The operation efficiency of State-owned enterprises (SOEs) during 2011-2016 had yet to match the resources they were holding, according to a report delivered to the National Assembly on May 28^th.

Overview of the session. (Source: VNA)

The report, compiled by the NA specialised team to supervise the management and use of state capital and assets in enterprises and SOEs equitisation during 2011-2016, said as of December 31^st, 2016, the nation had 583 enterprises fully owned by the State.

Most enterprises posted profit and the profit increased year after year. They basically fulfilled their role as an important force of the economy, contributing to regulating and stabilising the macro-economy.

Their combined revenues reached VND 1.5 quadrillion (USD 66 billion) in 2016, and pre-tax profits were nearly VND 140 trillion (USD 6.1 billion). Several enterprises reported high profits such as Viettel Group, Vietnam Rubber Group and Vietnam Sugarcane and Sugar Corporation.

For enterprises partly owned by the State, VND 26.2 trillion (USD 1.1 billion) of State stake was sold, earning over VND 36.5 trillion (USD 1.6 billion) for the State coffer during 2011-2015.

However, the supervision team said despite high growth in total assets and capital, increases in revenues, pre-tax profits and contributions to the State budget were slow at an average of 3 per cent a year. Meanwhile, total debts remained high, rising 26 per cent against 2011.

A number of SOEs occurred losses, while corruption and wastefulness were seen in some giants such as the Vietnam National Oil and Gas Group, the Vietnam National Chemical Group, the Electricity of Vietnam, and the Vietnam National Coal and Mineral Industries Group.

In addition, the restructuring of badly-performing businesses and the withdrawal of State capital from ineffective investment projects remained slow. Notably, several violations in the implementation of policies and laws on the management and use of state capital and assets in enterprises left serious consequences, including the punishment of a number of involved officials.

In terms of SOE equitisation, the supervision team said that the work produced positive results. During 2011-2016, a total of 571 businesses were privatised. Social capital was mobilised to invest in these businesses, thus contributing to changing the administration mode, creating motivation for development and increasing the efficiency of production and business.

However, the supervision team noted that some agencies and units failed to meet requirements and progress of equitisation. The proportion of State stake in joint stock companies remained high. The number of shares sold at initial public offerings (IPO) was lower than the plan, which hindered the realization of the goal to attract capital from outside and renovate corporate governance.

The equitisation process faced many difficulties related to land, while the implementation of policies and laws on SOE equitisation saw several violations related to businesses’ finance and the evaluation of business value.

The report of the supervision team also pointed to reasons for shortcomings in the management and use of State capital and assets in enterprises and SOE equitisation work.

It noted that along with the target of profits, SOEs had to implement political and social welfare tasks in the context of instability in domestic, regional and international economies, thus affecting their growth rate, revenues and profits. The policy and law framework on the management and use of State capital and assets in enterprises and SOE equitisation work still had many limitations.

In addition, agencies representing the State stake in enterprises have not performed well the supervision and inspection work.

To increase the efficiency of the implementation of laws and policies, the supervision team proposed the legislative body consider the revision of related laws to address shortcomings in current regulations.

The NA, NA Standing Committee, NA agencies, delegations of deputies and deputies should intensify supervision over the management and use of state capital and assets in enterprises and SOE equitisation.

Meanwhile, the Government should review the implementation of laws on the matter and proposed to the NA on revising or supplementing related laws. The Government should also complete regulations on selection, appointment and supervision of the management of enterprises and land after equitisation, while directing the strict punishment of violations related to the management and use of state capital and assets in enterprises and SOE equitisation.

The Government also need keep a close watch on the mobilisation and use of capital of businesses, and allow the bankruptcy of SOEs as regulated by law.

The report stressed that the State budget should not be used to rescue businesses in loss.

The supervision team suggested ministries, sectors and localities to complete and approve land use plans. It also asked SOEs to continue renovating business administration , focus on main business activities, and build a roadmap on recovering State investment in other enterprises in a transparent manner and ensure the State’s interest./.

VNF/VNA