State enterprises fail to meet deadline

Although the State-owned Enterprise Law, which was designed to regulate wholly state-invested firms, expired last Thursday, many SoEs have not yet changed their status to one-member limited companies as required.

Nguyen Kim Toan, head of the Government Office SoEs Renewal Department, said at a seminar in Ha Noi on June 29, only two days prior to the expiration, that 51 SoEs could not meet the requirement for various reasons. She said the major reason was their poor performance, which had resulted in losses.

The Viet Nam National Sericulture Corp is one of the said companies. Another 14 farms and forestry plantations are also at the end of the tunnel due to problems related to land and other assets.

Toan added that the Prime Minister had required completion before the new year.

She said that on June 15 around 1,200 SoEs had not completed the process. She said that authorities would issue decisions on status change by July 1, but that was not an indication that it had been completed.

After the decision was issued, steps, including the working out of a plan for the new changes and business registration for the new institutions, would follow.

Changing the form of State-owned enterprises is set by the Government, which aims to improve their management and performance, thus creating a more positive impact on the country’s economy.

Another target is to provide businesses in all economic sectors a common framework, the Law on Enterprises.

According to Dr. Nguyen Dinh Tai, permanent vice president of the SoEs Club and head of CIEM’s Advisory and Training Management Centre, the importance is the quality rather than the quantity of SoEs changing status.

Prime Minister Nguyen Tan Dung has recently decided on a list of 15 State owned corporations, including Viet Nam Cement Industry Corp, Viet Nam National Textile and Garment Group, Viet Nam Railway Corp and Viet Nam Ship Building Industry Group, to be turned into the one-member limited companies.

“The difficulty lies in the change in quality and corporate management as the working habits and mind-set have taken deep root in SoEs,” said Tai.

A survey of 321 SoEs completed their renewal to operate as one-member limited companies last October, showed that more than 65 per cent of them are SoEs under management of local governments. And up to 72.5 per cent of these (65 per cent) companies chose a model in which the chairman also assumes the general director position.

More than 45 per cent of the 321 one-member limited companies have not yet carried out organisational restructure or adjusted their companies’ rules as required by the Enterprise Law. One of the urgent requirements of the change is to renew corporate governance in accordance with the law and international practices.

Tags: Vietnam companies, Vietnam enterprises, Vietnam state-owned firms