Resolutely handle the large SOEs

	Many provinces hit the target of domestic tax revenue
	The process of SOEs’ equitization is slow and not substantive
	A new Decree on equitization of SOEs introduced in December 2016

SOE equitization must be implemented more drastically to handle the shortcomings of loss–making SOEs.

Continue to be a hot problem

2016 continued to be a hot year for the SOE sector due to series of shortcomings and inadequacies of this sector such as ineffective investments and loss-making business causing loss of State’s assets and huge debt. And delay in information disclosure of SOEs under regulations of the Government, continued to be demanded by competent authorities.

According to the assessment of the Ministry of Planning and Investment, SOEs accounted for 70% of the whole social investment capital, 50% of the State capital, 60% of credit, 79% of bad debts of commercial banks and 70% of ODA capital, etc but they contributed only 30% to economic growth. Although SOEs included groups, and corporations holding key positions in the economy, their performances have not met expectations; even many enterprises caused losses at an alarming rate and recorded prolonged losses.

Before the above situation, from the middle of 2016, the Government directed to resolutely clarify the shortcomings and inadequacies, thereby clarifying causes and responsibilities of individuals and organizations that caused the loss of the State’s assets to have strict measures in the spirit of non-restricted areas for those violations. Accordingly, the competent authorities conducted an inspection of the causes leading to the big loss of the PetroVietnam Construction Joint Stock Corporation (PVC). Through the inspection of the Central Commission for inspection, the Government Inspectorate and State Audit clarified that PVC disclosed weaknesses in production and business, which led to the loss of nearly 3,300 billion vnd in 2011-2013. Besides, the Investigation Police Authority prosecuted five leaders of this enterprise for “intentionally acting against the State's regulations on economic management causing serious consequences".

The Government Inspectorate also conducted an inspection for Dinh Vu polyester fiber project of Petrovietnam Petrochemical and Textile Fiber Joint Stock Company (PVTex) and showed signs of intentionally acting against and lack of responsibility in approval of the project, selection of contractors and relationships with contractors, causing losses and wastefulness of investment capital. The Government Inspectorate clarified the lack of responsibilities of the related parties including the Vietnam National Textile and Garment Group – an establishing shareholder of PVTex and Petrovietnam under the Ministry of Industry and Trade. Together with performance of the enterprises, the functional authorities proposed and resolutely handled violated individuals.

Also in 2016, many other SOEs were inspected and handled strictly all violations of individuals and organizations such as: the Vietnam Railway Corporation, Vietnam oil and gas group and many construction and other projects invested by SOEs.

Firmly handling loss-making SOES was confirmed again by the Prime Minister Nguyen Xuan Phuc at the second session of the National Assembly term XIV. Accordingly, the Prime Minister clarified responsibilities of individuals and organizations and resolutely handled violations in the direction of not using the taxes of citizens to compensate for the losses and firmly removed inefficient projects, even listed these projects into bankruptcy, so that these loss-making projects did not become a burden to the economy.

Drastic equitization

Many SOEs evaded listing on the stock market after equitization. Typically, despite being equitized for many years, two large enterprises in the beer sector, the Sai Gon Beer Joint Stock Corporation (Sabeco) and the Hanoi Beer Joint Stock Corporation (Habeco). as well as the managing authority the Ministry of Industry and Trade still delay the listing on the stock exchange as prescribed. Before this situation, the Government directed to withdraw all 9,000 billion vnd of State capital in Habeco in 2016, while selling 40,500 billion vnd of Sabeco in 2016-2017. With this drastic implementation, these two large SOEs were officially listed on the stock exchange in 2016. Along with that, the Government also directed the sale of shares of the State Capital Investment Corporation (SCIC) for 10 companies must be conducted publicly and transparently to prevent group interests in accordance with market rules and ensure the maximum State assets and highest interests of the State. This makes the business environment more transparent and healthier.

Talking about the shortcomings and inadequacies of SOEs, Mr. Nguyen Hoang Hai, Vice Chairman of Vietnam Association of Financial Investors (VAFI) stated that: the large SOEs causing loss of State assets is due to weak management capacity of the enterprises, and corruption. Hence, this expert said that the individuals who take charge of issuing the investment decisions, causing the loss of assets will be handled strictly and this handling will be implemented from the enterprise managing authorities (ministries, departments and localities) to individuals who directly manages the State’s capital and assets in the enterprises. There needs to be appointed responsibility to each individual and a strict financial regulation to interpose and prevent these violations.

In the long run, according to Mr. Nguyen Hoang Hai, the most effective measure for the SOEs is to determine equitization actually and thoroughly. The functional authorities and enterprises must implement State policies to not hold the capital in unnecessary sectors to prevent the loss of State capital.

Concerning equitization, in fact, SOE restructuring in recent times has not achieved results as desired. In 2011-2015, the country has sorted 591 SOEs, reaching 96% of the plan, but the quality of equitization had many shortcomings due to the sold capital rate in the State capital withdrawal in the enterprises reached only 8%. The proportion of State capital after equitization in some large enterprises was still at a high rate. According to experts, SOE restructuring, including the equitization of SOEs must be carried out more drastically and stronger to resolve the weaknesses of loss-making SOEs as well as improve the efficiency and position of efficient enterprises.

SOEs remain biggest tax payers in 2016: rankings State-owned enterprises (SOEs) remain the biggest tax payers in Vietnam as they make up nearly 60 percent ...

At the National Conference on deployment of arrangements and renovation for SOEs from 2016-2020, the Prime Minister Nguyen Xuan Phuc also specified that the group benefit is the biggest barrier for the equitization process and does not create motivation for capital withdrawal from equitization. Thereby, the Prime Minister requested units to clean up enterprises’ operations, deal with obstacles and contradictions as barriers to the equitization process; and stressed that leaders who do not implement or delay to implement, causing the loss of the State’s assets upon the equitization, must be punished. Thus, the message of the authorities for SOEs is clear, it is expected that all SOEs will be absolutely handled to achieve the position of the sector which is considered as a guiding role in the economy.