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Restructuring state enterprises
20/1/2012 11:27' Send Print

However, while the State enterprises hold 70% of total social investment capital, 50% of the State investment, 60% of credit of commercial banks and 70% of the official development assistance (ODA), their contributions to Viet Nam’s economy has not been up to expectation. The contribution to GDP has been low. Several businesses have suffered losses. Outstanding has climbed to alarming level. Investment has been scattered and less effective. Restructure and transition of state businesses have been slow.

In October 2011, the 3rd Plenary session of the Party Central Committee (11th Tenure) emphasized one of the three focal areas in the coming five years which is restructuring state enterprises focusing on economic groups and State corporations.

To ensure effective restructure of State enterprises it is necessary, first and foremost, to confirm that the state does not do business for profit which will be done by the private sector. The objectives of restructure of state enterprises are to break monopoly and influences of groups of interests to the sector, create equal competitiveness with other sectors and international businesses, achieve financial transparency, do way with give-and-take mechanism and sate subsidy.

Efforts should be concentrated to the following major solutions:

First, to make it clear which branches will receive 100% state investment, which branch will not need state investment?

Second, to eliminate all preferential treatment towards state enterprises so that they will operate on an equal footing with the private sector. The state enterprises concentrate their investment in their major field of production not in other businesses.

Third, to continue to speed up the process of equitization which should be based on the market economy. The state enterprises’ quality of operation should be better after being equitized.

Fourth, to renovate supervision of the state enterprises. The state enterprises are multi-purposed entities. Thus, supervision should follow all these purposes not purely on financial purpose.

Fifth, to renovate employment mechanism by selecting and contracting qualified CEO. In addition, changes should be made in salary scales for executives of the state enterprises.

Sixth, to complete institutionalization of state enterprise management, exercise state ownership’s rights and responsibilities towards state capital and property in state enterprises to ensure financial transparency.

Seventh, to identify more clearly public service activities, resolutely remove state subsidy to public service enterprises, and to manage by public service activities through bidding among enterprises from different economic sectors upon the State’s order.

Dr. Pham Viet DungDirector of Economic Department, Communist Review