State monopoly reform to abolish business monopoly

	Ministry of Industry and Trade expressed an opinion about the List of 20 State monopoly industries
	20 State monopoly sectors

According to the assessment, the electricity sector has just partly opened and still maintained the dominant position of the Vietnam Electricity Group. Photo: ST.

Some enterprises still hold the monopoly

Over more than 30 years of innovation, the number of state monopoly sectors has decreased significantly. In the network industrial sectors, which have a great impact on the economy such as electricity, telecommunications, water supply and especially transport, scale and scope of state monopoly has been narrowed. However, Vietnam seems to be far from the international practices and experience.

Recently, CIEM has researched and surveyed 4 network sectors including electricity, railways, aviation and telecommunications. As a result, the state monopoly reform in these sectors are at various levels. If the telecommunications and aviation sectors have achieved significant results in state monopoly reform, the railways sector is the dominant player in slow reform.

Regarding the reform roadmap or market opening and attraction to the participation of other economic sectors, Nguyen Thi Luyen, Head of Economic Institution Department (CIEM), said that the telecommunication sector has almost opened totally, while the electricity sector has partially opened; the railway transport sector has taken the first step. On the competition level, competition is mostly in mobile communications and air transport. In the remaining segments, although they have opened up (such as electricity, railway transport), existing companies, particularly SOEs, still dominate the market.

Specifically, in addition to 3 state-owned network providers, namely VNPT, MobiFone and Viettel, the number of enterprises in all economic sectors participating in setting up telecommunication infrastructure and providing public telecommunication services is increasing, thereby, the price of telecommunication services is decreasing. However, Ms. Luyen noted that the total market share of these 3 major providers still dominates the market at 2G, 3G services and fixed-broadband services. For aviation sector, the supply system of aviation services has created a strong competitive market as the private sector has been deeply involved in the air transport sector, contributing to improving the quality and reducing ticket prices. However, the level and scope of monopoly still go on, especially when a unit (Aviation Corporation of Vietnam) is assigned to manage and exclusively operate all 22 commercial airports.

Regarding railway transport sector, according to the CIEM’s representative, Vietnam Railway Corporation is still a monopoly. This leads to lack of motivation to improve quality, reduce prices, leading to reduced market share, and becoming the weakest industry. In 2017, there were only 9.5 million passengers, instead of 11.2 million in 2010, the market share of goods transport decreased from 0.97% to 0.39%.

Regarding the electricity sector, the CIEM’s report also stresses that this sector has just opened partially. Although it has opened, it still maintains the dominant position of the Vietnam Electricity Group. This group dominates electricity generation and is a monopoly in infrastructure management of electricity transmission and distribution. Moreover, there is no certainty about access fees, electricity transmission capacity, and all consumers have long-term contracts with Vietnam Electricity Group (via its subsidiaries). This is a matter of concern when continuing to implement state monopoly reform in the electricity sector for facilitating the establishment of a competitive market.

The progress should be speeded up

According to economist Pham Chi Lan, there are many experiences of monopoly reform, but these experiences are difficult to apply to Vietnam. In terms of policy, Vietnam is ready to eliminate monopoly, but what is the reason why the policy has not been put into practice? Ms. Lan said that, "It is possible that the persons in charge do not want to apply, there are no motivations to implement, many documents are issued but there are a lack of sanctions, the persons in charge do not implement and are not punished.” She suggested that the reform progress to fight against state monopoly should be accelerated in accordance with the roadmap and the level as committed with the international community. It is necessary to apply advanced management to network enterprises, monopoly enterprises, and have sanctions strict enough to handle cases of deliberate delays.

Commenting on the status of state monopoly in aviation, electricity, telecommunications and railway sectors, economist Le Dang Doanh said that we have made certain efforts for monopoly reform, but in fact, it has turned the state monopolies into enterprise monopolies without social supervision and participation, and pricing mechanism is not transparent, there is not an authority to monitor monopolies. So that, it is difficult to reduce state monopoly despite regulations in the Competition Law. Therefore, Mr. Doanh proposed “the establishment of a competition supervisory authority". Taking the example of Van Don building a private airport, he questioned why the management of existing airports do not belong to private companies?

Concerning the question by Mr. Doanh, Dr. Tran Mai Hien , a member of the National Competition Council, said that the state monopoly and monopoly SOEs should be separated. Mr. Hien notified that there were many documents regulating these concepts, but because of the interests of the State and the public interest, the state monopoly is often required.

In addition, many private enterprises responded that there were many sectors in which private enterprises do not and can not do, which is unfair and uncompetitive. Not to mention that most of the public service and state monopoly sectors are using the form of appointment of contractors, which is not in compliance with the contents specified in the Law on Competition, Law on Procurement. It should be reviewed and amended to comply with the law

Reduction in state monopoly and natural monopoly in the above sectors has a great impact on the economy. In order to thoroughly reform state monopoly in these sectors, CIEM representatives have made some recommendations. Specifically, for the railway sector, it is necessary to continue to restructure the Vietnam Railway Corporation, establish an independent agency to manage railway infrastructure, develop a mechanism to approach and connect the infrastructure of railway network ensuring fair competition for new train owners engaging in the railway transport business.

Decree declares state monopoly in 20 goods, services The government has issued Decree No. 94/2017/ND-CP declaring the State will hold the monopoly in the production ...

For the electricity sector, it is necessary to continue to reform according to the roadmap and ensure a competitive electricity market. Ensuring the independence for electricity generation, transmission and distribution and the free negotiation of prices with customers; developing specific regulations to ensure fair prices, and establishing an independent supervisory agency for the electricity sector