State groups and corporations needs improvements

The Prime Minister has issued a Government action program to ensure the effective implementation of legal policies on the management and use of State capital and assets by State groups and corporations.

The programme emphasises that it is imperative to restructure ineffective State corporations, which have suffered losses for years and failed to recover and to clarify the responsibility of such collectives and individuals and deal with them under law.

Despite performing its role as a key economic force, which has made significant contributions to national development, the operations of State groups and corporations have proved ineffective and incommensurate with State investment due to inefficient management and use of State capital and assets.

Weaknesses in their operations have been hotly debated at the National Assembly (NA) sessions. NA deputies have cited many businesses that are seriously and consistently in the red. For example, Transport Construction Project Corporation No 4’s operated inefficiently with its total losses rising from VND 655 million to VND 57 billion, while the Waterway Construction Corporation suffered losses of VND429-719 billion. Despite inflicting such great damage, no individual has been held accountable. In addition, improper investment, poor business capacity and the use of legal loopholes by such entities have caused a significant drain on State funds.

From 2006-2008, 34 groups and corporations invested more than VND 2,000 billion in the securities market, 18 invested VND3,000 billion in insurance and 17 contributed VND1,700 billion to investment funds. It is worth noting that most groups and corporations allocating their capital to securities and investment funds suffered big losses.

Normally, each State group or corporation plays a leading role in a certain sphere of business. These major businesses often have partner businesses, which are run by relatives of key figures. In some cases, major businesses suffer losses but their partner businesses still earn high profits. These “mutual benefit” relations are very complex and concealed in different sophisticated ways.

It is unacceptable that business operations are unprofitable but their leaders still feel at ease and their relatives even get rich so quickly.

However, to increase individual responsibility for business interests and business capability in all State groups and corporations, it is essential to build a salary mechanism in line with market laws. Anyone generating profits for the State must deserve equal treatment like others in economic sectors.

In order to recruit capable managers for State groups and corporations, the selection process must be made public to offer opportunities to truly talented candidates, including foreigners.

The fact is that the growth rate of State-owned enterprises are often lower than those from other economic sectors, resulting in their contributing less to GDP growth and job generations. Consequently, the state-run economic sector must be restructured to make its operations more effective in the future.

VietNamNet/VOV

Tags: Vietnam enterprises, Vietnam state groups