State firms told to reduce investment in non-core operations

The Government will require State-invested enterprises to reduce the percentage of capital they invest in non-core business activities under a draft regulation compiled by the Ministry of Finance (MoF).

In a draft decree on management and use of capital and financial management for State-invested enterprises, the percentage of investment permitted for non-core business activities would be reduced to 15 per cent from the current 30 per cent.

State management offices previously ordered State-invested corporations and groups to withdraw their capital from non-core sectors but they had not taken the requirement seriously, said Dang Quyet Tien, deputy head of the Ministry of Finance’s Enterprise Finance Department.

The Government expected the new draft would restrict corporations and groups from staying, or getting, involved in high risk sectors such as securities, insurance and real estate, Tien said.

Pham Nguyen Hanh, deputy general director of the Viet Nam Textile and Garment Group, told Dat Viet (Land of the Viet) the group had invested in the Asia Commercial Bank but could not withdraw its capital at this time because of disadvantages on the securities market.

“The group would suffer huge losses if it withdrew its funds from the bank and would not be able to ensure State capital as required under law,” she said.

In addition to withdrawing unrelated investment capital, MoF proposed development of regulations on supervising the financial situation of State-owned enterprises to promote effective use of State capital, said Tien.

Tran Van Hieu, deputy minister of finance, said the ministry had studied regulations to increase management responsibility and use of capital and assets by enterprises. Enterprise managers would then have an idea of their weaknesses and be able to make timely solutions to the problems, he said.

The Government would promote sanctions on enterprise managers that were not in compliance with the regulations, Hieu said. — VNS

Tags: Vietnam companies, Vietnam enterprises