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Restructuring state-owned enterprises, achievements, orientations and major tasks by 2015
26/8/2014 21:25' Send Print

However, as the socialist-oriented marker economy mechanism has been further completed, international economic integration has deepened and broadened, the multi-sector economy has increasingly been dynamic and diversified, state-owned enterprises with their roles should be arranged and restructured for higher efficiency.


Implementing the Resolution of the 11th National Party Congress of the Communist Party of Viet Nam on economic restructuring and growth model renovation, the Government and the Prime Minister of Viet Nam have assigned functional agencies to study and design restructuring solutions concentrating on three aspects: public investment, finance and banking and state-owned enterprises.

Since 2011, Viet Nam has drastically carried out arrangement, equitization and restructuring of state-owned enterprises. The Prime Minister issued the Decree on strengthening state-owned enterprise restructuring; approved the Master Plan on state-owned enterprise restructuring, focusing on state-owned economic groups and corporations in the period of 2011-2015 which identifies objectives, task, solutions and roadmap for implementation and concrete duties of ministries, branches, localities, and state-owned economic groups and corporations. The implementation of the Master Plan has been expedited synchronously from completing institution, legal framework, mechanisms, policies to identifying restructuring contents of each enterprise and developing implementation plans. By now, branches, central and local levels and enterprises have implemented important work set out by the Master Plan.

1. On completing institution, mechanisms and policies

Relatively complete and synchronized institution, mechanisms and policies on management of enterprises with 100% state capital have been promulgated to quicken state-owned enterprise restructuring and renovate owner’s management mechanism. Important mechanisms and policies on renewal of management and supervision of enterprises with 100% state capital have been made such as assignment and decentralization of rights, obligations and responsibilities of state owner towards state-owned enterprises and state capital invested in enterprises, regulation on financial management, regulation on supervision, regulation on operation of controllers of one-member limited liability companies with 100% of state capital; establishment of new enterprises and enterprise reorganization and dissolution; and amendment and supplement to the Decree on conversion of enterprises with 100% state capital into joint stock companies, among others.

Owner’s institution and management mechanism have been strengthened after the Government issued Decree No 99/2012/NĐ-CP dated 15 November 2013 on assignment, decentralization of the implementation of the rights, responsibilities and obligations of state owner for the state-owned enterprises and state capital invested in the enterprises. Accordingly, as far as institution is concerned, the owner’s management mechanism defines more clearly rights, responsibilities and obligations of the Government, Prime Minister, ministries, branches, localities, members’ councils of state-owned economic groups and corporations.

It also identifies clearly that the line ministry is the focal organization which exercises the rights, responsibilities and obligations of state owner towards state-owned enterprises especially state-owned groups and corporations, and is responsible for organization, operation, supervision, examination and inspection of implementation, production, business and investment development; capital management, use, conservation and development, evaluation of managers’ performance and state-owned enterprises’ efficiency.

2. Arrangement and equitization of state-owned enterprises and the Master Plan on state-owned economic group and corporation restructuring

The approved Master Plan for restructuring state-owned enterprises with the focus on state-owned economic groups and corporations in the period of 2011-2015 sets out important orientations:

- Classify existing enterprises with 100% state capital by groups, in which the Vietnamese State holds 100% charter capital of those enterprises in state monopolized fields, national defense and security; holds 50% of charter capital of large-scale enterprises in the fields of resource and mineral exploitation and processing; whole sale of food, preventive medicine and disease treatment; in those state fields where other non-state economic sectors can effectively invest, operate and do business and the State does not need to retain, equitization is called for and the State will withdraw all capital. Those state-owned enterprises which suffer prolonged losses and are unable to recover will be either sold or transferred with their debts restructured to become joint stock companies or limited liability holding companies or dissolved or let go bankrupt.

- Observe market principle by withdrawing state capital invested in areas outside or not directly related to the core businesses and in joint stock companies which the State does not need to retain.

- Restructure enterprises by branches and areas regardless of levels and management agencies to streamline management focal points, enhance asset usage efficiency and avoid sporadic investment and waste.

- Restructure state-owned groups and corporations comprehensively from organization model, management, human resources, production branches, businesses, development strategy, investment to market and products. Reorganize some state-owned economic groups and corporations suitable to reality and requirements.

By now, the Vietnamese Government has completed the approval of the plans on arrangement and equitization of state-owned enterprises in the period of 2011-2015 of all ministries, branches and localities through out the country, identifying state-owned enterprises with 100% state capital, equitizing enterprises with concrete percentage of shares hold by the State (majority, minority or none), and enterprises which are merged, sold, transferred, dissolved or go bankrupt.

