It’s necessary to have “White Paper” on allocating capital to SOEs: expert

By nature, state owned enterprises (SOEs) belong to the people, therefore, SOEs are even more public than the current public companies, and they must be forced to expose information, said Dr Nguyen Dinh Cung, Deputy Head of the Central Institute for Economic Management (CIEM), when commenting about the decision by the National Assembly to allocate trillions dong to state owned economic groups and general corporations.

The National Assembly has approved the allocation of five trillion dong to five state owned economic groups and general corporations. What would you comment about this?

Dr Nguyen Dinh Cung: The budget allocation has been approved already. However, I still think that the National Assembly should not have approved the plan on such detailed investments.

Under the current laws, it is the owner of the enterprises, i.e the State, who has the right to make decisions to pour capital into concrete projects, how much to invest and where to invest. And the person, who signs the decision to make investments, will have to take responsibility for the effects of the projects.

After hearing the report from the government, the National Assembly will need to supervise how the government uses the state budget. If the Government cannot do this work well, the government’s members must be replaced by other people.

In Vietnam, the National Assembly never acts as the owner of SOEs. But now the National Assembly even makes concrete decisions on how much to invest and which enterprises to be allocated capital. This means that the National Assembly gets involved in the businesses’ management. If so, the National Assembly will have to take responsibility for the efficiency of the projects, especially when the projects do not go well.

The government has explained that the state-owned economic groups and general corporations need a sum of five trillion dong in order to develop socio-economic infrastructure projects for the public interests. So what are your comments?

The truth here is that the works for public interest are not the duties of private businesses, and they must be undertaken by the State. However, the problem is that general corporations that get allocated capital not only undertake projects for public interest, but they also do business.

Meanwhile, economists in the world have many times affirmed that such a model of enterprises which do commercial business and undertake projects for public interest at the same time is not a good model.

Therefore, in the world, the organizations which do business for profit and the enterprises which undertake projects for public interest are separate organizations.

There is a clear principle that we should follow that the State only spends money and assigns organizations to carry out the projects for public interest. The assigned organizations have to fulfill tasks and show concrete results. Of course, the projects need to be fulfilled efficiently and with the lowest possible costs.

I think that it is necessary to set up more detailed regulations on the investment in the projects for public interests, so as to clearly point out who must take responsibility for the efficiency of the projects.

Do you think that it will be still difficult to clarify the efficiency of the use of state budget’s capital until we can split business projects and the projects for public interests?

The State can be considered as an investor. It has the right to spend money to do projects for public interests. The State is also an agency which represents the whole people’s ownership, therefore, it needs to choose the best investment method for people.

As I said above, we need to split the business for profit and for public interest. As for now we still cannot do this, the two kinds of business need to be entered into different accounts. This allows the Government to supervise the use of the state budget and find out if the enterprises use the capital for the right purposes.

In our current conditions, when the state budget deficit is still high, we need to tighten the budget spending and try to heighten the efficiency of state budget use.

State-owned enterprises now do not expose information like the companies listing their shares on the bourse, or public companies. Do you think that it is legal?

The current laws do not require SOEs to expose information. For a long time, we have been supervising SOEs in accordance with a “specific law”.

However, I still believe that SOEs need to make public information about their operations.

I believe that the government has the right to release a legal document, stipulating that SOEs must make public information.

Such a supervision mechanism will help the government to better supervise the use of the state budget. It is feasible and not costly. – Vietnamnet

Tags: Vietnam companies, Vietnam enterprises, Vietnam SOEs