maintain the percentage of state capital in enterprises). Therefore, the cash balance as of December 31, 2018 was VND 52,067 billion, as reported by the Ministry of Finance

The delegation said that the mechanism of management of revenue from equitisation and divestment of State capital in enterprises is governed by many different legal documents, which are inconsistent and some are contrary to the provisions of the law.

Thanh gave an example of the 2015 Law on State Budget that stipulates the revenues from budget capital investment in central and local economic organisations are defined as revenues of central or local state budget revenues.

Meanwhile, the regulation issued together with the Prime Minister's Decision No. 21 / QD-TTg of May 10, 2012, stipulates revenues from the equitisation and divestment of State capital will be paid to the fund for support of arrangement and development of enterprises.

Surveys show this has made it hard for some localities in management and use of revenues from equitisation and divestment. Hanoi and Ho Chi Minh City are "suspending" revenue from equitisation of SOEs on the provisional accounts of VND 8,416,485 billion (June 30, 2019) and VND 1,789,373 billion (December 31, 2017), while the need for budget spending is urgent. The two cities had to make a lot of written reports and proposals on using this revenue but unsuccessful though this revenue naturally belongs to the local budget under the law on State budget.

In addition, according to the State Audit's report on the management and use of the fund, there are still some shortcomings such as Shipbuilding Industry Corporation and the Vie tNam Southern Food Corporation using the fund into the business but making loss, causing potential risk of capital loss; or Vietnam Paper Corporation using revenue from equitisation to increase its charter capital of VND 21 billion without the approval of the Prime Minister, the Ministry of Finance had not promptly reported to the Prime Minister on the settlement and transfer the balance to the fund for support of arrangement and development of enterprises in 2017. From 2018 to June 2019, the official balance of fund has not been aggregated to report to relevant authorities.

The delegation proposed the NA Standing Committee not to issue a Resolution on the management and use of revenues from equitisation and divestment of State capital in enterprises, because this is prescribed in the law on State budget.

To be consistent with contents of revenue and expenditure in the law on State budget, it is proposed to include the amendments and supplements to Law No. 69/2014/QH13 into the law building programme in 2020. Accordingly, amending some current shortcomings of Law No. 69 while ensuring not to promulgate too many legal documents on the same content, leading to conflicts and overlap, and complying with provisions stipulated in Article 55 of the Constitution.

The delegation also proposed the Government direct the review and amendment of the by-law documents to ensure the proper and synchronous implementation in accordance with the provisions of the 2015 law on state budget. Accordingly, revenues from from equitisation and divestment of State capital in enterprises shall be paid to the state budget. Expenditures for support of restructuring state-owned enterprises and supplementing State capital in enterprises are allocated by the state budget.

In conclusion, the NA Standing Committee members said the system of legal documents on the management and use of revenues from equitisation and divestment of State capital in enterprises was fully issued, contributing to improving the effectiveness and efficiency in management and use of these revenues.

Therefore, the NA Standing Committee agreed that it was not necessary to promulgate a Resolution on the management and use of revenues from equitisation, divestment of State capital in enterprises and it was not necessary to amend and supplement Law No. 69/2014 / QH13.

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The NA Standing Committee also asked the Government to strictly implement the 2015 law on State budget and review and evaluate the management and use of revenues from equitisation and divestment of State capital in enterprises over the past time. At the same time, reviewing and amending by-law documents to ensure the proper and synchronous implementation in accordance with the provisions of the 2015 law on State budget.