The Government also approved 70% of the plans to restructure state-owned economic groups and corporation in line with determined objectives and orientations (69 out of 109 plans) of which the Prime Minister approved 20 out of 21 plans of state-owned economic groups and corporations; and decided to stop piloting the model of economic group in 2 groups in construction sector and the Viet Nam Shipbuilding Industry Group. Ministries approved 39 plans and local authorities approved 10 plans of corresponding state-owned corporations.

On the basis of approved plans and solutions, ministries, branches, localities and state-owned economic groups and corporation have actively engaged in implementation aiming to reduce the number of state-owned enterprises to 692 by 2015 from the current 1,254 and basically equitize state-owned enterprises by 2020, the State will retain approximately 200 enterprises in state-monopolized and public areas, security and national defense. At the same time, develop state-owned enterprises with rational structure and high competitiveness, focusing on key branches and areas which supply products and essential public services to society and national defense and security as the mainstay for the State economic sector to exercise its leading role and as important material forces for the State to orient and regulate economy and stabilize the macro economy.

3. Formulate and approve Charters of state-owned economic groups and corporations

Based on newly-promulgated regulations on organization, management, assignment and decentralization of rights and obligations of owners, supervision and examination, among others, state-owned economic groups and corporations have proactively developed their Charters. Of the 14 extremely important state-owned economic groups and corporations, 12 have submitted their proposed Decree on Charters to the Government and 6 of them were signed and promulgated by the Prime Minister. Currently, agencies are continuing to finalize the remaining draft Decrees on Charters for early approval of the Government in 2013. Ministries, branches and localities are approving corresponding state-owned corporations’ Charters.

4. State-owned economic groups and corporations have expedited restructuring following approved contents. Initial achievements include:

- Efforts were focused on identifying objectives, duties, role and position of each group and corporation in the economy; reviewing, identifying branches and businesses, and removing those which are less or not related to concentrate on core branches and businesses. The Vietnam National Oil and Gas Group stays focused on five major branches and businesses of which the main one is oil and gas search, exploration and exploitation. The Vietnam National Coal - Mineral Industries Corporation concentrates mainly on production of coal, minerals, electricity, industrial explosives and mine engineering. The Vietnam National Coffee Corporation identifies its main businesses of coffee growing, production, processing and trading. The Vietnam National Shipping Lines concentrates on three core businesses of shipping, port management and maritime services and losgistics.

- State-owned economic groups and corporations have reorganized production and business, restructured member enterprises for specialization, assignment, cooperation, without sporadic investment, internal competition and merger of member enterprises of the same businesses. The Vietnam National Coal - Mineral Industries Corporation received 6 coal production companies and changed them into the Corporation’s branches and equitized 3 member companies. The Vietnam Paper Corporation equitized 4 subsidiary companies, changed its research institute into scientific and technological enterprise and transferred its College to the Ministry of Industry and Trade. The Vietnam Multimedia Corporation completed merging 3 companies into parent company. The Vietnam National Tobacco Corporation is converting one company into its branch.

- State-owned economic groups and corporations have built financial plans for their core business development as well as plans for settlement of financial constraints appropriate to each enterprise’s situation.

Groups and corporations have proactively sold and transferred capital or looked for counterparts to withdraw capital depending on each enterprise’s characteristics, conditions and situation. By 30 September 2013, groups and corporation withdrew more than 4,164 billion dong out of the total investment in outside core businesses of 21,796.8 billion dong. The Vietnam National Oil and Gas Group restructured the PetroVietnam Finance Corporation by merging it with the Western Commercial Joint Stock Bank and withdrawing capital according to road map. Other enterprises including the Vietnam National Tobacco Corporation and the Vietnam National Vegetable, Fruit and Agricultural Product Corporation have coordinated with the Company for Purchase and Sale of outstanding debts and assets of enterprises to handle outstanding debts.

However, while the world and Viet Nam’s economy show no sign of recovery, Viet Nam’s groups and corporations have met with difficulties in financial restructuring and capital withdrawal. The Vietnam National Coal - Mineral Industries Corporation twice organized unsuccessful auction sales of shares; The Vietnam Chemicals Corporation has not yet been able to withdraw capital invested outside core businesses because its shares’ market price is lower than the approved minimum price.

- Groups and corporations have taken measures to amend, supplement and complete internal management regulations; review the development and implementation of regulations on supervision, inspection and evaluation of efficiency; apply modern human resource management policies; and rearrange labor and redundant labor in the process of restructuring.

Together with the process of restructuring each state-owned group and corporation, the Government and Prime Minister of Viet Nam have continued to lead the equitization of state-owned enterprises. Several enterprises have carried out enterprises’ evaluation, developed equitization plans to submit to competent authorities for approval such as the Vietnam National Textile and Apparel Group, the Vietnam Aviation Corporation, corporations of the Ministry of Construction, Ministry of Transport, and Ministry of Agriculture and Rural Development, among others. In 2013, the rearrangement and equitization of state-owned enterprises in Viet Nam achieved better results; in the first 9 months, the whole country rearranged 49 enterprises, of which 41 was equitized, an equivalent to 150% of the equitized enterprises in 2011 and 2012. Some of them have recorded positive and effective results like the Ministry of Transport and the Lam Dong Provincial People’s Committee which equitized 25 enterprises and 3 enterprises respectively.

5. On renovation and arrangement of state-owned agricultural and forestry farms

The arrangement of state-owned agricultural and forestry farms in Viet Nam have been rigorously implemented since 2003 in the spirit of Resolution No 28/NQ-TW dated 16 June 2003 of the Politburo. In 2013, the Government of Viet Nam organized a review of the 10-year-implementation of the Resolution No 28/NQ-TW to assess rearrangement and renewal of agricultural and forestry farms, pilot equitization of orchards, afforestation and cattle herds in close association with processing enterprise equitization, operation model of agricultural and forestry farms after conversion in some localities and organizations as well as land use in state-owned agricultural and forestry farms.

The Politburo concurred to assessment on the status quo, arrangement results, orientations and duties in the following stages and agreed to issue a new resolution in replacement of the Resolution No 28/NQ-TW to continue the rearrangement of agricultural and forestry farms. On that basis, the Vietnamese Government will continue the rearrangement of enterprises in this area with more efficiency.

In summary, after the Government and Prime Minister of Viet Nam issued decrees and decisions on restructuring of state-owned enterprises, ministries and branches have concentrated on implementation. In a short period of time, a lot of mechanisms and policies on state-owned enterprise organization, management and restructuring were promulgated, contributing to removing obstacles and difficulties in enterprise restructuring. Remaining policies or policies arising from the process of implementation especially those relate to capital restructuring and withdrawal of capital invested outside branches should be developed and completely promulgated in time to meet demands. Positive results were recorded in state-owned enterprise rearrangement and equitization, the number of equitized state-owned enterprises in the first 9 months of 2013 was 3.3 times higher than that of 2012. Obvious results were also achieved in capital withdrawal, but there remain numerous difficulties due to unfavorable market, constraints in mechanisms and policies and some ministries, branches and localities were not active and proactive in leading and implementing these policies.

Key tasks towards the end of 2015

Results made in state-owned enterprise restructuring so far in Viet Nam show great efforts of branches and levels from Central to local levels and enterprises. Nevertheless, lots of work remain to be done to achieve objectives set out by the Master Plan on restructuring, particular the following issues:

- Promptly complete important mechanisms and policies for state-owned enterprise restructuring including organization, management, operation and supervision of state-owned economic groups and corporations; sample Charter of one-member limited liability Company with the State as owner; regulation on withdrawal of state capital invested outside core branches and businesses, and others. Delay in creating legal corridor, and making policies in time to remove obstacles and difficulties in the implementation process will hamper efforts for enterprise restructuring and arrangement as well as withdrawal of capital.

- In 2013, complete the approval of Charters and Plans for restructuring of state-owned economic groups and corporations so that they can expedite the implementation in 2014-2015.

- Accelerate state-owned arrangement and equitization and withdrawal of state capital from state-owned enterprises as approved by the Prime Minister. Enhance responsibilities of leadership of ministries, branches, localities, state-owned economic groups and corporation while implementing approved plans on restructuring, arrangement, equitization and capital withdrawal.

- Approve plans on state-owned enterprise arrangement by branch and area regardless of management levels submitted by line ministries.

- After the Politburo issues Resolution on continuing to arrange agricultural and forestry companies, sensitize the resolution and build Programme of Action of the Government including developing mechanisms and policies on agricultural and forestry company arrangement; approve the master plan on “arrangement, renewal and development of agricultural and forestry companies” as a basis for implementation.

- Strengthen inspection and supervision of ministries, branches, localities and enterprises in their leadership and implementation of tasks, and strictly observe reporting regime by submitting periodical reports to make solutions in time to overcome constraints, obstacles and difficulties in the process of restructuring.


This article was published on Communist Review No 856 (February 2014)

Vu Van NinhMember of the Party Central Committee, Deputy Prime Minister